Real Estate Act: Builders Cannot Change Binding Clauses, MahaRERA Clarifies
The Maharashtra government's Real Estate (Regulation and Development) Act (RERA) has introduced a model agreement format to protect buyers. However, many builders modify crucial clauses, leaving buyers unaware of their rights. MahaRERA has taken steps to
ReraMahareraReal EstateBuyer ProtectionBuilder ObligationsReal Estate MaharashtraOct 28, 2024
To protect buyers, MahaRERA, the regulatory authority, has issued a circular directing builders to highlight any deviations from the model agreement in a different color. This helps buyers identify any changes made. Despite this, the main issue remains unresolved as many builders continue to modify or omit mandatory clauses.
MahaRERA issued Order-Cum-Circular No. 38 on December 13, 2022, addressing the misuse of the 'force majeure' clause. This clause, defined under Section 6 and Rule 6(a) of RERA, covers events like war, flood, drought, fire, cyclone, and earthquake. Builders often expand this clause to include other situations, which is not permissible. These unauthorized modifications have been declared non-negotiable and void ab initio by MahaRERA, meaning they are not binding on buyers.
Another important clause is the formation of an allottees association, as mandated by Section 11(4)(e) of RERA and Rule 9. Builders are required to take steps to form this association once more than 50% of the flats are booked. Builders have also been altering the provision under Section 17, which requires them to execute conveyance within three months of receiving the occupancy certificate.
Section 14(3) of RERA obligates builders to provide a five-year guarantee for their workmanship, known as the mandatory defect liability period. MahaRERA observed that some builders either omit this clause or include a period of less than five years. Such modifications are not permitted and are declared void.
Other mandatory provisions, such as the interest rate for delayed payments, are also protected. The interest rate is the Reserve Bank of India’s max credit lending rate plus 2% annually. This rate must be applied uniformly, and builders cannot charge more or less. Buyers who face delays in possession have the right to receive interest at this rate until they receive their units. This provision is non-negotiable and has been upheld by the Supreme Court.
In conclusion, MahaRERA has taken significant steps to protect consumers from unscrupulous builders. Buyers should be vigilant and seek legal advice to ensure their rights are not compromised.
Frequently Asked Questions
What is the Real Estate (Regulation and Development) Act (RERA)?
RERA is an act introduced by the Maharashtra government to regulate the real estate sector, protect buyers' interests, and ensure transparency between buyers and builders.
What is the model agreement format prescribed by RERA?
The model agreement is a standard format of the sale agreement between buyers and builders, designed to ensure that all necessary terms and conditions are included and are fair to both parties.
Can builders modify the clauses in the model agreement?
Builders can modify some clauses based on specific circumstances, but they cannot alter or omit mandatory clauses as specified by RERA. MahaRERA has issued guidelines to prevent such misuse.
What is the 'force majeure' clause and why is it significant?
The 'force majeure' clause covers unforeseen events like war, flood, drought, and earthquakes. Builders are not allowed to expand this clause to include other situations not covered by RERA.
What are the rights of buyers if there are delays in project completion?
Buyers have the right to receive interest at the rate of the Reserve Bank of India’s max credit lending rate plus 2% annually for every month of delay until they receive possession of their units.
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