From May 1, 2017, all new house purchases will come with three commitments -a date of possession in writing, full refund of the amount paid with 10.9% interest in case of delay beyond the committed date of possession and interest for the delayed period, in case the buyer doesn't want the refund.
The Centre on Wednesday notified a standard house purchase agreement that builders all over India will have to sign with homebuyers.
The notification under the recently enacted Real Estate Regulation Act will result in automatic termination of the sale agreement in case of a delay beyond the committed date of possession. The builder will have to make the refund within 45 days of the termination. Buyers who do not want to withdraw will be entitled to interest payment for the period of delay.
Guidelines notified by the Centre have provided for compensation in case of delayed delivery even for ongoing projects but the new sale agreements will apply only to projects launched from May 2017, when the law comes into force.
The new rules, however, exempt any interest liability on the developer for delay caused by force majeure conditions such as war, floods, cyclone, and drought, which are be yond the control of the promoter.
At the same time, if a buyer defaults in payments, the developer can terminate the contract. The number of delayed payments is something that builders and buyers can mutually decide. The builder will have flexibility in deducting the booking amount and interest liability from the repayment made to the buyer.
The sale agreement also stipulates that the total price of apartment or the plot shall be escalation free except when development charges are increased by the competent authorities.
Besides receiving timely payment from buyers, the agreement also provides for certain rights of promoters such as interest in case of delay in payments by buyer and additional payments for increase in carpet area up to 3% of area originally offered. The agreement also makes it mandatory for a developer to disclose the total number of apartments, carpet area, the number and area of garage or covered parking, and the date of grant of commencement certificate by the local authority , among others things.
In addition, the agreement has to provide the break-up of cost of construction, including the cost of the apartment, the proportionate cost of common area, preferential location charges and taxes and maintenance charges, among others.
While the law was enacted earlier this year, the urban development ministry notified the rules on Monday with states such as Uttar Pradesh and Gujarat following the Centre's path. While the Centre's notifications are in the nature of “model guidelines“, states can modify the rules. So far, sources said, Gujarat and UP have adopted the Centre's rules without modifying them. The UP government is planning to appoint a regulator by December 15 with the agency fully in place by April 30, a senior official said. Other pollbound states such as Punjab, Goa and Uttarakhand too are expected to put in place regulatory bodies by December.
Monday's notification by the Centre goes beyond delayed delivery to also allow buyers to seek rectification of structural defects within five years from the issue of occupancy certificate by local authorities.