It will be compulsory for builders and homebuyers to sign a tripartite ‘sale agreement’ when purchasing in all new housing developments within Noida. “The Noida Authority board on Saturday made a basic change in the way real estate transactions are conducted in the city, through which it will know who a flat has been sold to at the time the first payment is made and not at the time of completion, like it is now,” stated a Times of India news report.
The announcement made by CEO Lokesh M following the board meeting led by chief secretary Manoj Kumar Singh will increase transparency during transactions and help eliminate questionable sales in a city where the real estate market is significantly troubled and has faced some of the country’s most notable misconduct.
How it will impact homebuyers
According to officials speaking to Times of India, this measure will safeguard the interests of homebuyers, enhance the government’s stamp duty income, and provide improved supervision of project development.
The ‘sale agreement’, essentially a preliminary registry before the formal one, will be prepared according to Section 13 of RERA. This section stipulates that a promoter cannot demand more than 10% of the total cost of an apartment, plot, or building as an advance payment or application fee unless a written sale agreement has been established first.
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“In light of this, a decision has been taken that a tripartite agreement between the buyer, builder and Noida Authority will be executed in the registry department once the homebuyer pays 10% of a property’s amount,” Lokesh M said, as reported by Times of India. Throughout this agreement, an initial payment of 2% of the stamp duty will be made, while the remainder is due upon possession and at the final registration.
The government-certified agreement provides buyers with solid proof of their legitimacy at the time of the first payment, ensuring their names are recorded in the stamp and registry department. This mechanism helps prevent developers from reselling the same unit to multiple buyers or canceling sales for arbitrary reasons, such as payment delays or missed project deadlines, according to industry experts. In the past, numerous cases have surfaced where developers fraudulently sold the same flat to different buyers, with the problem only coming to light when purchasers attempted to take possession.
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Transactions can also occur under the radar in the opposite direction-as a buyer may sell a unit back to the builder or another party before taking possession, thereby avoiding stamp duty. This allows for the same unit to be resold without the government collecting any taxes. However, an official noted that this practice will no longer be possible once a tripartite agreement is established.
When a deal is finalized, sale agreements are still signed, but they occur between a builder and a purchaser. Typically, buyers and developers now start with an initial agreement on a Rs 100 stamp paper. The government’s role in the registration process, through the Noida Authority, only starts after the developer has secured an occupancy certificate (OC) and completion certificate (CC) for the property. A ‘sale agreement’ serves as legal evidence of the property purchase transaction and contains crucial information such as property details, total cost, payment terms, and possession date.
What is the sale agreement?
An agreement to sell is a crucial initial step in formalizing the verbal agreement between a property buyer and seller. It not only sets a timeline for when the transaction should be finalized but also details the terms and conditions that safeguard both parties. This agreement acts as a roadmap for how the property transaction will unfold. When purchasing a property, it’s essential to be particularly vigilant, as the process can be riddled with potential legal challenges at every turn.
