You’ve toured the sample flat, liked the location, and the builder’s sales team has been warm and responsive. Now they slide a 40-page document across the table and say, “This is our standard agreement — just sign here.”
Stop.
The builder-buyer agreement (BBA) is the most important document you will sign in the entire property transaction. It defines your rights, the builder’s obligations, what happens when things go wrong, and — crucially — what you can and cannot sue for. Builders draft these agreements. Their lawyers draft these agreements. The language is engineered to protect the builder, not you.
This article walks you through the clauses that should make you pause, push back, or walk away entirely.
1. No Fixed Possession Date — Only “Tentative” or “Expected”
What it looks like:
The developer expects to hand over possession on or around Q3 2027, subject to circumstances beyond the developer’s control.
Why it’s dangerous:
A possession date that is “tentative,” “expected,” or “subject to approvals” gives the builder unlimited runway to delay without consequence. You, meanwhile, are paying EMIs on a home loan, possibly paying rent elsewhere, and have no legal leverage because the agreement itself never committed to a date.
What to demand instead:
A specific calendar date for possession — day, month, year. Anything else is not a commitment.
RERA mandates that every registered project must declare a possession date. If your agreement doesn’t have one, that’s a RERA violation and a serious red flag about the builder’s intentions.
Weak or Absent Penalty for Delayed Possession
What it looks like:
In the event of delay, the developer shall pay compensation at ₹5 per sq.ft per month for the period of delay.
Why it’s dangerous:
On a 2,400 sq.ft villa, ₹5 per sq.ft per month works out to ₹12,000/month in compensation. Your home loan EMI is probably ₹1.2–1.8 lakh per month. The penalty covers less than 10% of your carrying cost — which means the builder has almost no financial incentive to deliver on time.
What to demand instead:
RERA specifies that compensation for delayed possession should be at the prevailing SBI MCLR rate on the amount paid by the buyer. Make sure your agreement references this or agrees to a penalty that is economically meaningful — at minimum 1% of the agreement value per month of delay.
Also check: is the penalty clause reciprocal? If you delay a payment, are you penalised at 18–24% per annum? If the builder delays, are they penalised at ₹5/sq.ft? That asymmetry is designed to be unfair.
3. The “Force Majeure” Clause Is Too Broad
What it looks like:
The developer shall not be liable for delay caused by acts of God, pandemics, labour shortages, material unavailability, government policy changes, or any other circumstances beyond the developer’s reasonable control.
Why it’s dangerous:
Force majeure clauses exist for genuine emergencies. But when written broadly, they become a catch-all escape hatch. “Government policy changes” could refer to a new building code. “Labour shortages” happen in every construction project. “Material unavailability” is a routine supply chain issue. If any of these qualify as force majeure, the builder can delay indefinitely while you pay EMIs.
What to demand instead:
Force majeure should be limited to genuinely extraordinary events — natural disasters, declared national emergencies, war. It should also have a time cap: if force majeure conditions persist beyond, say, 6 months, you should have the right to exit with a full refund plus interest.
4. Super Built-Up Area With No Carpet Area Commitment
What it looks like:
The villa measures approximately 3,200 sq.ft super built-up area. The loading factor may vary.
Why it’s dangerous:
Super built-up area includes your unit plus your share of common areas — lobbies, staircases, club infrastructure, even boundary walls in some interpretations. It is a builder-defined number that can be manipulated. You are paying per sq.ft of super built-up area, but you will live in the carpet area.
On a 3,200 sq.ft super built-up villa with a 30% loading factor, your actual usable area is 2,240 sq.ft. But if the agreement doesn’t define carpet area, you have no way to verify this — and no recourse if the actual unit is smaller than you expected.
What to demand instead:
The agreement must explicitly state both the super built-up area and the carpet area as defined under RERA (carpet area = net usable floor area, excluding walls, balconies, and common areas). RERA actually mandates that sale must be on carpet area basis. If the agreement avoids this, the builder may be hiding an unfavourable loading factor.
5. Unilateral Right to Change Specifications
What it looks like:
The developer reserves the right to make changes to the specifications, layout, or design of the property as may be required due to structural, regulatory, or aesthetic reasons, without prior notice to the buyer.
Why it’s dangerous:
You were sold on Italian marble flooring, a specific kitchen platform, a north-facing villa with a view of the park. Without this clause being limited or removed, the builder can substitute all of it — cheaper flooring, a different layout, a repositioned window — and you have no contractual right to object.
What to demand instead:
Any change to specifications should require your written consent. If the builder makes a change without consent, you should have the right to either accept a monetary adjustment (to compensate for the inferior specification) or exit the agreement with a full refund. At minimum, insist on a “specifications schedule” as an annexure that lists materials, brands, and grades — and is made part of the agreement.
6. Maintenance Charges Fixed Unilaterally by the Builder
What it looks like:
Maintenance charges shall be ₹4 per sq.ft per month for the first two years and shall be revised at the sole discretion of the developer/maintenance company.
Why it’s dangerous:
Pre-handover, many builders run the maintenance of the project through their own subsidiary. During this period, they can set and revise charges freely. You have no vote, no transparency into how the money is spent, and no ability to switch providers.
Additionally, “maintenance deposits” collected at handover — often ₹2–5 lakh per villa — are rarely refundable and rarely accounted for.
What to demand instead:
Insist on a cap on maintenance charge increases (e.g., not more than 10% per annum, or CPI-linked). More importantly, the agreement should specify when the Residents’ Welfare Association (RWA) will be formed and handed control — RERA mandates this within a defined period of the project’s completion. A builder who delays forming the RWA is a builder who wants to keep collecting maintenance fees without accountability.
