The Real Estate (Regulation and Development) Act (RERA) is a cornerstone in regulating the real estate sector in India. It aims to provide transparency, accountability, and efficient management of real estate projects. A critical element in this framework is the Proforma Agreement for Sale, which governs the relationship between promoters (developers) and allottees (buyers). This agreement outlines the terms, conditions, and obligations for both parties.
Recent Orders No. 63/2024, 60/2024, and 38/2022 have provided additional clarity on the non-negotiable clauses within the RERA proforma Agreement for Sale. These non-negotiable clauses ensure that the agreement complies with RERA’s statutory provisions and protects the rights of all parties involved. Any modification or deviation from these clauses may result in the agreement being deemed void.
As per Section 34 of the Act, MahaRERA holds the responsibility to:
MahaRERA is empowered to issue directions to promoters, real estate agents, and allottees under Section 37 of the Act and Regulation 38 of the General Regulations.
The Explanatory Note: Clarity on Modifications
According to the Explanatory Note in the model form of the agreement (Annexure 'A' of Rule 10(1) of the Rules), modifications are allowed to reflect the unique facts and circumstances of each case. However, the substance of certain clauses must remain intact to comply with the Act and its Regulations. Any clause deviating from these provisions would be considered void ab initio (invalid from the outset).
Promoters are allowed to modify the agreement, but any such changes must be clearly highlighted in a deviation sheet and made accessible to the allottee. Below, we examine the critical non-negotiable clauses that must remain unchanged.
1. Agent Clause (Clause 15A)
Explanation:
In the event that a Registered Real Estate Agent is involved in the transaction, the responsibility of paying any fees, commissions, or charges to the agent lies with either the Promoter, Allottee, or both, as mutually agreed upon in the terms of payment. The specific breakdown of who pays what must be detailed in the contract.
Purpose:
This clause ensures transparency and accountability in the agent’s role, making it clear who is responsible for what. It prevents ambiguity and potential disputes over agent payments, ensuring that both the Promoter and the Allottee know their obligations from the start.
2. Carpet Area Variation Clause (+/- 3%)
Explanation:
Once the construction of the building is complete and the Occupancy Certificate is issued, the Promoter must confirm the final carpet area allotted to the Allottee. Any variation in the carpet area should not exceed 3%. If the area reduces, the Promoter must refund the excess payment to the Allottee within 45 days, along with applicable interest. If the area increases, the Allottee is obligated to pay the additional amount.
Purpose:
This clause establishes a clear understanding between both parties regarding the measurement of the carpet area, preventing potential disagreements. It ensures fair adjustments based on the original price per square foot, providing financial clarity when changes to the area occur.
3. Termination on Default of Installments
Explanation:
If the Allottee fails to make payments for three consecutive installments, the Promoter may terminate the agreement after giving the Allottee a 15-day notice specifying the breach. If the breach is not rectified within this notice period, the agreement will be terminated, and the Promoter must refund the Allottee’s payments within 30 days, subject to necessary adjustments.
Purpose:
This clause provides a fair process for terminating agreements when the Allottee defaults on payments. It ensures that the Promoter has a clear and legally sound process to follow when handling payment defaults, while protecting the Allottee’s rights by mandating a notice period and the requirement of a refund.
4. Society Formation Clause
Explanation:
The Allottee is required to participate in the formation and registration of a society, association, or limited company with other allottees. After the registration, the Promoter must facilitate the transfer of rights to the society or company within three months.
Purpose:
This clause ensures that the property is managed collectively by the Allottees through a legal entity. It creates a formal structure for the ownership and management of the property, ensuring long-term stability and collaboration among the Allottees.
5. Conveyance of Project Land within 3 Months of Occupancy Certificate
Explanation:
The Promoter must execute a deed of conveyance in favor of the society or limited company within three months of receiving the Occupancy Certificate.
Purpose:
This ensures the legal transfer of land ownership to the Allottees’ society or representative body without unnecessary delays. It provides a clear timeline for the Promoter to hand over property rights, preventing ownership disputes or delay-related conflicts.
6. Defect Liability Period (5 Years)
Explanation:
If any structural or workmanship defects are reported within five years of possession, the Promoter must rectify the issues at no cost to the Allottee.
