With this sale agreement, no builder can take you for a ride!

The Government of India (Ministry of Housing & Urban Poverty Alleviation) has published, on 02 August 2016, the draft Agreement for Sale under the Real Estate (Regulation and Development) Act, RERA-2016 for public comments. This comes as a sequel to the Act and the Draft Rules for the Union Territories also published by the Central Government in the recent past. It may be of benefit to those who are planning to buy a home for themselves or even a residential plot of land.

It is also of importance since with the enactment of the RERA-2016, effective 01 May 2016, all future Sale Deeds will have to be as per new guidelines as soon as published by the Government of Karnataka. It is very much likely that the State Rules and Agreement formats will mostly be in conformity with the Central Government Format. Given below are the 9 points which stand out when we compare these with the format being commonly used in Bengaluru.

1. Appropriate Identity of the Promoter and the Buyer

There are separate paragraphs for each category of Promoter and Buyer, unlike the present practice where everything is generally left to imagination. The following categories are distinctly mentioned, since the same affects various aspects of the sale:-

(a) Promoter -A Company, Partnership Firm or an Individual.

(b) Allottee – A Company, Firm, Individual or a Hindu Undivided Family (HUF).

2. Personal and Tax Identity

The draft agreement includes all the documents that can establish the personal and tax IDs like CIN no. (In case of a Company), Aadhaar number and PAN etc of both the parties is required to be mentioned in the agreement.

3. Various Certificates and NOCs

The agreement makes specific reference to the date of issue and other details of the Commencement Certificate and Registration under the RERA-2016 in addition to the usual ones like Sanctioned Plans etc. Furthermore, the promoter is required to give an undertaking that, “All approvals, licenses and permits issued by the competent authorities with respect to the Project, said Land and [Apartment/Plot] are valid and subsisting and have been obtained by following due process of law.” This should thus take care of fake CCs and OCs and other similar documents.

4. Apartment Area Defined

The area of Apartment is now defined in terms of Carpet Area, which is easier to measure, instead of the existing words like Built Up area and Super Built up Area etc. In addition the agreement clearly mentions the area of the Garage or Closed Parking separately and the calculation of the land share in the Common Areas on pro rata basis. This will obviate any misleading or fuzzy details being passed on by the Promoter.

5. Transparency in Pricing

The new draft agreement makes the pricing method and the final price as transparent as possible. Some of the important inclusions are:-

(a) Rate and Total Price separately for the apartment, the Garage/Closed Parking and the pro rata land share to avoid any confusion.

(b) The breakup of the cost inclusive of all taxes and surcharges etc. is also required to be mentioned.

(c) The price once mentioned in the Agreement is escalation-proof except any additional taxes, levy or other charges payable to the Government for which a copy of the concerned Government notification is required to be attached with every demand for any additional amount. This comes as a boon for the buyers as the Promoter can no longer increase the final price quoting excuses like escalation in material cost or cost over-runs due to delays.

6. Occupancy Certificate (OC)

It is a landmark addition to the Agreement for Sale. Before handing over, it will be incumbent on the Promoter to measure and handover the agreed Carpet Area AFTER THE ISSUE OF OCCUPANCY CERTIFICATE. It is also made clear that the Promoter can issue Offer of Possession letter only after the Occupancy Certificate has been received.

7. Binding Construction Schedule

Another milestone inclusion is the stringent and binding construction schedule. The Promoter has been made strictly liable to:-

(a) Handover the apartment by the date given in the Agreement for Sale and that too, along with the Completion Certificate and/or Occupancy Certificate as applicable.

(b)The agreement makes it mandatory to give a firm Date by which the possession will be given, instead of vague expressions like months, years or say mid-2018 etc.

(c)  The agreement further specifies that the apartment will be handed over in a “ready to move in” state which prevents the handing over of apartments sans attendant amenities like lifts and fire protection etc.

(d) Handing over within three months from the date of issue of the Occupancy Certificate.

8. Warranties by Promoter

In another first, the new Agreement provides for a number of warranties from the Promoter like pending litigations and govt dues, illegal multiple sale of any part of the property and involvement of HUF etc.

9. Defect Liability Period (DLP)

The new draft agreement gives yet another power to the buyer in the form of a long Defect Liability Period of fie years and rectification of the defects within 30 days.

As we can make out, the above is a real empowerment of the buyer, but for two things. Firstly, the final format should not end up being diluted under pressure from the builder lobby. Secondly, the Rules made by the State under the RERA-2016 are also in conformity with this noble intention evident in this new Agreement for Sale.

 

The comments can be either emailed BEFORE August 17th, 2016, to commentsondraftagreement@gmail.com
or sent to: Sailesh Jogiani, Under Secretary (Housing),
Ministry of HUPA, Room No. 220 C,
2nd Floor, Nirman Bhawan, Maulana Azad Road,
New Delhi – 110 011, Tel: 2306 2252.

2 Comments

  1. Hi Sir/Madam,
    We are looking to buy a flat in 2nd floor of a G+3 appartment near HSR Layout. Builder has infomred us that sanctioned plan was G+3, but he has constructed 1 additional floor (for renting out only for his additioanl income). So he can’t get Occupancy certificate from BBMP, so we. Shall I still proceed to buy that? Because this property matches to our budget and in Bangalore most properties with OC are out of our budget or located too far from city.

  2. OFFHAND

    This is one of the topics to be found specifically but briefly covered in the BOOK, 2017 Edition,authored by Dr. Sanjeev Kumar (Published by ‘Bharat’.

    In PART 4, quite a few of the salient features of the RERA have been set out in the form /style of FAQs. The points noted under Sl. No.10, pg. 413, dealing with the Format to be adopted for Agreement to Sell require to be made a special note of.

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