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Builder Buyer Agreement (BBA): All You Need to Know

By IIFL Home Loans | Published On Jan 11 2024 8:53 AM 1 min read 352 views 367 Likes
IIFL Home Loans

Until the implementation of RERA, builders and developers exerted a lot of dominance in the construction and sale of real estate properties. Many times, there was a delay in construction and completion of the projects and the buyers were left with no remedial measures whatsoever. While RERA streamlined many things and acted as a blessing for real estate buyers, buyers and builders must be on the same page in a real estate transaction. That’s where the Builder Buyer Agreement comes into the picture. 

Let’s understand the meaning of the Builder Buyer Agreement and its importance in real estate dealings.

What is a Builder Buyer Agreement?

Builder Buyer Agreement (BBA) is a contract for the sale of property, or you can say a purchase contract for a home. It states that the concerned property has been transferred to the buyer and all the rights relating to the said property are transferred to the new owner’s name subject to the terms, conditions, and clauses mentioned in the agreement. The agreement lays down detailed information about the property including approvals, terms, conditions, and flat layout as agreed between the buyer and seller.  

Why is BBA Important?

In 2021, the Supreme Court emphasized the importance of the Builder Buyer Agreement (BBA) and stated it as a very important document for consumer protection. It also asked the Centre to bring uniformity to the BBA. It asked the Centre to frame model agreements for the agent buyer agreement and builder buyer agreement. This will bring more transparency to the real estate transaction. Further, it also stated that such model agreements must conform to the Real Estate (Regulation and Development) Act, 2016 to protect the interest of homebuyers.

The model builder buyer agreement will replace the existing arbitrary agreements and eliminate the one-sided agreements that can harm the interest of the real estate buyers. Such a one-sided contract for sale of property can place the customers in a disadvantageous position as compared to the builders, promoters and agents. The model agreement will bring the buyers and builders on the same page, streamline the real estate transactions and reduce the overall physical, mental and financial strain for the customers.

Important Terms of BBA

As BBA acts as a purchase contract for a home, the following are some of the conditions and information that you will find in the builder-buyer agreement:

  • Construction of buildings and apartments
  • Development of the project
  • Date of completion and possession
  • Specifications of internal and external development works
  • Date of payment
  • Mode of payment
  • RERA registration
  • Rate of interest in case of default
  • Buyer’s right to cancel or assign the property
  • Refund policy
  • The grace period, if any, taken by the builder
  • Force majeure clause
  • Consideration taken for the property and what is excluded in such consideration (like parking, maintenance, electrification charges etc.)
  • Particulars of the property papers like clear title, fixtures, jurisdiction and arbitration clause.
  • Any other information that may be important or relevant.

Important Points Relating to BBA

Here are some of the important points you should remember while going through the builder-buyer agreement:

  • Proforma Sale Agreement: Builders are required to present a proforma sale agreement, allotment letter, and the conveyance deed scheduled to be executed with the buyer along with the application and other supporting documents.
  • Earnest Money Clause: After the builder-buyer agreement is signed, the builder cannot demand more than 10% of the property value from the buyer.
  • Lack of Promised Facilities: The builder must furnish all the amenities as stated in the builder-buyer agreement. If the builder fails to do so, the buyer may notify the builder within 5 years after taking the ownership and the builder shall correct the error within 1 month. If the builder fails to do so, then the buyer shall be entitled to compensation.
  • Specifics: The builders are required to mention all the specific details in the builder-buyer agreement. This leaves little room for errors and builders missing out on their obligations.

In a Nutshell

Builder Buyer Agreement is an important document that all prospective real estate buyers should be aware of. Negligence here gives an upper hand to the builders over the real estate transaction, leaving buyers in the lurch. Being aware alone can make the real estate transaction seamless for the buyer. Another aspect of buying real estate is choosing the right lender.

IIFL Home Loan is one of the preferred institutions that provides seamless home finance to real estate buyers. With quick processing and minimal home loan documents required, you can get your real estate financed purchase in no time. All this while enjoying affordable interest rates and flexible terms. Build your dream home now with IIFL Home Loans.


Q1: What are the benefits of a builder-buyer agreement?

Ans: Builder buyer agreement lays down what the buyer is signing for and protects the interests of the property buyer. It also holds the builder accountable for the deliverables.

Q2: Are builder buyer agreements negotiable?

Ans: Yes. You can negotiate the terms of the builder buyer agreement with your builder.

Q3: Can the builder cancel the sale of the property?

Ans: Yes. The builder can cancel the sale of the property if it is permissible as per the builder-buyer agreement and satisfies the relevant conditions. Some of the most common causes include non-payment or delayed payments by the buyers.

Q4: What can buyers do if the builder fails to deliver as per the builder-buyer agreement?

Ans: If the builder fails to fulfill its obligations, then the buyers can file a complaint with RERA authorities for further course of action.


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