Builder-Buyer Agreement: 10 Clauses to Check in 2026
Builder-Buyer Agreement in 2026: 10 Clauses to Check Before Signing a Flat Purchase Agreement
India | October 21, 2026
A family in Hyderabad books an apartment in an under-construction residential project.
The salesperson shows them a floor plan, a sample flat and a brochure advertising a swimming pool, covered parking and possession within two years.
The family pays a booking amount and receives a lengthy agreement.
Everything appears routine until they read the small print.
The possession clause mentions an additional grace period. The price sheet excludes several charges. The cancellation provision allows substantial deductions. The document describes the flat using a saleable-area figure without clearly explaining the usable carpet area.
These terms can have significant consequences.
A builder-buyer agreement, usually called an agreement for sale under the Real Estate (Regulation and Development) Act, 2016, establishes important contractual rights and obligations before the ultimate property conveyance and handover.
It may determine how much the buyer pays, when payments become due, which apartment is promised, when possession must be delivered and what happens if either party defaults.
Signing without understanding these provisions can expose a buyer to avoidable financial and legal uncertainty.
This guide explains ten clauses every apartment buyer should examine before signing, with special attention to Telangana's prescribed agreement format and RERA protections.
It is intended for ordinary homebuyers evaluating residential projects. The exact legal treatment depends on the project, the transaction documents and applicable law.
Why the agreement deserves attention before the sale deed
A property purchase often unfolds in stages.
The buyer may begin with an enquiry or booking form, followed by an allotment letter and the agreement for sale. Later stages can include mortgage disbursement, construction-linked instalments, occupancy or completion documentation, possession and execution of the final conveyance.
The agreement for sale matters because important obligations arise before the buyer receives the keys or final registered sale deed.
Under Section 13 of RERA, a promoter generally cannot accept more than 10% of the cost of an apartment, plot or building as an advance or application fee without first entering into and registering the required agreement for sale.
The agreement must address matters including development specifications, payments, possession and interest payable on default.
Telangana Rule 38 prescribes an agreement format in the annexure to the Telangana Real Estate (Regulation and Development) Rules, 2017.
The state's prescribed format is an important comparison document. Buyers should not assume that any draft supplied by a developer is necessarily compliant merely because it has been described as standard.
Clause 1: Exact promoter, project and apartment identity
What to check: The agreement must correctly identify the legal promoter, project, registered phase and apartment being purchased.
A developer's public brand name may differ from the legal company or LLP signing the agreement.
Record the promoter's exact legal name, registered address and relevant company or entity identifiers.
Match these particulars with the project's Telangana RERA registration where applicable.
The property schedule should specify the tower, block, floor, flat number and other identifying information.
Confirm that the unit shown in the agreement matches the booking form, sanctioned plan and RERA disclosures.
A large development may contain multiple separately registered phases. Registration of one phase does not automatically establish the position of another.
Red flag: The sales brochure names one business, while the agreement identifies a different company without explaining its development and sale authority.
What to request: RERA registration details, promoter identity, relevant development authority documents, the sanctioned plan and the completed property schedule.
An independent lawyer should verify the promoter's right to sell the exact unit.
Clause 2: Carpet area, balcony area and price calculation
What to check: The agreement should clearly distinguish RERA carpet area from balconies, terraces and any larger saleable-area description.
Under RERA, carpet area is the net usable floor area within the apartment, excluding external walls, service shafts, exclusive balconies or verandahs and exclusive open terraces, but including internal partition-wall area.
A marketed super built-up area may include a proportion of common spaces. It is not interchangeable with carpet area.
Suppose an apartment is advertised as 1,500 square feet of saleable area but has 1,120 square feet of RERA carpet area.
The buyer should understand what is included in each figure and how the purchase price is determined.
Telangana's prescribed agreement format specifically addresses carpet area and final-area adjustments after construction.
Its model provides for recalculation and refund of excess money when the relevant area is reduced, with specified interest. It also addresses qualifying increases, including a three-percent threshold in the stated model provision.
The precise executed terms must be examined against the applicable law and model.
Red flag: The agreement mentions only “1,500 sq ft including common areas” without a clear carpet-area statement.
What to request: A dimensioned apartment drawing, carpet-area declaration, balcony and terrace measurements, final-price formula and written area-adjustment mechanism.
Clause 3: Total price, taxes and additional charges
What to check: The full financial commitment, not merely the advertised base price.
An apartment marketed at ₹80 lakh may involve additional items depending on the transaction.
These could include applicable GST, parking-related charges, amenities, utility connections, maintenance deposits, corpus or sinking-fund contributions, registration and other statutory expenses.
Not every separately quoted charge is necessarily lawful or payable in the way described. Its basis needs examination.
