What is Builder Buyer Agreement? Format, Importance, Documents Required & More

A Builder Buyer Agreement is a crucial legal document that outlines the terms and conditions between a builder and a buyer during the purchase of a property.

If you are planning to buy an under-construction property or invest in a new home, it is important to under this legal document to protect your rights and avoid future disputes.

In this blog post, we will explore what BBA is in real estate, the importance of BBA, its key components, the difference between builder buyer agreement and sales deed, the documents required, and more. So, let us start this blog.

Also Read – 10 Tips for First Time Home Buyers

What is Builder Buyer Agreement in Real Estate?

A BBA in real estate is a legal contract between the buyer (homeowner) and the builder (developer) of a real estate project.

This contract outlines the terms of the transaction, including the payment schedule, possession date, responsibilities, and the specifications of the property being sold.

The implementation of the Builder Buyer Agreement helped homebuyers a lot. Earlier, we heard that the homeowner didn’t get the property they signed for.

A BBA in real estate acts as a safeguard for both homeowners and developers. It ensures transparency between the buyer and the builder during the process.

For the homebuyers, it ensures transparency regarding the builder’s commitments. While for the builder or developer, it protects against disputes that may arise during the construction or handover phase.

Importance of Builder Buyer Agreement (BBA) in Real Estate

1. Legal Protection for Both Parties

A BBA provides legal protection for both the builder and the buyers. In case of a dispute, this document serves as the primary evidence in court.

2. Defines Payment Terms

The agreement clearly outlines the payment schedule and any penalties for delayed payments or possession. This ensures there is no confusion about the cost or the payment timeline.

3. Specifies Property Details

This agreement includes detailed specifications about the property, such as the carpet area, layout, and amenities, ensuring that the buyer gets exactly what was promised by the developer.

4. Possession and Handover Timeline

It specifies the date of possession and outlines the process for the handover of the property. If the builder fails to deliver on time, this agreement can hold them accountable.

5. Provides Transparency on Maintenance and Other Charges

The Builder Buyer Agreement includes various details such as maintenance charges, parking space allocation, and other additional costs that the buyer should expect after taking possession.

Key Components of a Builder Buyer Agreement

A BBA is an essential legal document in real estate. It lays out the terms and conditions between the builder and the buyer.

Here are the key components of BBA in real estate:

1. Project Details: It includes the details of the project, such as its size, location, layout, specifications, etc.

2. Total Cost and Payment Plan: The agreement mentions the total cost of the property, including additional charges like maintenance, parking, or club membership.

It also outlines the payment schedule—whether it’s in instalments, linked to construction milestones, or a one-time payment.

3. Possession Date: It specifies when the builder promises to hand over possession of the property. If there’s a delay, it also mentions the penalty the builder must pay to the buyer.

4. Construction Standards: The builder is required to follow specific construction quality standards and adhere to the approved layout plans. Any deviations must be communicated and approved by the buyer.

5. Cancellation Clause: This section explains the terms under which either party can cancel the agreement, along with any refund policies or penalties involved.

6. Defect Liability Period: Builders are responsible for fixing any structural defects in the property for a specified period (usually 5 years), as per the Real Estate (Regulation and Development) Act (RERA).

7. Force Majeure Clause: This covers unexpected delays due to uncontrollable circumstances, like natural disasters or government actions, and how they’ll be handled.

8. Maintenance and Handover: The agreement specifies when and how the builder will transfer the maintenance of the property or society to a Resident Welfare Association (RWA). It may also include advance maintenance charges.

9. Legal Compliance: It ensures that the builder has obtained all required approvals and clearances, such as environmental clearance, RERA registration, and completion certificate.

10. Dispute Resolution: This section defines how disputes between the buyer and builder will be resolved—whether through arbitration, courts, or other legal means.

Builder Buyer Agreement Format

It consists various details like:

• Property Details
• Name of Buyer
• Area of the flat
• Name of Developer
• Payment Schedule
• Construction and Quality Assurance
• Cancellation and Refund Policy

Documents Required for Builder Buyer Agreement in India

There are several essential documents for BBA, such as

For Buyer:

• Identity Proof
• Address Proof
• Income Proof
• Bank Statements
• Loan Sanction Letter (if applicable)
• Photographs

For Builder:

• RERA Registration Certificate
• Title Deed of the Property
• Approved Building Plans
• No Objection Certificates (NOCs)
• Completion Certificate
• Encumbrance Certificate
• Project Brochure/Details

You should thoroughly review the document before signing, verify all supporting documents, and seek legal advice if needed.

