Builder-buyer agreement: 12 clauses to read before you pay, and the Supreme Court's model-agreement case

Rules and rates as of 12 October 2026.

The builder-buyer agreement, which the law calls the agreement for sale, is the document you will be held to for years. Many buyers first see it after paying a booking amount, sign it at the sub-registrar's office in a hurry, and only read it when something goes wrong. The Real Estate (Regulation and Development) Act, 2016 (RERA) fixes a number of terms in a buyer's favour whatever the printed clause says. This guide sets 12 common clauses against those rules.

First, the 10% rule and what it does not do

Section 13(1) of RERA says a promoter cannot accept more than 10% of the apartment's cost as an advance or application fee without first signing a written agreement for sale and getting it registered. Section 13(2) says the agreement must be "in such form as may be prescribed" by the state's rules. It must also set out construction and specification details, the dates and manner of payment, the possession date, and the interest rates on default.

So if you are asked for 15% or 20% "to block the unit" before a registered agreement exists, that conflicts with s.13. The 10% figure caps what can be collected before registration. It is not, in the Act's text, a cap on what can be forfeited if you cancel. The forfeiture question is covered by a separate Supreme Court ruling, discussed below.

The 12 clauses, set against the law

1. Payment schedule. Under s.13(2), the agreement must state the dates and manner of payment. Check whether instalments are tied to construction stages or to calendar dates. Under s.19(6) and 19(7), you must pay on time, and you owe interest at the prescribed rate if you are late.
2. Possession date. Section 13(2) requires a date. Under s.18(1), the promoter's liability arises if it fails to give possession by the date the agreement specifies. The Act itself has no general "grace period", so any grace or extension wording deserves a close read.
3. Delay interest. If you stay in the project, the proviso to s.18(1) entitles you to interest for every month of delay until possession, at the prescribed rate. If you withdraw, you get a refund with interest plus compensation. The definition of "interest" in s.2(za) says the rate a promoter charges you for default must equal the rate it pays you for its own default. A clause that charges you 18% but pays you a flat per-square-foot amount fails that test.
4. Carpet area. Section 2(k) defines carpet area as net usable floor area. It excludes external walls, service shafts, exclusive balconies or verandahs and exclusive open terraces, and it includes internal partition walls. Price should be stated on carpet area, not "super built-up" area. Section 14(2) says a change in area is not a "minor" change a builder can make without your consent.
5. Specifications and plans. Section 14(1) says the project must follow the sanctioned plans and specifications. Under s.14(2), changes to your unit need your prior consent, apart from minor changes. Changes to the building or common areas need written consent from at least two-thirds of allottees, not counting the promoter.
6. Defect liability. Under s.14(3), the promoter must fix structural defects, defects in workmanship, quality or services, and defects in its other obligations, without charge, within 30 days. This applies to any defect raised within five years of handing over possession. Under s.11(4)(a), this duty continues even after the conveyance deed is signed. A clause offering "one year warranty" cannot shorten that.
7. Cancellation and forfeiture. Section 11(5) says the promoter can cancel only on the agreement's terms, and you can go to the Authority if a cancellation is "unilateral and without any sufficient cause". How much the builder may keep if you cancel is covered by the worked example below.
8. Price escalation. Section 13(2) requires the payment terms to be written down. Look for any wording that allows the "total price" to rise for cost increases, new levies or "development charges". List every charge outside the stated price and ask in writing what each one covers.
9. Common areas. Section 2(n) lists common areas, including lobbies, lifts, terraces, parks and "open parking areas". Under s.17, the promoter must transfer title in common areas to the residents' association. Where no local law sets a period, that is within three months of the occupancy certificate.
10. Parking. Under s.2(y), a "garage" has a roof and walls on three sides and "does not include an unenclosed or uncovered parking space such as open parking areas". Since open parking is listed as a common area, check exactly what a "parking charge" in your agreement is paying for.
11. Transfer or resale charges. The Act's text does not set a fee for transferring an allotment before possession. These clauses are contractual, so note the amount and whether builder consent is needed. Ask whether a later buyer takes over your rights, including delay interest, in full.
12. Dispute forum. Under s.31, complaints go to the state RERA Authority. Compensation claims under ss.12, 14, 18 and 19 go to its adjudicating officer (s.71). Section 79 bars civil courts from matters RERA can decide. Section 88 says RERA is "in addition to, and not in derogation of" other laws, which is why buyers also use consumer commissions. Read any arbitration clause with that in mind.

Worked example: forfeiture on a ₹90 lakh flat

In Godrej Projects Development Ltd v. Anil Karlekar (Civil Appeal 3334 of 2023, decided 3 February 2025), the agreement treated 20% of the basic sale price (BSP) as earnest money, all of which could be forfeited. The Supreme Court did not disturb the consumer commission's consistent view that 10% of BSP is a reasonable forfeiture, and it ordered the excess refunded. The Court also said that terms which are "ex facie one-sided, unfair and unreasonable" amount to an unfair trade practice. It called that agreement "one-sided and totally tilted in favour of the Developer". That ruling applied consumer law to its own facts. It is not a statutory cap, and the outcome in another case can differ.

Take an illustrative flat with an all-in price of ₹90 lakh, of which ₹85 lakh is BSP. The buyer has paid ₹30 lakh and then cancels without any default by the builder.

If the clause measured 10% on the ₹90 lakh all-in price instead, the forfeiture would be ₹9,00,000. Which base the clause uses matters as much as the percentage. Check also whether the clause adds brokerage, taxes paid or interest to the amount kept.

The Supreme Court case on a model agreement

In Ashwini Kumar Upadhyay v. Union of India, W.P.(C) 1216/2020, the Supreme Court has been examining whether the core of the agreement for sale should be the same across states. In its order of 12 August 2022, a bench of Justices D.Y. Chandrachud and A.S. Bopanna recorded the amicus curiae's report. The report grouped states by whether they had notified an agreement, had followed the model (Delhi) format, or had deviated from it, with or without reasons. The Court asked for a roadmap to apply a model agreement uniformly while allowing for local needs. It said that "the core of the model agreement must be uniformly followed to protect the interests of home buyers".

Press reports describe a January 2023 hearing that circulated a two-part compendium: clauses to be uniform nationally, and clauses states could add without diluting them. We have not read that order, and we could not confirm from the Supreme Court's records what has happened since. As of today, no nationwide model agreement imposed by the Court has been confirmed. If one is finalised, unfair clauses like those above could be harder to insert. Until then, your state's prescribed form under s.13(2) is the benchmark.

This is an explainer, not legal advice. For a specific agreement, a property lawyer can compare it line by line with your state's prescribed form.