Things to Check in a Buyer’s Agreement
Identification Of Property: Check whether the property has been clearly identified and demarcated in the buyer’s agreement. Details of the land on which the housing complex is constructed, details of the property to be purchased such as unit number and floor, super area/built-up area of the property etc should be clearly provided. Moreover, layout plan of the property should also be annexed with the buyer’s agreement
Facilities and Amenities: Details of facilities and amenities that the developer is undertaking to provide with the property must be taken into account. For instance, maintenance of the complex and/or common areas and facilities, electricity back-up, centralized air conditioning, car parking, membership of club/gym etc should be clearly mentioned. Carefully read the document to understand charges, if any required to be paid for availing these facilities and amenities
Payment of Installments: Check the types of payment plans offered by the developer. These could be down payment plan, time-linked payment and construction linked payment plan. As a safeguard against unprecedented delays in getting possession of the property, a buyer may opt for construction-linked payment plan. Here, the buyer is required to pay a pre-determined sum of money to the developer, only upon completion of specific construction phases of the complex in which property is located.
Penalties: Another important point to be considered is the clause on forfeiture of earnest money by the developer, in the event of non-payment of installments on timely basis by the buyer. Usually, two kinds of penalties are provided in buyer’s agreement – penalty on delayed payment of installments levied on the buyer and penalty on delayed delivery of possession of the property levied on the developer. A buyer should carefully note the amount of penalty he would be required to pay in case he fails to pay the installment within the timelines provided in the buyer’s agreement. Also note the amount of penalty the developer has to pay if he fails to deliver possession within the timelines in the agreement.
Encumbrances and litigation: Visit the developer’s office and inquire about any encumbrance, charge and/or litigation with respect to the property and ensure that the representations given by the developer w.r.t charge.
Time of delivery: Ensure that the time of possession is clearly mentioned in the agreement. Also make a note of the consequences (e.g. penalty on seller/developer) of delay in possession.
Specifications: Specifications such as type/quality of flooring, paint, wood furnishings, or accessories such as central air conditioning, modular kitchens, etc if any, promised by the developer; should also be clearly incorporated in the agreement.
Transfer charges: Some developers impose a transfer charge for transfer of the property by the buyer in favor a third party. Provisions regarding transferability of the property along with applicable transfer charges should be clearly incorporated in the agreement.
Other charges: Last but not the least is provisions with respect to external development charges, internal development charges, preferential location charges (PLC), electrification charges, interest-free deposit for maintenance services etc., in the agreement. To arrive at the actual total sale price, buyers should carefully consider the quantum of these charges. Also check whether these charges have been included in the sale price of are to be paid as additional charges, over and above the sale price.