No builder to take over 10% unit cost before sale agreement UP Rera

By Investoxpert | 22 Jan 2024 | Real Estate

No Builder To Take Over 10% Unit Cost Before Sale Agreement UP RERA

In order to participate in transactions that include more than 10% of the total cost of a property, real estate developers and purchasers are advised by the Uttar Pradesh Real Estate Regulatory Authority (UP Rera) to formalize a registered sale agreement. The purpose of UP Rera's advice is to increase promoters' responsibility and openness in commercial activities.

What Does The Authority States?

The authority's statement states that promoters must execute a registered agreement for sale before taking any advance payment from any party that exceeds 10% of the cost of the apartment, land, or building. Under the Rules of 2018, the state government produced a model agreement for sale, which this agreement must follow.

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The agreement between the promoter and the buyer should include all of the parameters of the project development, including information about the construction of buildings and flats as well as details about both internal and external development activities. The dates and payment schedule for the unit's cost will be included, along with the date the allottee will actually become the owner of the unit.

The agreement will also specify the interest rates, which will be set by the state government that would be charged in the event that either side fails. The interest rate in this case is SBI MCLR+1%.

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Latest Update

In a recent advice on the project payment module, the state's Real Estate Regulatory Authority (RERA) reminded both purchasers and developers that no advance should be provided until the sale agreement is signed.

In order to notify purchasers that no developer may demand an advance greater than 10% of the total cost of a flat, plot, or building, it cited Section 13 of the UP-Rera Act.

Only after the builder-buyer agreement has been signed may this advance be accepted.

Officials stated that several complaints over the manner in which builders were receiving upfront payments led to the warning. Buyers were often required to pay more than 10% in advance, and in other situations, they were ordered to pay even before the sale agreement was finalized.

Promoters and purchasers of real estate should heed this advice on when and how to make payments. A builder is never permitted to demand an advance payment of more than 10% of the unit cost. That too, but only once the selling contract is complete.

According to the Rera head, the purpose of the advice was to guarantee promoters' responsibility and openness in their commercial dealings.

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It is obvious that charging extra violates Section 13 of the UP-Rera Act. It states unequivocally that a developer may not accept an advance of more than 10%.

What Therefore Ought To Be Included In The Sale Agreement?

According to a Rera official, the document has to include every data related to the project, including the dates of construction and information regarding internal development efforts.

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It should also include a summary of the crucial dates for payments and the way they should be done. It is important to include the date of ownership as well. Aside from this, the agreement should include the interest rate that an allottee or promoter will have to pay in the event of a default.

The Marginal Cost of Funds Based Lending Rate (MCLR) should be followed by these rates. In certain circumstances, an extra 10% should be added. The minimal rate of interest that banks are benchmarked to is known as MCLR.

Conclusion

In several instances, promoters have siphoned off substantial sums from credulous allottees without registering the selling or builder-buyer agreements. Under section 31 of the Rera Act, angry allottees may, under certain circumstances, contact Rera to submit a grievance and seek enforcement of their rightful entitlements. By fortifying the regulatory framework, this law safeguards the interests of buyers and promoters in the real estate sector.

No builder to take over 10% unit cost before sale agreement UP Rera