Today’s population, especially those living in big cities have evolved from living in big houses to apartments/villas etc. These days the working professionals do not have enough time for constructing their own houses by arranging men, material etc. So, now the trend of buying posh flats in posh housing societies is in. These projects are carried out by renowned builders in the real estate market. These kind of projects are governed by RERA so that buyers are not cheated of their money that is paid in pre-construction phase. In this article we will understand, RERA Agreement for Sale that is executed between builder and buyers. So, let us start.
RERA is an authority that sets certain rules and regulations for builders. It defines the rights and duties of both buyer and seller. It gives remedies to both buyer and seller in case of disputes. These are the some of the important points about RERA that any buyer should keep in mind while entering into a purchasing of a house:-
If a project is registered with RERA that it we can say that it complies with all condition set by RERA.
A buyer can enter the RERA Registration number of any project on RERA’s website. All the details as submitted by builder to RERA will be available on the website.
RERA has made it mandatory for both buyer and seller to enter into Agreement to Sell.
The format of RERA Agreement for Sale has been standardized. So that all builders across country should provide same information to the buyers.
As per provisions of RERA, no promoter can collect more than 10% of the total amount payable by the buyer without entering into an agreement to sell.
Hereafter, we will understand that what is RERA Agreement for Sale and other points related to it.
What is RERA Agreement for Sale?
RERA Agreement for Sale is an instrument wherein the seller makes a promise to transfer the property to a buyer on fulfillment of certain conditions. The Agreement to sell is a not a title of ownership of the property. At the time of Agreement to Sell following payments are made:-
Buyer is supposed to deduct and pay TDS u/s26QB before entering into Agreement to Sell.
Stamp Duty and Registration Charges as prescribed by state authorities have to be paid while doing Agreement to Sell.
One representative duly authorized by Builder will sign the Agreement to Sell along with buyer.
Any loan sanction if required on the house property is done against the hypothecation of Agreement to Sell Document.
Basic Ingredients of RERA Agreement for Sale
RERA has made it compulsory for all the buyers to enter into an Agreement to sell with the promoters. RERA has standardized the format for RERA Agreement for Sale. The basic ingredients of Agreement to Sell are:-
It should include particulars of development of project and its specifications.
The Agreement to Sell should contain agreed payment plan.
Liability and Rights of Promoter and buyer in case of default by each party.
Total Price payable including taxes and a declaration that same is escalation-free.
All details like allotted car parking, total carpet area of the unit.
Floor Plan of the project, payment plan and details of all amenities available in the project including specification of common areas.
Comparison between RERA Agreement for Sale and Sale Deed
As per above discussions, we have seen that Agreement to Sell does not give ownership title to the buyer. However, it is still mandatory to enter into Agreement to Sell. In this part of the article, we will discuss about validity of Agreement to sell in eyes of the law.
RERA Agreement for Sale- RERA Agreement for Sale is an instrument wherein the seller makes a promise to transfer the property to a buyer on fulfillment of certain conditions.
Sale Deed- Sale Deed gives right, interest and ownership title to the buyer.
Although Agreement to Sell does not provide a clear title to the property, but it is still a document enforceable under law. Now, we will understand that what happens in case of dispute between buyer and builder.
Consequences of Dispute between buyer and builder
There are two parties in RERA Agreement for Sale i.e. Buyer and Builder. Both parties can land into a dispute where any of the parties fails to fulfil its promise. Such disagreements can arise due to delay in payment, possession and or non-delivery of certain agreed facilities etc. In such event, the RERA Agreement for Sale overrides the Transfer of Property Act.
RERA Agreement for Sale gives rights to both parties to approach Judicial Authorities in case of disagreement.
Mere fact that there is no ownership title with the buyer does not take away his right to seek legal relief in case builder fails to fulfil his duties.
In the view of complaints from buyers regarding unfair practices of builders, RERA Act was introduced in 2016. Since then, real estate market has become more regulated and pro-buyers. The RERA Act protects buyer’s rights. RERA Agreement for Sale is one such move that has proved to be really effective. So, to conclude we can say that all the buyers of property should not delay to enter into Agreement to sell just to push the payment liability. Recently, to give boost to the real estate sector, states are announcing reduction in stamp duty rates. Therefore, all the recent buyers have not only saved stamp duty but also safeguarded their rights as they have entered into RERA Agreement for Sale.
CS Urvashi Jain is an associate member of the Institute of Company Secretaries of India. Her expertise, inter-alia, is in regulatory approvals, licenses, registrations for any organization set up in India. She posse’s good exposure to compliance management system, legal due diligence, drafting and vetting of various legal agreements. She has good command in drafting manuals, blogs, guides, interpretations and providing opinions on the different core areas of companies act, intellectual properties and taxation.
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