Legal & Documents
What is a Builder-Buyer Agreement?
Forty pages, written by their lawyers, handed to you when you have already fallen in love with the flat. Here is where to look.
The short answer
The builder-buyer agreement is where every term of your purchase is fixed — price, carpet area, possession date, delay penalty, cancellation, specifications.
RERA improved it substantially, and several states now prescribe a model form. But the asymmetries persist, and they are usually in the clauses nobody reads. Under RERA, a builder cannot take more than 10% before this is signed and registered — so you still have leverage. Use it.
What it is
The contract between you and the developer for an under-construction unit. Legally, it is the agreement for sale — the terms differ regionally, but the document is the same one.
Under Section 13 of RERA it must be written, registered, and executed before the builder takes more than 10% of the price. Several states prescribe a model agreement that builders are required to follow.
The clauses to find
| Clause | What to look for |
|---|---|
| Carpet area | Must be stated, and must match the RERA filing. A statutory requirement, not a courtesy. |
| Possession date | A date, not 'approximately' or 'tentatively'. Compare it with the date declared on the RERA portal — they should match. |
| Delay penalty | The interest the builder pays you for late possession. Compare it with the interest you pay them. See below. |
| Grace period | Many agreements grant the builder an extra 6–12 months on top of the possession date, before any penalty starts. Find it. |
| Force majeure | Read how widely it's drafted. Overly broad clauses excuse almost any delay — 'any circumstance beyond the promoter's control' is doing a great deal of work. |
| Cancellation / forfeiture | How much do they keep if you withdraw? 'The entire booking amount' is common. Negotiate a cap. |
| Specifications | 'Or equivalent' means they can change any fitting for anything they call equivalent. Name the brands. |
| Amenities | Listed, with a commitment to deliver. Clubhouses have been known to evaporate. |
| Alteration of plans | RERA requires consent of two-thirds of allottees for changes to the sanctioned plan. Check the clause reflects that. |
| Undivided share of land | Your share of the land. It should be specified. |
| Payment schedule | Genuinely construction-linked, or front-loaded? Keep 5–10% for possession. |
The asymmetry test
Number one: the interest the builder charges you if you pay an instalment late.
Number two: the interest the builder pays you if they hand over possession late.
Under RERA these should be the same rate. In practice, many agreements still quietly favour the builder — 18% from you, a token amount from them.
Find both numbers. If they differ, say so, and ask for it to be corrected before you sign. It is a lawful request and a reasonable one.
Apply the same test to everything in the agreement. Ask: if the roles were reversed, would this clause read the same way? Where the answer is no, you have found something worth negotiating.
What you can actually change
More than people assume — because at this stage the builder has only 10% of your money and you can still walk.
- The forfeiture cap. A specified percentage, not "the entire booking amount".
- A loan-approval condition. Full refund if your home loan isn't sanctioned within X days.
- The delay penalty rate — matched to what they charge you.
- The grace period — shortened, or removed.
- Specific brands in the specifications, instead of "or equivalent".
- The final instalment payable on the Occupancy Certificate — one sentence, enormously valuable on the day it matters.
Some builders will refuse everything. That is their right — and their refusal tells you a great deal about how the next four years will go.
Before you sign
- Get a lawyer to read it. Yours, not theirs. A few thousand rupees on an ₹80 lakh purchase.
- Cross-check against the RERA filing — carpet area, possession date, approvals.
- Find the delay penalty and compare it with what they charge you.
- Find the grace period.
- Find the forfeiture clause.
- Find the force majeure clause and read how widely it's drafted.
- Check they haven't taken more than 10% before this document.
- Get every annexure. The specifications, the floor plan, the payment schedule, the amenities list. They are part of the contract, and they are where things quietly change.
“The final instalment of 10% shall be payable on production of the Occupancy Certificate.”
It costs nothing to ask for. And on the day you are standing in a finished flat with a cracked tile, a door that won't close and no OC — it is the only thing that will get any of it fixed.
Frequently asked questions
What is a builder-buyer agreement?
The contract between a developer and a buyer for an under-construction unit, setting out the price, carpet area, possession date, payment schedule and remedies for default. Legally it is the agreement for sale. Under RERA it must be written, registered, and executed before the builder takes more than 10% of the price.
Is the builder-buyer agreement negotiable?
More than people assume. At this stage the builder has only 10% of your money and you can still walk away. The forfeiture cap, a loan-approval condition, the delay penalty rate, the grace period, specific brands in the specifications, and making the final instalment payable on the Occupancy Certificate are all worth asking for.
What is the most important clause in a builder-buyer agreement?
Compare two numbers: the interest the builder charges you for a late instalment, and the interest they pay you for late possession. Under RERA these should match. In many agreements they still don't — and that single asymmetry tells you how the whole document is drafted.
What is a grace period in a builder-buyer agreement?
An additional period — often 6 to 12 months — that many agreements grant the builder on top of the declared possession date, before any delay penalty begins. It is easy to miss and it can effectively erase a year of your compensation. Find it, and try to shorten or remove it.
Should I get a lawyer to read the builder-buyer agreement?
Yes. It is forty pages, written by their lawyers, handed to you when you have already decided you want the flat. A few thousand rupees for an independent reading, on an Rs 80 lakh purchase, is the highest-return money in the entire transaction.