What the agreement for sale must contain under RERA

The agreement for sale is the document a homebuyer signs, pays against, and later relies on when something goes wrong. Under the Real Estate (Regulation and Development) Act, 2016, it is also a document whose core terms a promoter is not free to write as it pleases. A great deal of what makes an agreement enforceable, or fatal to a promoter's position, is fixed by statute and rule.

Why the form of the agreement is regulated at all

Before RERA, the agreement for sale was drafted by the promoter, for the promoter. Clauses that let the builder change the plan, delay possession indefinitely, forfeit the buyer's money on default, and bind the buyer to penalties the builder did not share were ordinary. RERA's answer was to prescribe what the agreement must contain and to make the registered agreement the reference point for the parties' obligations.

What the agreement must contain

Section 13 of the Act, read with the model form prescribed under the State rules, fixes a floor. An agreement for sale of an apartment, plot or building should set out at least the following, and an agreement that omits them is to that extent vulnerable:

• The particulars of development, the specifications, and the amenities as sanctioned — not as marketed.
• The date by which possession is to be handed over, stated as a date, not as a period running from an event within the promoter's control.
• The total price, the stage-wise payment schedule, and the basis of any escalation, with no open-ended right to revise.
• The interest payable by each side on default, which the Act requires to be the same rate for promoter and allottee alike.
• The consequences of the promoter's failure to complete, including the allottee's right to withdraw and to a refund with interest, or to retain the unit and claim interest for the delay.

No promoter shall accept a sum of more than ten per cent of the cost of the apartment as an advance without first entering into a written agreement for sale.

— Section 13(1), RERA 2016

The symmetry the Act insists on

The single most important change RERA made to the agreement is symmetry. The rate of interest the allottee pays on a late instalment must equal the rate the promoter pays on delayed possession. A clause that charges the buyer eighteen per cent while the builder offers a nominal sum per square foot is not merely unfair — it is contrary to the Act, and the authority will read it down.

Consequences of an agreement that falls short

1. Terms that are inconsistent with the Act do not bind the allottee. The agreement is read subject to the statute, not the other way round.
2. A one-sided clause — on forfeiture, on delay, on the promoter's right to alter the plan — is liable to be struck down, and tribunals have not hesitated to do so.
3. Taking more than ten per cent before a written, registered agreement is itself a contravention, exposing the promoter to penalty regardless of the clause.

For buyers, and for promoters

A buyer should read the agreement against this floor before signing, and treat any gap as a point to raise, not a formality. A promoter should draft to the floor from the start — an agreement that cannot survive scrutiny at the authority is a liability that surfaces at the worst possible moment, when possession is already late and the buyer is already before the regulator.