Builder/Buyer Agreement
Builder/Buyer Agreement
Most are witnessed many home and commercial real estate buyers, paying cheques for new apartments, condos, residential plots, offices and retail spaces in upcoming mixed used developments. Most of the potential buyers sign the Builder/Buyer Agreement, without going through the contract, (this is a very common sight especially in India). A Builder/Buyer (Buyer Seller) Agreement is an important document while transecting to buy a property. This agreement holds all the clauses, terms and conditions and legal implications, for the buyer and the developer, should there be a default from the either sides. During the process of buying and negotiating to acquire a property, as buyer you should be aware of all the clauses which protect your rights, and the clauses which safeguard the developer. Do not forget, this is your hard earned money, going in some ones pocket. A typical Buyer Seller Agreement is meant to protect the rights of the developer and the buyer. Some of the important point you should consider, before signing on the dotted lines are as under:
The time frame of the project
The payments terms and clauses
Interests, penalty, default charges for a buyer
Approvals, sanctions, obtained by the developer to undertake the development
Approved layout plans and drawings of the project
Title and ownership of the project
Is the development being out sourced
Is the land clear of loans / mortgages, where the developer proposes to undertake the development
Source of funding.i.e. (J/V, equity funded, partnership development etc)
Special clauses towards changes in building plans / floor space area etc
Clauses on refund of payments in case the development fails or is not completed
There are many more clauses in the Buyer Seller Agreement, apart from the few mentioned above. I have known many people, who invest and buy property availing funds through banks and financial institutions. Believe me, it is a nightmare for these buyers when the developer delays projects for one reason or the other. Sometimes, the buyers are left with no option but to continue living on rented accommodation, also repaying the banks or the financial institution against the home loan. The buyers are left hanging mid way, at the mercy of the developer. This leads to a financial stress on the buyers and should be strictly avoided.
Make sure to read between the lines, it is mandatory for a developer to sign a Buyer Seller Agreement the moment he accepts payments against the property. As a buyer you hold a right to view or demand a copy of all the approvals /sanctions obtained by the developer for undertaking such a project. If you cannot understand the clauses and their hidden meanings, mentioned in a Buyer Seller Agreement, it is advisable to take a legal opinion to understand the agreement and have it explained to you.
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