SC says builder-buyer agreement important to protect homebuyers
The Supreme Court on Monday issued a notice to the Centre, asking it to frame model agreements for the builder-buyer and the agent-buyer deals to bring in more transparency in the real estate sector.
The model agreements must conform with the Real Estate (Regulation and Development) Act, 2016 to ensure protection for consumers, the apex court said.
A uniform builder-buyer agreement is required to be framed by the Centre to protect interests of lakhs of homebuyers, a Supreme Court bench led by Justice DY Chandrachud said.The move followed a public interest litigation (PIL) filed by advocate and BJP leader Ashwini Upadhyay, seeking a direction to all states to enforce a model builder-buyer agreement and a model agent-buyer agreement and to take steps to avoid “mental, physical and financial injury” to customers.
“Promoters, builders and agents use manifestly arbitrary one-sided agreements that do not place customers at an equal platform with them, which offends Articles 14, 15, 21 of the Constitution. There have been many cases of deliberate inordinate delays in handing over possession and customers lodge complaints but the police don’t register FIRs, citing arbitrary clauses of the agreement,” the PIL said.
“Builders issue revised delivery schedule again and again and adopt arbitrary unfair restrictive trade practices. All this amounts to criminal conspiracy, fraud, cheating, criminal breach of trust, dishonestly inducing delivery of the property, dishonest misappropriation of property and violation of corporate laws,” it added.
Issuing the notice on the Centre, Justice Chandrachud said: “This is an important issue on protection of buyers, often put on the back foot by clauses in agreements made by builders and a model BBA will keep builders in check.”The housing ministry had earlier brought out a model builder-buyer agreement for residential projects, but no state had adopted it fully. Only Union Territories have notified the agreement in complete alignment with the central rules.
Homebuyers have welcomed the move by the apex court. Abhay Upadhyay, president of The Forum for People’s Collective Efforts (FPCE), and member of the Central Advisory Council, RERA, told Moneycontrol that while a model builder-buyer agreement exists, most states have notified their own version to suit their requirements.
A Maharashtra BBA is different from a Karnataka BBA. Most BBAs followed by states are in violation of RERA. The Centre should notify a model BBA which should be applicable pan-India and should be in sync with RERA. This is a positive step and much required,” Upadhyay said.
Noida Federation of Apartment Owners’ Association President Rajiva Singh suggested that “all such transactions should be digitalised to create further protection”. Highlighting the plight of consumers, the NOFAA chief said: “Homebuyers have been exploited for long and it is time some radical changes are made.”
Talking to Moneycontrol, Siddharth Hariani, Partner, Phoenix Legal, said adequate flexibility would be required to be offered in these agreements, keeping in mind the city and state specific development regulations and laws, which would impact the specific project.
The petition was filed in October last year, and was listed for hearing on October 4. “Due to deliberate excessive delays in possession, real estate customers are not only suffering from mental and financial injury but also a brazen violation of their right to life and livelihood,” said the PIL filed through advocate Ashwani Kumar Dubey.
It contended that many developers across the country still follow a common practice of pre-launching a project without securing requisite approvals from the authorities and term it “soft launch” or “pre-launch”. This openly violates the law.
“It is necessary to state that registration of the project with the regulatory authority has been mandatory before it is launched for sale and for registration the basic pre-requisite is that the developer must have all the requisite approvals,” it said.
The petition has also sought directions to compensate buyers for losses incurred due to inordinate delays by developers.
