Builder Buyer Agreement Under RERA: Clauses Buyers Miss

A buyer books a flat in a project advertised for possession in December 2024. The builder buyer agreement says possession within "approximately 36 months from the date of commencement of construction", a date the buyer cannot verify. In 2026 the flat is still unfinished, the builder blames approval delays, and the compensation clause in the agreement is capped at a token amount. The buyer signed a 40-page document without reading clause 14. Understanding the builder buyer agreement rera framework would have changed the outcome.

Under the Real Estate (Regulation and Development) Act, 2016, this situation should be very different. RERA mandates a written agreement, fixes the consequences of delay, and limits how far a developer can shift risk onto the buyer. But protection depends on knowing which clauses are statutorily required and which are the developer's own drafting choices. This guide explains the builder buyer agreement rera framework, the clauses buyers consistently miss, and what to do before signing.

What the builder buyer agreement rera framework requires

RERA applies to real estate projects that are under construction or being developed for sale, subject to the thresholds in the Act. A project must be registered with the state RERA authority before it is advertised or sold. Once a buyer books a unit, the developer must enter into a written agreement for sale, and that agreement must be registered.

Under Section 13 of RERA, a developer cannot accept more than ten per cent of the cost of the apartment, plot or building as an advance or application fee without first entering into a written agreement for sale with the buyer. The agreement must be registered under the Registration Act, 1908. This is the provision that gives the buyer the document itself as a right, rather than as a favour.

The agreement must state the particulars required by the Act and the rules made under it — the carpet area, the total cost, the payment schedule, the possession date, and the rate of interest payable by either party on default. The state rules prescribe the form and the mandatory disclosures. A developer's standard agreement that omits these particulars is not compliant.

Carpet area: the definition that decides the price

RERA defines carpet area as the net usable floor area of an apartment, excluding the external walls, the area covered by internal partition walls, the balcony and open terrace area. The definition is specific and it is mandatory for the agreement to state the carpet area of the unit.

Many developers quote super built-up area or built-up area in marketing material and then state the carpet area only in a schedule. The difference can be twenty-five to thirty-five per cent. Since the total price is calculated on the area, the definition matters directly to the money paid. The agreement should state the carpet area as defined in RERA, the price per unit of area, and the total consideration based on it.

If the developer changes the carpet area after the agreement, RERA requires the buyer's written consent for certain changes, and provides for adjustment of the price where the area increases beyond the permitted variation. A clause allowing the developer to vary the area without consent, and to charge for the increase at the time of possession, is a clause to negotiate hard.

Possession date and delay compensation

The possession clause is the most important commercial term in the agreement. RERA requires the agreement to state the date by which the developer will complete the project and offer possession. A vague phrase like "within a reasonable period" or "on completion of construction" is not a possession date.

What the Act provides on delay

Under Section 18 of RERA, if the developer fails to complete or hand over possession by the date stated in the agreement, the buyer can withdraw from the project and claim a refund of the amount paid with interest, or continue with the project and claim interest for every month of delay. The rate of interest is prescribed under the state rules, typically at or above the marginal cost of funds-based lending rate of the State Bank of India plus a spread.

The Act also imposes a corresponding obligation on the buyer: if the buyer fails to pay according to the agreement or fails to take possession, the developer can charge interest at the same rate. Symmetry is a feature of RERA, and an agreement that imposes heavy interest on the buyer but a token compensation on the developer is not in the spirit of the statute.

The "force majeure" extension clause

Almost every builder buyer agreement contains a force majeure clause that extends the possession date. A properly drafted clause covers events genuinely beyond the developer's control — natural disasters, statutory bans, court orders. An overbroad clause covering "delay in approvals", "shortage of materials", "labour issues" or "any other reason beyond the developer's control" converts a fixed date into an open-ended one.

RERA allows extension of the project timeline only on an application to the authority on grounds set out in the Act, such as force majeure, and the authority can impose conditions. A developer who extends the date unilaterally through a contract clause rather than through the authority is attempting to bypass the statutory process. Read the clause, count the extensions it allows, and negotiate a cap on the total extension period.

Payment schedule and the ten per cent rule

RERA requires that the payment schedule in the agreement be linked to the stages of construction, and that the developer maintain a separate escrow account into which a prescribed proportion of the amounts realised from buyers must be deposited. The escrow requirement is intended to ensure that money collected for one project is used for that project, and not diverted.

The agreement should set out each construction stage and the percentage of the total price payable at that stage. A schedule that demands seventy per cent of the price by the time the plinth is complete places the buyer's money at risk and departs from the construction-linked model. Where a buyer takes a home loan, the disbursement schedule must be aligned with the agreement's payment stages, or the buyer will be paying interest on money released ahead of construction.

Also check what the "total cost" includes. RERA distinguishes the cost of the apartment from the cost of the apartment including statutory charges. The agreement should itemise the base price, the cost of amenities, parking charges, statutory charges and registration costs. Developers sometimes quote a headline price and add items later in the cost sheet.

