Builder-Buyer Agreement in Bangalore: Clause-by-Clause Checks Before Signing
Most disputes between flat buyers and builders in Bangalore trace back to a few lines in one contract. That contract is the builder-buyer agreement, which the statute calls the agreement for sale. What follows is a walk through those lines, with the protection that RERA and Karnataka's rules attach to each.
Is the Agreement the Same as Ownership?
Ownership comes later. The agreement is only a promise to sell, with terms attached. Title moves to the buyer once a sale deed is signed and entered in the land records, which usually happens near handover.
Until that day, the signed text is what an authority or a court examines first. Brochure claims and verbal assurances from the sales team carry little weight beside it. A promised clubhouse, a fitting brand or a parking slot is safe only if the agreement names it.
How Much Can Be Paid Before Registration?
RERA's Section 13 sets the ceiling at one-tenth of the flat's cost. A builder may take that much as a booking amount, but nothing more until the agreement has been signed and registered.
That section also decides what the agreement has to include:
- A description of the project, the tower and the flat, with specifications
- Works of development, inside and outside the building
- When and how each payment is due
- The promised handover date
- Interest owed by whichever side defaults
A request for a quarter of the price on a booking form alone is out of line. Hold payments at the ceiling, read the draft, and pay the rest only once the registration is done.
What Is the Karnataka Model Agreement?
The state rules include a standard format for these agreements. Every registered project has a pro forma lodged with the authority, and the authority publishes it on the project's record online.
Lay the builder's draft beside that pro forma. Extra clauses can stay if they respect the Act. If one strips away a buyer's statutory right, the authority can be asked to set it aside.
What Should the Price Clauses Say?
Two clauses decide what the buyer really pays: the area being sold and the total being charged.
Area of the flat
RERA measures carpet area as the net floor space inside the flat, internal partitions included. It excludes the outer walls, utility shafts, a balcony or verandah reserved for the flat, and a private open terrace. The agreement should give the figure in sq ft, with balcony and terrace sizes shown apart.
The built area is verified at completion. So the clause should say how the price will be corrected if the measurement differs, and in how many days any extra money comes back. Attach the flat's own floor plan.
One total, no surprises
Ask for a single total with its components: base rate, parking, clubhouse, deposits, GST and any other tax. Under the model format the total stays put, apart from tax changes or charges set by an authority. Wording that lets the builder add unnamed charges later needs to be deleted or spelled out.
The buyer also bears stamp duty and registration separately. For a Karnataka home above Rs. 45 Lakhs, duty is 5%, rising to 5.6% after cess and surcharge, and registration is 2%. The EMI calculator shows these costs next to the monthly instalment.
When Are Instalments Due?
A payment table normally closes the agreement. With a construction-linked plan, each demand follows a completed stage such as the foundation, a slab or the finishing works, so what is paid tracks what is built.
Look for the trigger of each demand, the days of notice allowed, and the charge for lateness. Karnataka's rules make that charge equal to the builder's own liability for a delay.
What Happens If Possession Is Late?
The clause needs an actual date, not a "tentative" one or one qualified by approvals. Cross-check it with the completion date recorded for the project with Karnataka RERA.
When that date passes, Section 18 lets the buyer choose. One option is to leave and receive the full amount back with interest. The other is to remain and get interest monthly until the keys are handed over.
Rule 16 of Karnataka's RERA rules fixes the rate at SBI's highest MCLR plus 2 percentage points, and a buyer who pays an instalment late is charged the same. Drafts that pay the buyer a small sum per sq ft for delay, yet charge 18% or 24% on late instalments, ignore that parity.
Force majeure should cover only things like floods, earthquakes or war. Labour shortages, costlier steel and delays in the builder's own permissions are ordinary business risks.
Can the Builder Change the Plan?
Only with consent, says Section 14. Alterations to a particular flat's sanctioned plan, layout or specifications need that owner's prior agreement. Larger changes to approved plans or shared spaces need prior written approval from two-thirds or more of the allottees.
Watch for a clause granting permission in advance for new floors, towers or revisions of any kind. It can later be cited as consent. Have it removed, or confined to minor alterations an authority insists on.
How Does Cancellation Work?
Section 11 allows a promoter to cancel an allotment only as the agreement provides. The text should therefore state how many instalments must lapse and what written notices precede termination.
If the buyer withdraws, the builder may deduct only a stated share of the price. Forfeiting every rupee invites a challenge. Rule 17 says a refund that is due must be paid in sixty days, with interest.
Who Fixes Defects, and for How Long?
For five years after possession, the builder answers for flaws in structural soundness, workmanship, material quality and the services supplied, as Section 14(3) provides. If the buyer reports one within that window, repair must be done in thirty days at the builder's cost.
Look also at how the building is handed to its owners. Under Section 17, each flat gets a registered conveyance deed that carries a share of the common areas, and those areas go to the owners' association. Section 19 expects the buyer to take possession in two months after the occupancy certificate, so maintenance charges from that point matter.
Which Wording Leans Towards the Builder?
Here is a side-by-side of common drafting and the legal position.
| Subject | Typical draft | What RERA or the rules say |
|---|---|---|
| Handover | "Tentative" date, open-ended grace | A definite date; refund or interest if missed (Section 18) |
| Late-payment rate | High for the buyer, token for the builder | One rate for both (Rule 16) |
| Price | Power to add charges | A stated total, varying only with taxes |
| Plan revisions | Permission given in advance | The buyer's own prior consent, or that of two-thirds of owners (Section 14) |
| Defect cover | One or two years | Five years (Section 14) |
| Cancellation | Everything paid is lost | As the agreement provides; refund within two months (Rule 17) |
A Checklist Before the Pen Touches Paper
Corrections cost little before registration and a great deal after. A workable order:
- Obtain the full draft with all annexures before paying anything beyond the booking amount.
- Fetch the project's filed pro forma from the state authority's website and compare the two.
- Tally the flat number, carpet area, parking slot and handover date with the cost sheet and registration record.
- Email the builder a list of every clause that departs from the points above.
- Have a property lawyer vet the final text and the title papers.
- Register the agreement and file the copy with all receipts.
Our advisers can help buyers across Bangalore collect these papers for a project before booking. Write to us on the contact page with the project name.
