Nov 2019 , by , in Latest News

Builder-Buyer Agreement (BBA) is a pivotal legal document which should ensure that the rights of both builders and buyers are protected. Realty+ spoke to legal experts on the critical aspects that need essential consideration.

A builder-buyer agreement lays down the terms that govern the sale of different kinds of property like a residential, commercial, etc. between the buyer and builder. It is in the interest of both the parties to have a well-drafted BBA which would thereby protect the rights of both the builder and the buyer in the unfortunate event of a dispute that may arise.

Sandeep Shah, Partner, N.A Shah Associates LLP explained, “The builder-buyer agreement is a legal document, Some of the critical aspects of the agreement are (a) penal provisions in case of delay/ non-payment of the instalments (b) rights of the purchaser in case of delay in possession of the promised unit (c) warranty towards structural defects (d) clarity on the amenities, (e) conditions imposed before the agreement can be assigned to 3rd party etc.”

Farid Karachiwala, Partner, J. Sagar Associates added, “All projects have to compulsorily register with RERA and registration number must be mentioned in the BBA. Not more than 10% of the cost of apartment shall be paid as earnest money before entering into registered written agreement for sale.”

Simranjeet Singh, Advocate – Athena Legal stated, “The builder must ensure that one-sided agreements, which were a norm in the past, are not executed going forward as the same would be unenforceable in law and the builder cannot thus take refuge behind such clauses.”


Shah: The often neglected terms are the warranty provisions, make of the amenities as many developers promise white goods without specifying the make, model, capacity etc. of the white goods, the rights of assignment and transfer charges, rate of interest for default in payment of instalments.”

Singh: “The builder must add a provision specifically seeking the purpose of the said investment in the project i.e. personal or investment. It is imperative as recent judicial trends have clearly stated that the builders will be granted a certain level of protection in case the property in question has been purchased for a speculative purpose.”

Karachiwala: “One must ensure that there are no contrary terms to the provisions of RERA. There should be a mention of any escalation of the price of the flat on account of increase in development charges or charges which may be levied by Local bodies/ Government. Also, if there is any clause which would entitle the builder to change the date of handing over possession to a later date.”


Singh: A lawyer would be able to plug the loopholes in the BBA and can assist the intending purchaser in carrying out a due diligence on the builder before investing in the said property. Furthermore, certain terminology if left vague and unenforceable as per law can hurt both the buyer and the builder. When it comes to the liabilities to pay amounts to allottees/buyers in the form of say assured returns, pre-lease rentals, lease rentals, etc. the same must be consulted by a lawyer since defaults in making payments which are contractually due, can result in invocation of insolvency proceedings for a builder.

Karachiwala: Real estate contracts are not standardized and require an expert’s view to protect the rights of clients. Without an attorney, a buyer may not able to appreciate the terms, conditions and consequences of what the agreement contains. A lawyer can ensure detailing into the agreement so that there is no loophole from which a buyer of any property can get affected. Without a real estate lawyer, it’s easy to miss hidden clauses that can have a huge, adverse impact in the long run.

Shah: A good title is possible only if a knowledgeable and experienced professional is involved. The knowledge is not only in regard to conveyancing but also in regard to property taxes, procedure and formalities under Cooperative societies Act, restrictions regarding acquisition of agricultural and non-agricultural land, disputes or objections or lien recorded in regard to the property under consideration and so forth.


Timeline for Construction: The period when the builder will deliver flat to the buyer, construction timeline and the consequences of non-adherence to the said terms must be enunciated.

Building Layout: The sanctioned layout as provided to the regulatory authority with clearly mentioned sizes along with any aspect of escalation in the size of the property have to be clearly defined. There should be prior consent of the parties in respect of any changes in the layout or escalation in the size of the property.

Completion Certificate: It is the responsibility of the builder to obtain all relevant approvals/Certificates. There must be a safety value in the form of a provision in the BBA which should stipulate the liabilities of the builder in case he offers possession without valid approvals. However, the said aspect has been dealt with to quite some extent by RERA.”

Rights & Duties of Buyer – Buyer is entitled to obtain information relating to sanctioned plans, layout plan, specifications stage wise time schedule of completion of Project, claim possession of the Apartment, claim refund of amount with interest if the builder is not able to give possession. Buyer shall be responsible to make payments in the manner and within time specified in the Agreement.

Rate of Interest – Rate of interest chargeable on the default made by the buyer in paying the instalment towards the price of the flat and Rate of interest chargeable on the default of the Developer while giving refund of monies for not complying with the terms of the Agreement shall be the same.

Termination – BBA ought to protect parties with a clause whereby both the parties have a right terminate the contract if the other of the party commits a breach of any of the clause in the contract after giving notice and reasonable time to remedy the same. Such as refund or compensation in the case of default by the builder or builder forfeiting a sum of money deposited with interest in case of default by buyer.

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