Before Buying the Property Make Sure You Know About These Clauses in the Agreement
Jun 03, 2017 Legal Guidance
Buying a house is a dream. But the dream can turn into a nightmare if the deal goes wrong. To make sure everything goes smoothly, it is a buyer’s responsibility to read the agreement carefully before signing. Recently the Delhi court has slammed a builder penalty of Rs 630 crore for the fraudulent practices.
One thing every buyer should know is that not all developers have the best interest of the buyers in their agreement, even the most reputed ones. It is better to read the agreement carefully. The legal jargons can be difficult for everyone to understand; in that case, it is wise to hire a lawyer to help you in understanding the clauses of the agreement.
We discuss few clauses that every buyer should be aware of:
1. The right to change the layout without notice:
The Supreme Court has ordered the developers that they cannot change the layout without notifying each and every buyer about it. The notice should be issued by a competent authority. The said authority will also be liable to issue public grievances.
2. Right to change the size of property:
If your clause states that the builder can change the size of the property without notice, it is something for you to worry. If the developer decides to decrease the size of the property, then you might have to settle for the smaller size home. Alternatively, if the builder decides to increase the size of the property, then you might end up paying more money than assumed.
3. Preferential location charges:
Buyers pay more money to pay for the location of the property. If the developer is not able to book the property buyer wanted and hand over another one, then he could get the refund at the end without interest, according to the clause. CCI considers it an unfair move. If the developer cannot book the property of your choice, then they have no right to claim money upfront.
4. Ownership rights of a buyer to be decided by the developer:
When any buyer buys the property, he also buys a certain portion of land. For example, if you buy a property built on 3500 sq ft with five flats of 1000 sq ft area. The undivided share is 700 sq ft. make sure you know about the area you are paying for.
5. Linking projects:
According to the real estate laws, the developer cannot use the money for the particular project to fund another project. Every developer is supposed to put 70 percent of the money from the buyers in an escrow account which will not be accessible for other projects.
6. Buyers will pay an undisclosed amount as development charges:
There shouldn’t be any hidden clause for the home buyers and everything should be mentioned in the agreement.
7. No exit for buyers:
You should be able to exit the agreement if the developer is not keeping his promises without paying any extra charge.
8. The developer can abandon project without compensation:
Many buyers suffer from this as few developers fail to complete the project and leave it midway. This is illegal. The developers are supposed to pay the compensation.
If any of it is mentioned in your clause, you might want to check it again with your developer and sort it out.
One thing every buyer should know is that not all developers have the best interest of the buyers in their agreement, even the most reputed ones. It is better to read the agreement carefully. The legal jargons can be difficult for everyone to understand; in that case, it is wise to hire a lawyer to help you in understanding the clauses of the agreement.
We discuss few clauses that every buyer should be aware of:
1. The right to change the layout without notice:
The Supreme Court has ordered the developers that they cannot change the layout without notifying each and every buyer about it. The notice should be issued by a competent authority. The said authority will also be liable to issue public grievances.
2. Right to change the size of property:
If your clause states that the builder can change the size of the property without notice, it is something for you to worry. If the developer decides to decrease the size of the property, then you might have to settle for the smaller size home. Alternatively, if the builder decides to increase the size of the property, then you might end up paying more money than assumed.
3. Preferential location charges:
Buyers pay more money to pay for the location of the property. If the developer is not able to book the property buyer wanted and hand over another one, then he could get the refund at the end without interest, according to the clause. CCI considers it an unfair move. If the developer cannot book the property of your choice, then they have no right to claim money upfront.
4. Ownership rights of a buyer to be decided by the developer:
When any buyer buys the property, he also buys a certain portion of land. For example, if you buy a property built on 3500 sq ft with five flats of 1000 sq ft area. The undivided share is 700 sq ft. make sure you know about the area you are paying for.
5. Linking projects:
According to the real estate laws, the developer cannot use the money for the particular project to fund another project. Every developer is supposed to put 70 percent of the money from the buyers in an escrow account which will not be accessible for other projects.
6. Buyers will pay an undisclosed amount as development charges:
There shouldn’t be any hidden clause for the home buyers and everything should be mentioned in the agreement.
7. No exit for buyers:
You should be able to exit the agreement if the developer is not keeping his promises without paying any extra charge.
8. The developer can abandon project without compensation:
Many buyers suffer from this as few developers fail to complete the project and leave it midway. This is illegal. The developers are supposed to pay the compensation.
If any of it is mentioned in your clause, you might want to check it again with your developer and sort it out.
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