Builder-Buyer Agreement Clauses RERA Made Illegal

Unilateral changes to the plan or specifications

Before RERA, many agreements gave the builder unrestricted discretion to alter the sanctioned building plan, layout, or apartment specifications after booking, without needing buyer consent. Under Section 14, a promoter cannot make structural changes to the sanctioned plans or specifications of a specific apartment without the allottee's written consent, and cannot make other alterations to the overall project without the consent of at least two-thirds of the allottees — a builder cannot simply reserve unilateral discretion to change what was sold, regardless of what an old-style agreement might have said.

Disproportionate delay-interest clauses

A common pre-RERA pattern was charging buyers a steep penalty interest rate for delayed instalment payments, while the builder's own liability for delayed possession was capped at a token, nominal figure (sometimes a flat per-square-foot amount far below any reasonable compensation for the actual delay). RERA's interest-rate framework (tied to the SBI MCLR-plus-margin structure, applied symmetrically to both builder and buyer delays under many state rules) directly displaces this kind of one-sided structure — a builder cannot contractually impose a materially harsher delay-penalty regime on the buyer than on itself.

One-sided cancellation and forfeiture clauses

Pre-RERA agreements frequently allowed the builder to cancel an allotment and forfeit a large proportion (sometimes the entirety) of amounts paid, for relatively minor buyer defaults, while giving the buyer no equivalent right to a proportionate exit if the builder itself defaulted on its obligations. RERA's framework, combined with subsequent case law and evolving model agreement guidance, has pushed toward more balanced treatment — including RERA's own Section 18 remedies specifically addressing what happens when the builder is the one in default.

Why "model" agreements have gained traction

Several states have issued or referenced model builder-buyer agreement formats intended to reflect RERA-compliant, more balanced terms — while builders are not always required to use a state's specific model agreement verbatim, the existence of these reference formats has provided both buyers and regulators a clearer benchmark against which to assess whether a specific project's agreement contains problematic, non-compliant clauses.

What a buyer should specifically check before signing

• Whether the delay-interest rate applies symmetrically to both parties, or is skewed against the buyer.
• Whether the builder retains unilateral plan-change rights without the required buyer/majority-allottee consent mechanism.
• Whether the cancellation/forfeiture clause is proportionate, or allows the builder to retain an unreasonably large share of payments for relatively minor buyer defaults.