Building your dream house is an exciting journey. Still, unfortunately, it can sometimes lead to disagreements and disputes between buyers and builders. Contractual difficulties, quality problems, and building delays are just a few possible causes of these disputes. Understanding your rights as a buyer and the important factors that can affect a builder-buyer dispute. In this blog, you explore five vital elements to help you navigate conflicts and protect your interests. But first know  what a builder-buyer agreement actually is:


Understanding Builder-Buyer Agreement

The builder-buyer agreement serves as the foundation of your relationship with the builder. It contains the terms and conditions of your real estate purchase and is a legal document. Before signing this agreement, you should carefully read and ensure you understand it. Look for clauses related to the possession date, the penalty for delays, payment schedules, quality standards, and dispute resolution mechanisms. Knowing your rights per the agreement will help you effectively address potential disputes. Let us look at the five vital components of a builder-buyer dispute.


5 Vital Components Of a Builder-Buyer Dispute 


Before the RERA came into effect, builder-buyer agreements often favoured the builders. Several problematic clauses could put buyers at a disadvantage. For example, some agreements included clauses that imposed high-interest penalties on buyers for delayed payments. At the same time, builders faced minimal penalties for project delays. Some provisions allowed builders to increase the property price despite delays, citing rising input costs. Additionally, builders could alter the apartment’s dimensions and request additional buyer payments. These agreements often included penalties for payment delays and additional charges for amenities based on the “real cost basis,” which could lead to unpleasant surprises for buyers.


After the implementation of RERA, there have been significant changes in the Builder Buyer Agreements. Builders must now provide a Pro-forma of the agreement, including the allotment letter, agreement for sale, and conveyance deed, during project registration. The agreement also specifies that the builder cannot demand more than 10% of the property’s value as earnest money after signing it. The law mandates that builders must provide the promised amenities. If they fail to do so, buyers have the right to seek correction and compensation. These changes aim to provide homebuyers more transparency, fairness, and protection.


The payment structure is another crucial aspect of a builder-buyer dispute. Familiarise yourself with the payment milestones mentioned in the agreement. Ensure the payment terms are clear, transparent, and aligned with the construction progress. Avoid making excessive advance payments without proper justification. In case of any payment-related disputes, refer to the agreement and maintain a record of all payment-related documents, receipts, and bank transactions.


The process usually starts with drafting a simple contract outlining the conditions of the sale. This contract includes the house price, the selling date, and the builder’s responsibilities to the buyer. Then, the agreement is discussed and revised to address any specific concerns or issues either party raises. This includes clarifying the builder’s warranty responsibilities and the buyer’s right to check the property or cancel the transaction before signing the agreement. Once both parties reach a mutual conclusion, they sign the legal document.  


The Supreme Court of India emphasised the significance of a standard Builder Buyer Agreement (BBA) and its role in protecting the interests of homebuyers. The court called for the collaboration of all stakeholders to establish a comprehensive proforma of the Builder Buyer Agreement following RERA provisions. It is crucial to have a uniform, RERA-approved format for the Builder Buyer Agreement to ensure the legally binding and safeguarding of homebuyers’ rights.


Summing Up 

Having a well-drafted Builder Buyer Agreement is crucial for a fair and equitable transaction, providing peace of mind to both builders and buyers.