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

Real Estate Act: Builders Cannot Change Binding Clauses, MahaRERA Clarifies
Real Estate Maharashtra:The Real Estate (Regulation and Development) Act, implemented by the Maharashtra government, has set a standard model agreement for sale between buyers and builders. This model agreement is designed to safeguard the interests of buyers. However, a common issue arises when builders modify or omit key clauses, often to their own advantage, leaving buyers unaware of their rights under RERA.

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.

Related News Articles

Witnessing the Dream Come True: VTP Realty Unveils VTP Sierra's Progress
Real Estate Pune

Witnessing the Dream Come True: VTP Realty Unveils VTP Sierra's Progress

VTP Realty, a leading residential real estate developer in Pune, recently hosted a successful customer engagement event at VTP Sierra, its residential project located on Baner-Sus Road.

July 8, 2024
Read Article
Top Realty Stock to Buy Now for a 45% Upside: Is It in Your Portfolio?
real estate news

Top Realty Stock to Buy Now for a 45% Upside: Is It in Your Portfolio?

The real estate market is projected to reach USD 189.80 billion in 2024 and is expected to expand to USD 272.67 billion by 2029. The commercial real estate sector is also showing promising growth, making it a lucrative opportunity for investors.

November 15, 2024
Read Article
CapitaLand Sells Two Indian Real Estate Assets for $68 Million
real estate news

CapitaLand Sells Two Indian Real Estate Assets for $68 Million

CapitaLand, a leading global real estate company, has sold two of its Indian real estate assets for a total of $68 million. This strategic move is part of the company's broader plan to optimize its portfolio and focus on high-growth markets.

December 18, 2024
Read Article
CMD, IREDA Leads Engaging Panel Discussion at 18th Pravasi Bharatiya Divas Convention
Real Estate

CMD, IREDA Leads Engaging Panel Discussion at 18th Pravasi Bharatiya Divas Convention

Commander-in-Chief of the Indian Renewable Energy Development Agency (IREDA), moderated an inspiring panel discussion at the 18th Pravasi Bharatiya Divas (PBD) Convention, covering topics such as real estate, battery and green manufacturing, electric mobi

January 10, 2025
Read Article
SWAMIH Fund Reaches Milestone of 50,000 Completed Homes Since 2019
Real Estate Mumbai

SWAMIH Fund Reaches Milestone of 50,000 Completed Homes Since 2019

The SWAMIH Fund has successfully completed 50,000 homes since its inception in 2019, transforming the lives of homebuyers in stalled projects and redefining impact investing.

January 25, 2025
Read Article
Lumos Alternate and Bakeri Group Launch Rs 500 Crore Sakar Realty Fund for Housing Projects
real estate news

Lumos Alternate and Bakeri Group Launch Rs 500 Crore Sakar Realty Fund for Housing Projects

Lumos Alternate and Bakeri Group have partnered to establish the 'Sakar Realty Fund- I', a Rs 500 crore real estate investment platform aimed at mid-market residential projects in major Indian cities including Bengaluru, Mumbai, Ahmedabad, and Pune.

February 12, 2025
Read Article