Builder-Buyer Agreement: Key Details Every Homebuyer Must Check

Liked a property and going to pay the booking amount? Wait and thoroughly check the builder-buyer agreement first. A  builder-buyer agreement is more than just an agreement, it is a legally binding contract between a home-buyer and the property builder. The agreement has a series of terms and conditions that ensure transparency by including property and construction details, responsibilities, payment schedules, penalties, non-compliance, total cost, and possession date. 

To protect yourself (the buyer), it is important that you go through all the details in the builder-buyer agreement and verify before making any payment.  Here is a list of key details that you should look for in a builder-buyer agreement. 

1. Verify the Builder/Seller’s Ownership and Legal Title

Before paying even a small booking amount, ensure that the builder or seller legally owns the property. If the property does not have a clear title, you risk losing money even before the loan process starts.

What to check:

• Title documents such as past builder-buyer deeds, gift deeds, or partition deeds
• Latest Encumbrance Certificate (EC) showing clear ownership
• Proof that the seller has the right to sell and the land is not disputed
• For builder floors or apartments, check land ownership documents and development rights
  

2. RERA Registration Details

Under the Real Estate (Regulation and Development) Act, 2016 (RERA), all real estate projects that meet certain criteria must be registered.

Check the following in the builder-buyer agreement:

• RERA registration number
• Link to the project on the official RERA website
• Whether the builder-buyer agreement mentions compliance with RERA norms
  

Why does this matter?

A RERA-registered project means the builder must follow strict guidelines related to timelines, refunds, carpet area, and financial transparency.

3. Check the Exact Carpet Area Being Sold

One of the most important things Indian home buyers often miss is the difference between carpet area, built-up area, and super built-up area. Make sure the agreement does not mislead you with inflated super-built-up area details that do not match real usage space.

RERA mandates that the price must be based on carpet area, so ensure the builder-buyer agreement clearly states:

• Exact carpet area in sq.ft.
• Cost per sq.ft.
• Total price based on carpet area
  

4. Total Price and Payment Schedule

The builder-buyer agreement must mention the final, all-inclusive price you will be paying. Many buyers later get surprised with added charges. A clear payment plan protects you from sudden, unjustified demands later.

Ensure the agreement includes:

• Base flat cost
• GST (if applicable)
• Floor rise charges
• Preferential location charges (PLC)
• Clubhouse charges
• Electricity/water meter charges
• Parking charges
• Registration and stamp duty costs
• Maintenance deposit or corpus fund
  

Also verify the payment schedule, including:

• Milestone-based payments
• Due date
• Late payment charges
  

5. Construction Timeline and Possession Date

Possession delays are one of the biggest concerns among Indian home buyers, especially in under-construction projects. Under RERA, builders are required to pay buyers compensation for delayed possession; make sure this clause is clearly stated.

Your builder-buyer agreement should have:

• Exact date of possession
• Grace period (if allowed)
• Consequences if the builder delays the project
• Penalty compensation the builder must pay for delays
  

6. Cancellation and Refund Policy

Always check the cancellation clause before paying the booking amount. Many builders put strict terms where buyers lose a big portion of the money if they cancel.

A fair cancellation clause should mention:

• Conditions under which the buyer can cancel
• Refund timeline (usually 45–90 days)
• Any deduction for administrative charges
• Refund method (bank transfer, cheque, etc.)
  

Also check if the builder can cancel the allotment, this should only be possible under specific legally justified circumstances.

7. Specifications of Construction Material

Many home buyers assume that the builder will use high-quality materials as shown in brochures or sample flats. The builder-buyer agreement must ensure this.

Check for:

• Type of flooring (tiles, marble, wooden flooring)
• Brand and type of bathroom fittings
• Doors and window material
• Electrical wiring brand
• Kitchen platform material
• Waterproofing details
  

Everything promised in marketing material should be mentioned in writing in the builder-buyer agreement.

8. Layout Plans, Floor Plans, and Project Approvals

Builders often change layout plans after collecting money from buyers. To avoid this:

Confirm in the agreement:

• Final floor plan
• Unit layout (including balcony, utility, and terrace details)
• Car parking location (open, covered, stilt, basement)
• Project approval from local authorities (municipal corporation, town planning dept.)
  

Also ensure the agreement includes a clause that the builder cannot make major changes without buyer consent.

9. Amenities Promised by the Builder

If the builder has promised amenities like:

• Clubhouse
• Gym
• Swimming pool
• Garden
• CCTV cameras
• Children’s play area
• Power backup
  

Make sure all these are clearly written in the builder-buyer agreement. Otherwise, the builder may later charge extra or reduce the quality of the amenities.

10. Home Loan Clause and Bank Approval

If you are planning to take a home loan, the builder-buyer agreement should include:

• Details of banks that have approved the project
• Builder obligations during loan processing
• Refund clause if the loan application is rejected
  

Avoid paying booking amounts until your loan eligibility for the property is clear.

11. Penalty Clauses for Both Parties

A legally balanced builder-buyer agreement should have penalty clauses for both:

• The builder (for construction delay, changes in plan, failure to deliver quality, etc.)
• The buyer (for delayed payments)
  

Ensure these clauses are fair and not one-sided in favour of the builder.

12. Maintenance Charges and Handover Conditions

Before paying your booking amount, understand how much you will pay after moving in. Builders often delay completing common areas; make sure there are deadlines mentioned.

The agreement must specify:

• Estimated monthly maintenance charges
• Corpus fund
• Handing over of society management to RWAs
• Timeline for completion of common amenities
  

13. Dispute Resolution Method

The agreement must clearly state:

• How disputes will be resolved
• Jurisdiction (court location)
• Whether disputes will go through RERA or consumer court
  

14. Check for Hidden Clauses or Ambiguous Wording

Many agreements include vague clauses like “builder may revise plan if required” or “additional charges may apply.” Such clauses can be misused to demand extra money later.

Ask for clarification on any unclear language, such as:

• “Super built-up area subject to change”
• “Possession date subject to approvals”
• “Price escalation charges”

15. Force Majeure Clause

A Force Majeure clause protects both the builder and the home-buyer in situations where delays or disruptions occur due to circumstances beyond anyone’s control. These situations may include natural disasters (floods, earthquakes, cyclones), war, government restrictions, pandemics, or any unforeseen event that makes construction temporarily impossible.

What to check:

• The clause should clearly define what events qualify as Force Majeure.
• It should mention how much delay is permissible under such events.
• The builder should not misuse the clause to justify delays caused by poor planning or financial mismanagement.
• The agreement must state that once the Force Majeure event ends, the builder must resume construction immediately.
• Buyers should still be entitled to compensation if the delay is not directly linked to a genuine Force Majeure situation.
  

A well-defined Force Majeure clause ensures transparency and prevents builders from using it as a loophole to escape responsibility for avoidable construction delays.

Final Thoughts: 

Buying a home in India involves several legal and financial steps, and the builder-buyer agreement forms the foundation of your rights as a buyer. Before paying the booking amount, make sure you read the agreement thoroughly, ask questions about any unclear points, and seek legal advice if required. It’s also important to compare the agreement with the builder’s brochure and ensure that every promise made verbally is clearly mentioned in writing. Only proceed with the booking payment once you are fully satisfied with all the terms and conditions.

Like reading such insightful content, keep reading Inframantra blogs and articles. Inframantra is one of the best real estate consultancy firms in Gurgaon and known as a preferred channel partner of top real estate companies in Gurgaon. Looking for best residential properties in Gurgaon? Connect with an Inframantra property advisor or visit the Inframantra website. 

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