27 June Monday

Frame Model Builder-Buyer Agreements To Protect Home Buyers, SC Tells Centre

Vishnu VSUpdated: Monday Oct 4, 2021

The Supreme court on Monday directed Centre to frame  model builder-buyer agreement - ones that conforms to the real-estate regulations and development Act 2016. The exercise  is aimed to bring more transparency between builder-buyer and agent-buyer contracts and  enhancing customer safety.

A Bench headed by Justice DY Chandrachud said  having a uniform builder-buyer agreement format is necessary to protect the interest of homebuyers across the country.  

The ruling came over a Public Interest Litigation(PIL) filed by Advocate  Ashwini Upadhyaya, seeking the court to direct  states to follow a uniform builder-buyer agreement. Promoters, builders and agents draft  arbitrary one-sided contracts that put customers at a disadvantage. Much of ,these contracts  don’t conform to Articles 14, 15 and 21 of the constitution. When home buyers approach police for let down by delayed property handover etc, the cops are not prepared to even file an FIR, citing arbitrary clauses included in the agreement, a situation that the petitioner said results in  considerable  “ mental, physical and financial” injury”.

“Builders issue revised delivery schedule again and again and adopt arbitrary unfair restrictive trade practices. All this amounts to criminal conspiracy, fraud, cheating, criminal breach of trust, dishonestly inducing delivery of the property, dishonest misappropriation of property and violation of corporate laws," the PIL stated.

In the apex court notice on Centre,  the court  observed :  "This is an important issue on protection of buyers, often put on the back foot by clauses in agreements made by builders and a model (Builder-Buyer Agreement)BBA will keep builders in check.”

Incidentally, the housing ministry had earlier formulated a model BBA for residential projects, but no stated adopted it fully. Only . Only Union Territories have notified of their BBAs to be in complete alignment with central rules.