Uniform Builder Buyer Agreement (BBA) has been the demand of Indian home buyers for long. In the absence of it, while the home buyers were being harassed by the unscrupulous builders, the sector was at the receiving end of poor perception in the collective consciousness. Track2Realty evaluates whether a Model Builder Buyer Agreement will be a reality after the repeated interventions by the Supreme Court of India.
The Government of India has submitted its version of Model Builder Buyer Agreement to the Supreme Court of India (SC) for approval. This draft agreement has been developed in collaboration with the State Governments and the industry body CREDAI.
Earlier in October 2021, the Apex Court had issued notices to the Centre, States, Union Territories and the Law Commission of India, with reference to Sections 41 and 42 of RERA which mandates the Central Advisory Council to recommend the framing of standard agreements to prevent the exploitation of real estate buyers.
What does Uniform Builder Buyer Agreement mean? And why was it needed?
Well, the prevalent market practice, or rather malpractice, has been that BBA was given to buyers only after the initial booking amount was paid. Prior to that, the buyer could only see the Application Form. Now with Uniform BBA the builder will not be able to make unfair contract; and hence it will reduce the builder-buyer litigation.
As of now, builders insert arbitrary clauses, often extreme case like:
Deduction of 10-20% of total sales consideration, if booking is cancelled
Buyer can’t write a social media post against project, or else booking is cancelled
Buyer can only sale it back to the builder, before completion, and 10-20% will be deducted
Arbitrary transfer charges by the builder post possession
Even if property has appreciated during the period, buyer can’t sell it to third party as builder won’t transfer it or give NOC
Builder will charge delay penalty at 18-24% but give only INR 5 PSF in case of delay on his part
Date of applying for OC would be date of project completion for buyers and no further delay penalty
The Centre has now submitted the Model Builder Buyer Agreement to the Supreme Court (SC) for approval, following the court’s directive to establish core clauses for a standardised agreement applicable across all states.
On July 8, 2024, the SC emphasised the need for uniformity in Builder Buyer Agreements, noting that property buyers were being exploited by builders nationwide. This observation was made during the hearing of a Public Interest Litigation (PIL) filed by BJP leader and advocate Ashwini Upadhyay.
As of now SC has said that they also need to see the objections of CREDAI. As per the information available in the public domain, there are two parts of the Uniform BBA.
Part ‘A’ Clauses: Uniform clauses for Builder Buyer Agreements across the country.
Part ‘B’ Clauses: Clauses that States may insert, provided they do not contradict or dilute Part ‘A’ clauses and conform to the Real Estate (Regulation and Development) Act 2016.
Track2Realty View
While the Supreme Court bench led by Chief Justice D Y Chandrachud must be applauded for calling it out that home buyers across the country are being defrauded by the builders, it is to be seen to what extent the Model BBA has addressed the problem of arbitrary and unfair contracts, that is the base of thousands of consumer cases today.
It is also to be seen whether or not it has missed critical issues like,
Builder’s role after possession-should be uniform
Arbitrary Transfer charges
How long builder can keep at the max; playing one against the other
Ravi Sinha
Twitter: RaviTrack2Media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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