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Both promoter and buyer can terminate agreement in case of default by each other

Press Information Bureau, Government of India, Ministry of Housing and Urban Poverty Alleviation, 2nd November 2016

- Both promoter and buyer can terminate agreement in case of default by each other 
- Price of apartment escalation free under Agreement for Sale Rules notified 
- Date of delivery of possession to be specified in the Agreement; buyers shall take possession in 2 months 

To ensure timely implementation of real estate projects, the Real Estate (Regulation & Development) Agreement for Sale Rules, 2016 specify in black and white, the rights and obligations of both the promoters and buyers, including the right to terminate the agreement entered into by them in case of default by each other.

Agreement for Sale Rules notified by the Ministry of Housing & Urban Poverty Alleviation notified on October 31, 2016 seeks to eliminate the scope of such agreements being in favour of either of the parties. These Rules are applicable to the Union Territories of Andaman & Nicobar Islands, Dadra and Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh.


Under these Rules, a 20-page Agreement has been specified in which the date of delivery of possession to buyer is to be clearly mentioned and a schedule of payment as agreed upon by both parties is to be enclosed. Violation of these commitments is to be treated as default, in which case, promoter and buyer can terminate the agreement.

If the buyer defaults by not paying to the promoter for a specified number of demands made by promoter and such a default persists for an agreed upon number of months, promoter can terminate the agreement and cancel the allotment made to buyer. Promoter, can then deduct the booking amount and interest liabilities from the amount to be repaid to buyer.

If promote fails to give ready to move in possession of the apartment or fails to complete the project as per the stipulated time, amounting to default, buyer can then terminate the agreement and is entitled to refund of amount paid with interest in 45 days of such termination. In case, the buyer does not want to withdraw from such a delayed project, he needs to be paid interest till the project is completed. This however, does not apply if the development of project is delayed by force majeure conditions like war, floods, cyclone, drought, etc., which are beyond the control of promoter.

The Agreement to be entered into stipulates that the total price of apartment/plot shall be escalation free except when development charges are increased by the competent authorities.

Agreement provides for certain rights of promoters including timely payments as per the mutually agreed upon payment schedule, interest in case of delay in payments by buyer, additional payments for increase in carpet area up to 3% of corporate area originally offered to buyer and no liability on his part in case of delay in execution of project due to force majeure conditions.

The rights of buyers include timely delivery of possession of property by buyer, refund or payment of compensation with interest in case of delays, rectification of structural defects by promoter over a period of five years from the date of issuance of occupancy certificate etc.

The Agreement for Sale Rules, notified along with General Rules make it mandatory, disclosure of the number of apartment and the floor allotted to buyer, carpet area, number and the area of garage/covered parking, date of grant of commencement certificate by the competent authority, name of the authority that granted required approvals, Regulatory Authority with which the project is registered and such registration number, break up of cost including the cost of apartment, exclusive balcony or verandah, exclusive open terrace, proportionate cost of common area, preferential location charges, taxes and maintenance charges etc.

Underlining that timely execution of project is the essence of the Agreement to be entered in to, the Rules define the role and responsibilities of both buyers and promoters.

The Rules provide for amending the agreement with written consent of both the parties.
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