Purpose:
This clause guarantees that the Promoter is responsible for the quality of construction and that the Allottee does not bear the financial burden for issues that arise due to poor construction or workmanship. It ensures that the property meets the agreed-upon standards and that any defects are promptly addressed.
7. Conveyance Clause
Explanation:
The Promoter must execute the conveyance of title within three months from the date the Occupancy Certificate is issued.
Purpose:
This provides a clear timeline within which the Promoter is required to transfer ownership rights to the Allottee or the Allottee’s representative entity. This clause is important to ensure that ownership is transferred without unnecessary delays, giving the Allottee full control over their property.
8. Force Majeure Clause
Explanation:
The Promoter must limit the definition of force majeure to only those events that are statutorily recognized, such as natural disasters or other unforeseen circumstances beyond the control of the Promoter. The Promoter cannot expand this clause to include any events outside the statutory definition.
Purpose:
This ensures that the Promoter cannot use unrelated events to justify delays or non-performance. It defines the scope of situations where the Promoter is excused from liability due to events outside their control, providing clarity and protection for both parties.
9. Parking Clause (Circular No. 60)
Explanation:
The Allottee must purchase specific parking spaces (covered or open) from the Promoter for a specified price, with details on the size and location of the parking spaces outlined in the agreement.
Purpose:
This clause ensures that parking spaces are clearly defined and agreed upon, preventing misunderstandings regarding parking rights. It establishes clear terms around the parking facilities associated with the property, ensuring that both parties have a mutual understanding of the allocation and cost.
10. Advance Payment Clause (10% Payment as per Circular No. 60)
Explanation:
The Promoter cannot accept more than 10% advance payment from the Allottee before the agreement is executed. All advance payments must be deposited in RERA-designated accounts, ensuring the security and transparency of the funds.
Purpose:
This clause is designed to protect the Allottee by ensuring that any advance payments are securely held and that they do not exceed the prescribed limits. It establishes clear guidelines for the management of funds in accordance with regulatory standards.
11. Blanket Consent Clause
Explanation:
The Promoter cannot obtain a blanket consent from the Allottee for future changes, modifications, or revisions to the agreement. Any modifications to the agreement must be explicitly agreed upon by both parties.
Purpose:
This clause ensures that the integrity of the original agreement is maintained, protecting the Allottee from unilateral changes. Both parties must agree on any alterations, ensuring that neither the Promoter nor the Allottee is bound by changes they have not agreed to.
Implications of Modifying Non-Negotiable Clauses
If any of these clauses are modified or omitted in the agreement, the agreement may be considered void, and such modifications will not be binding on the Allottee. Promoters who violate these non-negotiable clauses will face legal consequences, and their registration applications may be rejected by the authorities.
Conclusion
RERA has put in place several non-negotiable clauses that promoters must adhere to in the Proforma Agreement for Sale. These clauses are designed to protect both parties in the transaction, ensuring fairness and transparency. Promoters must ensure that they do not modify or omit these clauses, as any deviation may result in the agreement being deemed invalid.
For both promoters and allottees, understanding these non-negotiable clauses is crucial to ensuring that the transaction is legally sound, fair, and transparent. By complying with RERA’s guidelines and maintaining these critical clauses, the real estate sector can foster trust and stability, benefiting both developers and homebuyers. However, it is also crucial for promoters to ensure that their interests are adequately protected under this framework.
To ensure full compliance and clarity in your real estate agreements, get in touch with our expert team at info@reraone.co.in. Our team is here to guide you, protect your interests, and help you understand your rights and obligations under the RERA framework. Avail our services to ensure your real estate transactions are legally sound and compliant with all regulatory requirements.
**Note on the Non-Deviable / Non-Negotiable Clauses
The clauses outlined above are merely an explanation of the key non-negotiable provisions as per the RERA Proforma Agreement for Sale. It is important to note that these clauses must be understood in the context of RERA’s regulations and any specific guidelines or circulars issued by RERA.
For further clarity or assistance, we strongly recommend referring to the relevant RERA circulars issued by the respective authority. Should you have any questions or need additional support, feel free to reach out to our team at info@reraone.co.in. We are here to help and provide professional services for all your RERA-related needs.**
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