What is the difference between the Builder Buyer Agreement and Sale Deed?

Builder-Buyer Agreement (BBA)	Sale Deed
It is legal agreement between the builder and the buyer outlining the terms of the property purchase	It is a legal document that transfers ownership of the property from the builder/seller to the buyer.
A BBA is Executed at the time of booking or purchasing an under-construction property.	Sale deed is executed after full payment is made and the property is ready for registration.
It does not transfer ownership rights to the buyer.	While it transfers the full ownership rights to the buyer.

What happens if a Builder Buyer Agreement is Lost?

A BBA is an important legal document, but if lost, you can face various inconveniences. Here are some essential steps you can take if you lose it:

• Contact the Builder/Developer
• Check with the Notary/Advocate
• You can File an FIR
• You can go to Builder’s Office and ask for a copy
• Consult Legal Assistance

Things to Keep in Mind Before Signing a Builder Buyer Agreement

It is essential to review the document properly before signing to ensure everything is in order and protects your interests. Here are key things to keep in mind:

• Verify Builder’s Credentials
• You must check the property details properly (size, layout, materials, etc.) as mentioned in the agreement.
• Review the payment schedule. It should be tied to specific construction milestones.
• The agreement should mention a precise possession date.
• The builder must provide environmental clearances, fire safety approvals, and other legal approvals from local authorities.
• You should review the terms for cancellation and refund policy in case you want to withdraw from the agreement before possession.
• Ensure the agreement specifies how disputes will be resolved, whether through arbitration, mediation, or court.

Builder Buyer Agreement Before RERA

Before the Real Estate Regulation and Development Act (RERA) in 2016, the BBA was largely unregulated, offering less protection and transparency to homebuyers.

The agreement primarily includes terms of the property purchase, including payment schedules, project timelines, and possession dates.

However, without a strong legal framework, buyers often face various issues and challenges, such as delayed possession, poor construction quality, and unclear or one-sided contract terms.

Even the builder was not accountable for any delay, and there were no penalties for failing to meet project timelines.

Also Read – Best Residential Projects in Gurgaon 

Builder Buyer Agreement After RERA

However, after the implementation of RERA in 2016, the BBA became more transparent and buyer-friendly. It ensures transparency, accountability, and fairness in real estate transactions.

The RERA mandates registration of the agreement, ensures timely delivery, and holds builders accountable for construction quality. If the builder does not give possession on time, they may face penalties.

Conclusion

In Conclusion, a builder buyer agreement acts as a safeguard for both buyers and builders.

For buyers, this document is a legal assurance of what they are entitled to receive, including timely possession, project details, construction quality, and compliance with agreed-upon terms.

Before signing, you must review the document and verify all the documents.

In the end, this agreement is your assurance that your dream home or investment is on the right track. Always proceed with care and confidence!

At Larisa Realtech, we specialize in guiding buyers through every step of their real estate journey, ensuring a hassle-free and secure experience. Let us help you make your dream a reality!

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FAQs

What happens if the builder delays possession?

If the builder fails to deliver the property on time, you can claim compensation as per the Builder-Buyer Agreement. Many agreements include penalty clauses for delayed possession, which can help you recover some of the losses.

What is the fee for builder buyer agreement in India?

The fee for a Builder-Buyer Agreement in India typically includes stamp duty (5-7% of the property value) and registration charges (1% of the agreement value). It may consist of additional charges, and it depends on location.

What is the difference between the Builder-Buyer Agreement and Sale Deed?

The BBA outlines the terms of purchase and construction, but it does not transfer ownership. On the other hand, the Sale Deed legally transfers ownership of the property once full payment is made and the property is ready.

Can a builder cancel a purchase agreement?

Yes, a builder can cancel a purchase agreement under certain circumstances, such as if the buyer fails to make timely payments or breaches any other terms of the contract.