New Flat/Property Agreement Review

When a flat is purchased from a builder, a lengthy agreement has to be signed. This agreement contains many clauses like details of the residential unit, its consideration, escalation in price, mode of payment, rate of interest in case of late payment, forfeiture of some amount in case of termination of the agreement, utilization of FSI and TDR by the builder, formation of co-operative society or condominium, utilization of internal amenities, etc. It is important to read and understand the document thoroughly, study the relevant legal provisions, negotiate the terms and conditions, clear all doubts, avoid any mistakes, and ultimately avoid future stress.

Important points to consider while reviewing an Agreement:

The authenticity of the project:

Information with respect to a project shall be available on the MahaRERA website if RERA Act is applicable to such project. Every minute detail like information of the builder/promoter, commencement date and completion date of the project, title of the project land and number of residential units to be built, registered CA, engineers, architects, real estate agents etc. is accessible. All permissions from the Government required for a development project are uploaded on the MahaRera website by the builder/promoter. Therefore, the authenticity of a project can be cross-checked by perusing the clauses and recitals in such agreement in comparison with the information available on the MahaRERA website.

Unfavorable clauses:

An agreement generally contains clauses such as – the rate of interest in case of late payment, forfeiture of some amount in case of termination of the agreement, etc. There may be some clauses which are drafted in such a manner that in case of any dispute in the future, the Flat purchaser may face losses or inconvenience. After signing such an agreement, it is difficult to raise queries with respect to these clauses. Therefore, it is important to examine whether these clauses are as per applicable laws and are reasonable.

Compliance with law:

It is also important to see whether the agreement clauses put by the Builder / Promoter are in compliance with the governing laws such as the Real Estate (Regulation and Development) Act, 2016 (“RERA”), the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and disclosure on Website) Rules, 2017, etc.

Mandatory Permissions and Sanctions:

It is significant to check whether a builder/promoter has obtained required permissions from the Government like NA Order, Commencement Certificate, etc.

Avoiding mistakes:

It is important to ensure that an agreement does not contain any inadvertent mistakes such as spelling or grammatical mistakes, which may create ambiguity while interpreting any clause. A minute / petty mistake can also create a dispute with respect to the terms and conditions stipulated in such an agreement.

Pendency of litigation:

It may happen in some cases, that the land upon which construction of the project is going on, is under litigation and a suit or claim is pending on such land in the Court of law. Therefore, it is important to verify whether any litigation is pending on such land and further check whether any adverse Orders have been passed in such a suit.