A Detailed Guide to Help You Understand the Builder Buyer Agreement

First-time home buyers find the paperwork and documentation to buy a real estate property difficult to navigate. The Builder-Buyer Agreement is one of the most important legal documents or agreements you must sign as a prospective homeowner. This will help you understand the agreement and the protection it provides you.

What is a Builder-Buyer Agreement?

A Builder-Buyer Agreement (BBA) is a legal contract between the developer or builder of a real estate project and the prospective homebuyer. It outlines the mutually agreeable terms and clauses, which, when fulfilled, allow the transfer of the property's ownership and rights to the buyer. Simply put, the BBA is a legally binding contract that specifies the terms and conditions of the sale of a property. It ensures complete transparency in dealing with developers or builders and also allows the homebuyer to invest with confidence. In addition, the commitments made by the builder in the contract protect the buyer from delays, incomplete projects, and breaches of quality standards.

Points to check before signing the Builder-Buyer Agreement

The Builder-Buyer Agreement is a legal contract that offers indemnity or protection to the buyer of residential real estate. As such, the onus of checking the contract and clarifying any ambiguous terms also lies with the buyer. Here are some points to check before you sign the BBA -

• Personal details of the buyer (name, father's name, date of birth, Aadhaar and PAN numbers etc.)
• Clear timeline for project delivery
• Payment schedule with transfer costs, including a detailed description of the financial obligations of the buyer
• The buyer must also check and verify that the buyer has all the requisite permits for building the project. These include building plan sanction, Commencement Certificate (CC), Intimation of Disapproval (IOD), Occupancy Certificate (OC), Municipal approvals for fire and water, and RERA registration.
• NOC from the bank or lending authority if the builder has taken a loan against property for construction purposes. The buyer may ask for an Encumbrances Certificate if the builder has taken multiple loans.
• The BBA also needs to clearly define the legal recourse in case of a breach of the agreement by either party.

It is important to ensure that the BBA is correct and thorough, as it is difficult to amend after signing it.

Why is a BBA important?

Some of the greatest concerns for real estate investors centred on delayed or shelved projects, issues with building quality, and non-deliverance of amenities and facilities as committed by the builders. The introduction of the RERA Act and the implementation of the BBA has alleviated such concerns by making builders fully responsible for the delivery of the quality standards, the pricing, and the timelines stipulated in the BBA. This offers buyers unprecedented protection in terms of delivery commitments and financial planning and also offers them the ability to hold the builders responsible.

Legal Recourse

The legal recourse in case of a breach of the Builder Buyer Agreement forms a key part of the agreement itself, which lends legal validity to the agreement. By enacting the RERA Act in 2016 and setting up the Real Estate Regulatory Authority, the government has moved ahead in securing the interests of homebuyers in India. According to the RERA Act, every developer must submit a sample of the BBA during project registration. Section 13 (2) of the RERA Act governs the scope of the builder-buyer relationship and requires the agreement to specify all terms without any ambiguity. In case of a breach, the dispute can be taken up by the RERA tribunals of the states of the respective states. 

Following the enactment of the RERA in 2016, several judicial rulings have clarified many of its provisions. In one such ruling, the Supreme Court specified that the builder is responsible for providing the Completion Certificate to the homebuyers even if possession is taken before the builder has obtained it. In another directive, the apex court.

Responsibilities of the buyer

• The buyer should check the agreement thoroughly for all the details of offerings. This includes the size of the unit, built-up area, carpet area, facilities and amenities, and the financial obligations with the timeline.
• The buyer also needs to check the delivery timelines and indemnity clauses securing the buyer in case of delay in delivery or financial losses.
• The buyer should check the building plans at the time of signing the BBA and the Completion Certificate at the time of taking possession.
• The buyer should get the BBA checked by a legal expert in case he/she is unsure about the terms and conditions.
• The BBA should be registered to be legally valid.

While you understand all about the BBA and the legal protection it gives you, it is also important to find a trusted and verified builder for your project. The property listings on Blox are all RERA-verified and are listed directly by builders with a track record of timely delivery of high-quality residential apartments.