Clauses buyers consistently miss

• Chargeable area versus carpet area. The price is quoted on one definition and the agreement states another.
• Unilateral increase in area. The developer reserves the right to increase the size and charge the buyer at the time of possession.
• Force majeure extensions. An open-ended list of events that pushes the possession date without penalty.
• Capped delay compensation. A fixed amount per month that is far below the statutory interest rate.
• Transfer charges. A fee imposed on resale before registration, sometimes a percentage of the sale value.
• Maintenance advance. Collection of several years' maintenance before possession, or by a developer-nominated society without transparency.
• Delay in formation of the association. The developer retains control of the society long after the majority of units are sold.
• Defect liability period. A clause reducing the statutory period for structural defects.
• Arbitration clause favouring the developer. Naming an arbitrator appointed by the developer, or a seat that is inconvenient for the buyer.
• Waiver of statutory rights. A clause stating that the buyer has read and waived rights under RERA.

Contract clause versus statutory position

When a clause in the agreement conflicts with RERA, the statute generally prevails. The table below sets out the common drafting positions buyers encounter and the statutory benchmark to compare them against.

Statutory protections the agreement cannot override

Some terms in a builder buyer agreement are governed by statute and cannot be contracted away. The statutory rate of interest on delay under Section 18 is one. The five-year defect liability period under Section 14, during which the developer must rectify structural defects, is another. The obligation to obtain an occupancy certificate before handing over possession cannot be waived by agreement.

The buyer's right to a refund on withdrawal for delay, the right to complain to the RERA authority, and the right to approach the adjudicating officer for compensation are statutory remedies. A clause that requires the buyer to give up these remedies or to accept a token compensation as full and final settlement should be resisted and, where already signed, reviewed with a lawyer.

Section 14 also requires that the developer not make any addition or alteration to the sanctioned plans, layout or amenities without the prior written consent of the buyers. A clause allowing the developer to change amenities without consent is contrary to the Act.

Stamp duty and registration of the agreement

The agreement for sale is stamped and registered under the state stamp law and the Registration Act, 1908. The stamp duty is a state subject and the rate differs from state to state; some states charge a percentage of the consideration while others prescribe a fixed amount for an agreement for sale. Registration charges apply separately.

Usually the buyer bears the stamp duty and registration cost of the agreement, and the developer arranges the registration or provides the copy. The buyer should insist on receiving a registered copy of the agreement, not merely a photocopy or a notarised copy. The registered copy is the document that can be produced before the RERA authority in a complaint.

Registration also fixes the date of the agreement, which matters for computing the possession timeline and the delay compensation. An unregistered agreement leaves the buyer arguing about when the timeline began.

What to do before signing

• Check the RERA registration number and verify the project's registration, the sanctioned plans, the timeline and the disclosures on the authority's website.
• Read the possession clause and the force majeure clause together. Calculate the worst-case date and decide whether you can live with it.
• Compare the carpet area in the agreement with the area in the marketing material and the cost sheet.
• Check the delay compensation rate against the statutory rate in the state rules.
• Itemise every cost. Confirm what the base price includes and what is charged separately.
• Ask for the title documents for the land, the approvals and the commencement certificate.
• Negotiate the arbitration clause so that the seat is neutral and the appointment is not controlled by the developer.
• Do not sign on the day of booking. Ask for a copy of the draft agreement, take it home, and get it reviewed.

Frequently asked questions

Is a builder buyer agreement mandatory under RERA?

Yes. Section 13 of RERA requires a written, registered agreement for sale, and the developer cannot accept more than ten per cent of the cost as advance before it is executed. An agreement that is not registered does not meet the statutory requirement.

What compensation is payable if possession is delayed?

Under Section 18 of RERA, the buyer can claim interest for every month of delay at the rate prescribed in the state rules, or withdraw and claim refund with interest. A contractual cap below the statutory rate is generally challenged as contrary to the Act.

Can the builder increase the carpet area and charge more?

RERA permits limited variation and requires the buyer's consent for additions or alterations to sanctioned plans. Where the area increases beyond the permitted variation, the price adjustment follows the Act and the state rules. A blanket clause allowing the developer to charge for any increase without consent should be resisted.

How long is the defect liability period for a new flat?

Section 14 of RERA provides a five-year period from the date of possession during which the developer must rectify structural defects, defects in workmanship, and defects in services provided. A shorter period in the agreement does not override the statute.

Can I sell my flat before possession?

It depends on the agreement and the developer's consent clause. Most agreements require prior written consent and a transfer fee. Some state rules and RERA provisions restrict transfer before the conveyance deed. Check both the agreement and the local rules before entering into a resale.

What can I do if the builder hands over possession without an occupancy certificate?

RERA requires possession to be offered only after the occupancy certificate is obtained. A buyer can complain to the RERA authority and can decline to take possession until the certificate is provided. Accepting possession without it may affect the buyer's ability to obtain utilities and the society's registration.

Drafting Support

Our drafting team reviews builder buyer agreements against the RERA requirements for the project's state, flags non-compliant clauses and prepares the rider amendments a buyer can propose before signing. Send us the draft agreement and the project registration number, and we will return a clause-by-clause note.