7. Cancellation Terms That Heavily Favour the Builder
What it looks like:
In the event of cancellation by the buyer, the developer shall forfeit 20% of the total sale consideration as cancellation charges. Refund of the balance shall be made within 12 months of cancellation.
Why it’s dangerous:
Two problems here. First, 20% forfeiture on a ₹2 Cr villa is ₹40 lakh — a punitive amount for what may have been a legitimate change in circumstance (job loss, medical emergency, change of city). Second, a 12-month refund timeline is unconscionable — you are giving the builder an interest-free loan of your remaining money for a year.
Contrast this with what typically happens when the builder cancels or fails to deliver: the penalty clause from Section 2 above gives them minimal exposure.
What to demand instead:
Cancellation charges should be reasonable — 2–5% is the RERA-aligned norm, not 20%. Refunds should be processed within 45–60 days, not 12 months. And the agreement should be explicit about what happens to your GST amount on cancellation (you are entitled to a GST refund; the builder should facilitate this, not complicate it).
8. No Mention of OC (Occupancy Certificate)
What it looks like:
The agreement defines “possession” as handing over the keys — with no mention of Occupancy Certificate or Completion Certificate.
Why it’s dangerous:
This is one of the most dangerous clauses in the market and one of the most overlooked. An Occupancy Certificate (OC) is issued by the local authority (BBMP/BDA) certifying that the building has been constructed per the approved plan and is safe to occupy. Without OC:
- You cannot legally live in the property
- You cannot get a Khata in your name
- You cannot resell easily (most buyers and banks require OC)
- You may face demolition risk if the structure is non-compliant
Builders hand over keys and call it “possession” all the time — without OC, sometimes years before it is obtained, sometimes never.
What to demand instead:
The agreement must explicitly state that final possession will be given only after OC is obtained and a copy is provided to the buyer. Tie your final payment (typically 5–10% of the value) to receipt of OC, not just key handover. This single clause can save you enormous grief.
9. Lock-In on Resale or Rental
What it looks like:
The buyer agrees not to sell, transfer, or rent the property for a period of 3 years from the date of possession without prior written consent of the developer.
Why it’s dangerous:
Your property, once registered in your name, is yours. A contractual lock-in on resale or rental is unusual and should be scrutinised carefully. Sometimes this clause exists in affordable housing segments where government schemes are involved — that’s legitimate. But in a private villa project, it can be used to protect the builder’s own resale or rental business in the same community, or to prevent you from undercutting their unsold inventory at a lower price.
What to demand instead:
Push back and have this clause removed. If the builder insists on it for a specific regulatory reason, get that reason in writing and verify it independently with a lawyer.
10. Disputes Go to Arbitration — in the Builder’s City
What it looks like:
Any disputes arising from this agreement shall be resolved through arbitration in accordance with the Arbitration and Conciliation Act, 1996. The seat of arbitration shall be Mumbai/Gurugram/Chennai.
Why it’s dangerous:
Two issues. First, an arbitration clause can be used to bypass RERA’s consumer-friendly dispute resolution mechanism — RERA is significantly faster, cheaper, and more buyer-friendly than arbitration. Post the Supreme Court’s ruling in Imperia Structures vs Anil Patni (2020), buyers do retain the right to approach RERA even if the agreement has an arbitration clause. But many buyers don’t know this and get intimidated into expensive arbitration.
Second, if the seat of arbitration is in a different city, you are looking at travel costs, local lawyers in an unfamiliar city, and a process designed to exhaust you into settling.
What to demand instead:
Insist on jurisdiction being Bangalore. More importantly, have a lawyer confirm that your right to approach RERA Karnataka is explicitly preserved in the agreement — or at minimum, understand that the arbitration clause does not extinguish your RERA rights.
What To Do Before You Sign
Step 1: Read the entire agreement yourself first. Not just the highlights the sales team walks you through. Every page. Mark anything you don’t understand.
Step 2: Hire an independent property lawyer. Not the lawyer the builder recommends. An independent lawyer reviewing a builder-buyer agreement typically costs ₹5,000–₹20,000 — a rounding error on a ₹1.5–3 Cr purchase. This is non-negotiable.
Step 3: Verify RERA registration independently. Go to the Karnataka RERA portal (rera.karnataka.gov.in), search the project by name or RERA number, and verify the declared possession date, project details, and promoter’s track record.
Step 4: Negotiate. Contrary to what builders will tell you, many clauses in a BBA are negotiable — especially penalty clauses, cancellation terms, and specification schedules. A builder who refuses any negotiation on any clause is a builder telling you something important.
Step 5: Don’t let urgency pressure you. “This price is only valid until end of month.” “We have only 2 units left.” “If you don’t sign today, the price goes up.” These are sales tactics. No legitimate builder will retract an offer because you asked for a week to have the agreement reviewed by a lawyer. If they do, you’ve learned something valuable before you paid anything.
A Final Word
The builder-buyer agreement is not a formality. It is the legal architecture of what may be the largest financial decision of your life. Most buyers sign it having read less than 20% of it. The clauses described above are not hypothetical — they appear, in various forms, in agreements across Bangalore’s villa market right now.
The good news: knowing what to look for puts you in a fundamentally different position from the average buyer. You don’t have to accept the “standard agreement.” You are allowed to read it, question it, and negotiate it. And if a builder makes you feel otherwise — that tells you everything you need to know.
