Supreme Court says model builder-buyer agreement is essential for real estate

On Monday, The Supreme Court said that it is essential for the country to introduce a builder-buyer agreement for the real estate sector to protect consumers as developers put numerous clauses in the agreement that consumers do not pay attention to.

A bench consisting of Justice DY Chandrachud and BV Nagarthna issued a notice to the centre on the plea and sought a response.

The bench said the agreement is important to protect consumer rights as most builders often put a number of clauses in the agreement that most people do not pay attention to. There should be some uniformity in the agreement. Hence, a model builder-buyer agreement should be placed in the country.

Senior Advocate Vikas Singh, appearing for petitioner advocates Ashwini Upadhyay said that the centre should present a model agreement countrywide as some states have this and some don’t which leads to no uniformity in those agreements.

During a court hearing, the bench said it is an interesting matter as it can easily be dealt with Real Estate Regulations Act and knows its importance.

States that have model agreements are often manipulated by the builders by changing conditions and clauses. Hence the centre should frame it and should be issued to all the states and union territories of India said advocate Vikas Singh.

Senior advocate Maneka Guruswamy representing a group of home buyers said that they are also looking for the implementation of the model agreement to help safeguard the interest of consumers.

The PIL was filed by Upadhyay wanted the centre to frame model agreement for builders and buyers to protect the latter and promote transparency in the system with the Real Estate Regulatory Authority (RERA) Act, 2016.

Filed in October of this, the plea has sought a solution from all the states to implement the ‘Model Builder Buyer Agreement’ and ‘Model Agent Buyer Agreement’ to avoid mental and physical pressure on home buyers.

The plea filed by Mr Upadhyay said “Promoters, builders and agents use arbitrary one-sided agreements that do not place customers at an equal platform with them, which offends Articles 14, 15, 21 of the Constitution. There have been many cases of deliberate inordinate delays in handing over possession and customers lodge complaints but the police don’t register FIRs, citing arbitrary clauses of the agreement.”

Delays in project delivery are affecting home buyers to suffer mental and financial pressure but also feels that their right to life and livelihood is violated stated in the PIL filed by advocate Ashwani Kumar Dubey.

PIL also mentions, “Builders issue revised delivery schedules 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.”

It is stated that developers follow pre-launching project practice without authority approval across the country and often term it as ‘soft launch’ or ‘pre-launch to attract customers’ attention and openly violate the laws. However, no actions are taken against any builder to date in this regard.

“It is necessary to state that registration of the project with the regulatory authority has been mandatory before it is launched for sale and for registration the basic pre-requisite is that the developer must have all the requisite approvals. Thus, the buyer is protected as the project is ring-fenced from the vagaries of non-approvals or delays in approvals which are one of the major causes of delay for the project,” the plea said.

The plea submitted to the court also sought an order of compensation to the buyers for the losses incurred because of delays by the builders and to recover their money.

Published by– PTI