Quick answer
Under RERA rules, a developer cannot collect more than 10% of the property cost as advance payment or booking amount before executing and registering a formal Builder-Buyer Agreement (BBA). The BBA must conform to the model agreement format prescribed by the state RERA rules. If the builder delays possession, they must pay interest to the buyer. Under GujRERA rules, the delayed possession interest rate is SBI's highest Marginal Cost of Lending Rate (MCLR) + 2% for both parties. Buyers should review BBAs line-by-line to check for hidden fees and unilateral exit clauses.
Quick Answer
The Builder-Buyer Agreement (BBA) is the most critical document in an under-construction property purchase. It defines the timeline, cost, construction specifications, and penalties. Historically, BBAs were heavily skewed in favor of developers, containing unfair termination clauses and minimal delay penalties. The enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA) introduced strict guidelines to balance this relationship. At Inamdar Legal, we help property buyers in Surat and across Gujarat review and correct BBAs before signing to protect their investments.
Under RERA rules, a developer cannot collect more than 10% of the property cost as advance payment or booking amount before executing and registering a formal Builder-Buyer Agreement (BBA). The BBA must conform to the model agreement format prescribed by the state RERA rules. If the builder delays possession, they must pay interest to the buyer. Under GujRERA rules, the delayed possession interest rate is SBI's highest Marginal Cost of Lending Rate (MCLR) + 2% for both parties. Buyers should review BBAs line-by-line to check for hidden fees and unilateral exit clauses.
- Builders cannot demand more than 10% of property cost before BBA registration.
- The BBA must align with the model agreement format specified under state RERA rules.
- Interest rate for builder delay or buyer default is standard at SBI MCLR + 2%.
- Any unilateral change in sanctioned building plans by the builder is invalid.
What is a Builder-Buyer Agreement (BBA) and When is it Executed?
A Builder-Buyer Agreement is a legal contract executed between a real estate developer and a homebuyer for the purchase of an under-construction flat, villa, or commercial space. It is signed after the buyer pays the initial booking amount. The BBA serves as the primary legal proof of the transaction until the building is completed and a final 'Sale Deed' is registered. Since RERA, developers are required by law to register this agreement at the Sub-Registrar's office to make it legally binding.
Common Issues and Unfair Clauses in BBAs
Before RERA, builders used customized agreements to trap buyers. Even today, developers try to slip one-sided terms into the draft BBA. The most common issues include:
- One-sided delay interest: A clause stating that if the buyer defaults on an installment, they must pay 18% interest, but if the builder delays possession, they only pay Rs. 5 per sq. ft. per month (approx. 2%). Under RERA, both must pay the same rate.
- Unilateral extension of timeline: Giving the builder a grace period of 6 to 12 months for possession without any penalty, without matching concessions for the buyer.
- Alteration of area: A clause allowing the builder to increase or decrease the flat area by up to 10% and demand extra payment, without requiring buyer consent.
- Hidden charges: Slipping in vague fees for 'electrification', 'clubhouse membership', or 'advance maintenance' that were not declared in the initial brochure.
RERA Buyer Protection Rules
RERA has introduced structural protections that supersede any conflicting clause in a builder-drafted BBA. These protections are outlined in the table below:
| RERA Section/Rule | Buyer Protection Limit | Key Benefits |
|---|---|---|
| Section 13 (Advance Limit) | Maximum 10% of property cost | Builder cannot demand higher payments before BBA registration |
| Section 18 (Possession Delay) | SBI MCLR + 2% Interest Rate | Buyer is entitled to monthly interest or a full refund with interest if the project is delayed |
| Section 14 (Sanctioned Plans) | Prior written consent required | Builder cannot change the sanctioned plan or number of flats without 2/3rd buyer approval |
| Section 14(3) (Defect Liability) | 5-Year warranty against structural defects | Builder must fix any construction defects within 30 days at no cost |
Step-by-Step BBA Review and Registration Process
To secure your rights when purchasing an under-construction property, follow this exact sequence: Step 1: Obtain the Draft BBA Request a copy of the draft BBA from the developer before paying any booking amount or immediately after paying the initial token (which must be under 10% of the cost). Step 2: Meticulous Document Review Check the draft BBA against the state's RERA Model Agreement. Identify one-sided clauses, delayed possession interest rates, and carpet area definitions. We review these agreements line-by-line to check for hidden traps. Step 3: Negotiate and Correct Drafts Request the builder to align the one-sided clauses with RERA guidelines. If they refuse, this is a major red flag indicating potential future defaults. Step 4: Execute and Register the BBA Once finalized, sign the agreement. Ensure the builder registers the BBA at the local Sub-Registrar's office. An unregistered BBA offers limited protection in court.
Timeline: BBA Execution and Registration
The timeline for finalizing the Builder-Buyer Agreement is tied to payment milestones:
- Draft review and negotiation: 3 to 5 working days
- Execution (signing): 2 to 3 days post-negotiation
- Registration deadline: The BBA must be registered immediately upon payment of the 10% booking threshold. Most banks will not approve home loans without a registered BBA.
- Monthly payment updates: Tied to RERA construction milestones declared by the builder's engineer
State-Specific Notes: Gujarat (GujRERA) Rules
In Gujarat, the model Builder-Buyer Agreement is defined under the Gujarat Real Estate (Regulation and Development) (General) Rules, 2017. The GujRERA Authority strictly penalizes developers who use alternative formats that dilute buyer rights. For property buyers in Surat, the BBA must clearly define the 'Carpet Area' as defined by RERA, not the vague 'Super Built-Up Area' historically used by builders. Stamp duty on a registered BBA in Gujarat is nominal, but it must be registered at the local Sub-Registrar office to be eligible for bank financing.
How Inamdar Legal Helps with Your BBA
Inamdar Legal acts as your independent legal advisor during property purchases. Operating remotely from Surat, we serve clients across Gujarat and India. Our services include: 1. We perform a line-by-line review of the draft Builder-Buyer Agreement to highlight one-sided terms and hidden fees. 2. We cross-check the BBA terms against the builder's GujRERA website filings to verify consistency. 3. We draft negotiation requests to the builder's legal team requesting changes to unfair clauses. 4. If the builder violates RERA rules, we draft and file formal Form M complaints before the RERA Authority. To begin, the client provides: (1) The draft Builder-Buyer Agreement, (2) The initial cost sheet, (3) The project's RERA registration number, and (4) The booking payment receipt copy.
When to Review This
- About to sign a BBA for an under-construction project
- Builder demanding payments exceeding the 10% booking cap
- Discovering one-sided interest clauses in a draft agreement
- Seeking home loan approval for a new property purchase
Disclaimer
This guide is based on public records and procedures available as of the date of publication. It is not legal advice. Rules, fees, and timelines are subject to change by government authorities. Consult a qualified advocate to review your specific documentation. Inamdar Legal is based in Surat, Gujarat, and provides remote support across India.