Agree­ments - read­ing be­tween the lines

While sign­ing the builder-buyer agree­ment, watch out for clauses re­lat­ing to over­heads, su­per area and de­liv­ery date

HT Estates - - Front Page - Sachin Sand­hir

fter the 2008 global fi­nan­cial cri­sis, the real es­tate sec­tor wit­nessed in­ad­e­quate liq­uid­ity. The prob­lem ag­gra­vated with do­mes­tic fi­nan­cial in­sti­tu­tions re­duc­ing ex­po­sure to the real es­tate sec­tor and dry­ing up of pri­vate cap­i­tal. With com­mer­cial projects (of­fice space and re­tail malls) tak­ing most of the brunt of the fi­nan­cial cri­sis, th­ese projects were worst off in se­cur­ing fund­ing.

Even if a de­vel­oper was able to get fund­ing for a com­mer­cial pro­ject from a fi­nan­cial in­sti­tu­tion, the

An un­der-con­struc­tion prop­erty in the pri­mary mar­ket is con­sid­ered sold when two agree­ing par­ties – the builder and the buyer –- de­cide to sign the builder-buyer agree­ment. While there could be a dif­fer­ence be­tween the quoted rate and the fi­nal ne­go­ti­ated rate, var­i­ous as­pects of builder­buyer agree­ments re­main the same across mar­kets in the coun­try. Th­ese are care­fully doc­u­mented and of­ten favour the builder/de­vel­oper and pro­tect his in­ter­ests.

How­ever, it is im­por­tant to un­der­stand the terms and con­di­tions spec­i­fied in the sale deed or the agree­ment.

If not un­der­stood prop­erly, clauses within the agree­ment could be mis­lead­ing and am­bigu­ous. More­over, your builder may profit from some of your misses. The big con­cern for any buyer is the pay­ment. Thus, un­der­stand­ing this part of your builder­buyer agree­ment is most im­por­tant. There are a few clauses that need spe­cial at­ten­tion. Here are some in­sights on the same.

Usu­ally, at the time of sign­ing the deed with your de­vel­oper, the ne­go­ti­ated price is given. In ad­di­tion it also men­tions the over­heads such as park­ing charges, fire fight­ing and elec­tri­fi­ca­tion charges, ex­ter­nal and in­ter­nal de­vel­op­ment charges and the pref­er­en­tial lo­ca­tion charges. Men­tion­ing th­ese over­heads and un­der­stand­ing them thor­oughly would save you from any sud­den pay­ments that may come your way.

Also, of­ten your de­vel­oper may put a small clause on the pos­si­ble change of su­per area in the fi­nal as­sess­ment of the en­tire con­struc­tion. The turn out of this clause could be dev­as­tat­ing. The clause says that area of the apart­ment can in­crease or de­crease, de­pend­ing on mar­ket con­di­tions and ar­chi­tec­tural changes, and price will be sub­ject to change ac­cord­ingly. And the size usu­ally in­creases! In the ab­sence of any reg­u­la­tions that could oth­er­wise mon­i­tor the scale of change, your de­vel­oper can charge you for the change. Most put a cap of up to 50 sq ft. Thus for the mis­cal­cu­la­tion of your de­vel­oper you may have to shell out more while at the time of pos­ses­sion. This ad­di­tional cost may be in the range of R2 lakh to R5 lakh for a mid-in­come house.

Builder-buyer agree­ments do not men­tion the ex­act time­lines of de­liv­ery. The word­ings put in the clause men­tions the num­ber of months for com­ple­tion. This could be mis­lead­ing. For any buyer it is dif­fi­cult to re­ally mon­i­tor the ex­act date of the com­mence­ment of the con­struc­tion.

More­over, be­cause of the un­cer­tain­ties within the real es­tate mar­ket, de­vel­op­ers have started putting a clause, which gives them an ad­di­tional six months for the com­ple­tion of the pro­ject due to the un­cer­tain­ties of the mar­ket. Of­ten termed as the grace pe­riod, most builders are us­ing the grace pe­riod to avoid any kinds of penalty due to a pos­si­ble de­lay in the fu­ture.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.