Q. Although MahaRERA has prescribed the model form of agreement between buyer and builder, such agreement is allowed to be modified and adapted on a case-bycase basis.The model agreement does not mark any clauses, which are mandatory and nonnegotiable. Hence, it is seen that many builders are seen modifying clauses in such an agreement, which is in violation of important RERA provisions. A common buyer is not so well-versed about his rights as well as builder’s obligations under RERA. How does the buyer protect himself if he has signed an agreement wherein important terms have been modified by the builder? -
Abhay Datar, Girgaum
A. The Real Estate (Regulation and Development) Act, framed by the Maharashtra government, has prescribed a model format of agreement of sale between buyer and builder with a view to protect the interest of buyers. It is true that the clauses in the model agreement are allowed to be modified by builders depending on facts and circumstances. Similarly, it is also true that the model agreement does not mark any clauses therein which are mandatory and non-negotiable. Hence, many builders are seen taking undue advantage of this gap and modifying or even omitting certain clauses to the detriment of the buyers.
You have a point that a common buyer is not well versed about his rights under RERA. To address this concern, MahaRERA has come out with a circular directing builders to show the deviations from the model agreement in a different colour so that the buyer knows about it. Still, the main issue remains unresolved. After coming across several instances of modifying mandatory clauses or omitting them altogether, MahaRERA was constrained to issue an ordercum-circular no. 38, dated December 13, 2022. The said order has noted that some builders have expanded the definition of “force majeure” to include many situations not contemplated by RERA under section 6 and rule 6 (a). This term “force majeure” has been explained under section 6. It relates to war, flood, drought, fire, cyclone, earthquake or any other natural calamity, affecting the regular development work. However, builders add many other situations in this clause to protect their own interest, which is not permissible.
Similarly, builders are seen modifying the mandatory clause of formation of allottees association as per section 11 (4) (e) of RERA and rule 9. As per this provision, the builder is bound to take steps to form an association of allottees as soon as more than 50% flats are booked. Further, section 17 mandates builders to execute conveyance within three months from the date of receipt of occupancy certificate. However, they have taken liberty to even modify this mandatory provision in their agreements with buyers as admitted by MahaRERA. Section 14 (3) puts another obligation on the builders to give guarantee of their workmanship for five years, which is a mandatory defect liability period.
MahaRERA has observed that some builders do not provide this clause at all in the agreement or include a period of less than five years. The MahaRERA authority has therefore declared in the afore-mentioned order that such modifications of mandatory clauses are not permissible and that all these terms, cited above, are non-negotiable irrespective of what is agreed between builder and buyer in the registered agreement. It has further declared all such modifications void ab initio and not binding on buyers. Thus, notwithstanding all such mischief by unscrupulous builders, MahaRERA has taken care to protect the gullible consumers.
There are a few other mandatory provisions that builders cannot dilute. For example, the interest payable by buyer to builder in case of delay in payment of any agreed installment and interest payable by builder to buyer in case of delayed possession is same; it is Reserve Bank of India’s max credit lending rate plus 2% annual rate. No builder can charge interest less or more than this prescribed formula. Furthermore, it is the right of every buyer, who wishes to continue in the project despite the delay, to receive interest at this prescribed rate for every month of delay till he/she gets possession. No builder can modify this clause of interest payment for delay. It is non-negotiable and has been so asserted even by the Supreme Court.
(Advocate Shirish V Deshpande is chairman, Mumbai Grahak Panchayat. Queries can be sent to him on email: shirish50@yahoo.com)
