Buying a home to get easier with model builder-buyer agreement

Asked about the timeline by when this committee would be formed, he said that they would “try and do it in the next three months. Stakeholders have to be collected from different sectors. It will be a landmark thing if it is done as it will at least give uniformity in handling of this sector across the country. It will be a template,” he said.

The problem (disputes between home-buyers and developers) could be resolved quite to an extent if the contract between builders and buyers is standardised and uniformity is brought about. It should be a unique document, applicable across the country. Then, maybe it can solve the problem to some extent, Singh said.

The roundtable was hosted by the DCA, in association with the Government of Maharashtra.

He said that the Supreme Court (SC) has also directed that there should be a model agreement across the country, and added that some states already have such a document in place.

“Each city has its nuances, real estate and housing have their own nuances. Mumbai has redevelopment which most cities do not have. The template/model agreement will be more for the conditions of engagement between the buyer and the seller, but some parts will be different. Many states already have one, but we will look at all and come up with a template,” he said.

The SC too, is of the view that there should be a model agreement which covers nuances of engagement between the buyers and the sellers.

“We will develop this document in consultation with all stakeholders. We will maybe, submit it to the Supreme Court and perhaps to the states,” he said.

Singh, in his address, highlighted the staggering number of pending cases in the housing sector at different consumer commissions. Out of over 5.5 lakh cases currently awaiting resolution, over 54,000 cases relate to the housing sector. This backlog of cases highlights the importance of providing speedy justice and streamlining the process for homebuyers.

As many as 45 percent complaints pertained to delay in possession; 12 percent to execution of sale deed; refund and withdrawal from project 12 percent; amenities 12 percent; and poor construction quality 12 percent, among others issues.

The Maharashtra Consumer Commission is faced with the maximum number of cases at 15,154 cases filed. Of this, about 8,718 have been disposed of, while 6,436 are still pending. In Delhi, 8,178 cases have been filed, of which 5,266 have been disposed of, and 2,912 are still pending. In Uttar Pradesh, 8,133 cases have been filed, of which 7,024 have been disposed of, and 1,109 cases are pending, show statistics from the ministry.

He also said that the agreement should be in simple language. “It is the common man who is buying. Therefore, the engagement between the buyer and the seller should be as simple as possible.”

The conference saw participation from a diverse group of stakeholders, including government officials, Chairman of RERA, Delhi, Chairman MahaRERA, officials from the Ministry of Housing and Urban Affairs (MOHUA), IBBI, legal experts, industry leaders, and consumer rights activists, to identify actionable solutions to the pressing issues faced by home-buyers and builders in the real estate sector.

Additional Secretary, DCA, Nidhi Khare, in a detailed presentation outlined a comprehensive overview of the legal provisions under various statutes designed to protect the interests of homebuyers. She delved into the roles and responsibilities of home-buyers under RERA, Consumer Protection Act, 2019, and the Insolvency and Bankruptcy Code, 2016. The presentation also addressed the increasing number of cases filed by home-buyers and the impact of these disputes on both, home-buyers and builders, leading to distrust within the sector.

During the conference, Member NCDRC, Binoy Kumar, underscored the importance of the builder-buyer agreement as the fundamental document governing transactions in the real estate sector. He suggested that the agreement should be made more efficient and in line with SC orders, which would subsequently reduce the number of cases filed by home-buyers.

The success of conciliation in resolving disputes was emphasised. The meeting urged for better cooperation between consumer courts and RERA to prioritise conciliation over litigation. The importance of completing and distributing incomplete projects, rather than opting for insolvency under IBC, was stressed, along with a call for transparency among all stakeholders.

Insights were also provided on misleading advertisements in the real estate sector, emphasising the need for enhanced transparency between buyers and developers to avoid future legal disputes.

The key problems identified for home-buyers were delay in delivery of possession of property to home-buyers; no compensation for delay in possession to home-buyers; biased, one-sided, and unfair builder-buyer agreements; amenities not provided to home-buyers as per the agreement; misleading advertisements by developers and influencers for luring home-buyers; and non-adherence to the model builder-buyer agreement proposed by RERA.

The key suggestions made during the deliberations included sending the draft agreement to buyers before execution; clearly mentioning permissions and sanctions obtained from competent authorities on the first page of the agreement; prohibiting builders from launching projects before obtaining all necessary permissions and sanctions; including an exit clause for home-buyers in all agreements that would be valid until the Occupancy Certificate (OC) or Completion Certificate (CC) is obtained and possession is offered by the builder; and including a schedule of additional charges beyond the cost of the unit/apartment in all agreements.

It was also suggested that all agreements should contain mandatory declarations regarding no dues from any authority/banks, as well as all necessary legal sanctions and approvals from competent authorities. Strong action should be against unfair and misleading advertisements by developers, it was suggested.