Ask for one itemised cost schedule.
It should identify charges already included in the quoted consideration, amounts payable separately, their recipients and the stage at which they arise.
For an under-construction property, the applicable GST position can differ from that of a qualifying completed property. Do not insert a generic GST percentage without checking the transaction category and current rules.
Red flag: A clause allows the promoter to add unspecified “other charges as determined from time to time”.
What to request: A signed itemised price sheet and clear contractual limits on additional demands, together with a lawful method for dealing with genuine statutory changes.
Clause 4: Payment milestones and buyer-default interest
What to check: Exactly when each instalment becomes payable and which construction milestone triggers it.
Some projects use construction-linked payment schedules.
Others advertise time-linked or special payment schemes.
A construction-linked schedule should define milestones clearly enough for a buyer and lender to determine whether a demand is justified.
Ask how the promoter will certify completion of each milestone and how much notice the buyer receives before payment becomes due.
Review interest applicable when the buyer pays late.
Telangana Rule 15 prescribes a rate based on the State Bank of India's highest Marginal Cost of Lending Rate plus two percentage points for the relevant promoter/allottee defaults.
The agreement should be checked for consistency with applicable statutory requirements.
The buyer should also consider whether the proposed schedule is manageable if a bank delays disbursement or the buyer's income temporarily changes.
Red flag: The developer can demand substantial payments irrespective of actual construction progress, or change milestones unilaterally without sufficient contractual basis.
What to request: A complete payment annexure showing percentage, amount, triggering event, due date mechanism and consequences of delayed payment.
Clause 5: Specific possession date and grace period
What to check: The legally meaningful date by which possession is promised.
Do not rely on a brochure stating “possession in 2028” without checking the signed agreement.
The document should state a specific commitment or objectively ascertainable date and explain any grace period.
Check whether the agreement distinguishes construction completion, occupancy certification, offer of possession and actual handover.
A developer may refer to the RERA registration completion date, but the buyer must also examine the contractual possession commitment.
A Telangana RERA order issued in 2026 addressed the significance of the agreed possession date and a specified contractual grace period in determining delay.
An extension of a project's RERA registration should not automatically be assumed to erase every individual contractual right.
Red flag: The builder may extend possession indefinitely for broadly described commercial or administrative reasons.
What to request: A clear handover date, narrowly and lawfully framed extension provisions, and a definition of what must be completed before valid possession is offered.
Clause 6: Builder delay, monthly interest and refund remedies
What to check: What happens if the promoter fails to deliver possession under the agreement.
RERA Section 18 provides important remedies.
A qualifying allottee who chooses to withdraw when the promoter fails to complete or give possession in accordance with the relevant provisions can seek return of the applicable amount with prescribed interest and compensation where legally available.
A qualifying allottee who does not withdraw may be entitled to interest for each month of delay until possession.
These alternatives should not be confused.
In Telangana, Rule 15 prescribes the relevant interest-rate formula as SBI highest MCLR plus two percentage points.
It would be misleading to publish a single permanent percentage such as 10% or 11%, since the applicable benchmark can change.
For illustration only, suppose ₹40 lakh has been paid and the applicable annual interest rate is assumed to be 10.5%.
For six months, a simplified calculation is:
₹40,00,000 × 10.5% × 6/12 = ₹2,10,000.
That is a mathematical example, not a determination of the amount legally payable in an actual case. Dates of each instalment, applicable rate periods, orders and calculation method can change the result.
Red flag: The developer's delay liability is negligible while the buyer faces much higher charges for late instalments, without a legally defensible explanation.
What to request: Clear default remedies consistent with RERA and Telangana rules, including interest calculation, refund procedure and the relevant complaint route.
Clause 7: Changes to floor plans, specifications and amenities
What to check: Whether the developer can change the apartment or the project after the buyer signs.
The agreement should attach or clearly identify sanctioned layout and floor plans, specifications, fittings and significant promised facilities.
RERA Section 14 restricts certain alterations to sanctioned plans and specifications without the consent required by law.
For specified material changes to buildings and common areas, the Act uses a consent requirement involving at least two-thirds of relevant allottees, subject to the provision's details.
There are separate rules and exceptions concerning minor changes and individual apartments.
The developer should not have unlimited power to substitute inferior materials, reduce promised amenities or materially alter the purchased unit merely by adding a general discretion clause.
Red flag: The promoter may modify flat dimensions, room layouts, common amenities or important specifications at its sole discretion, with no meaningful limits.
What to request: Signed specification schedules, sanctioned-plan references, a lawful change-control process and written consent procedures where required.
Clause 8: Buyer cancellation, forfeiture and refund timeline
What to check: The financial consequences if the buyer cancels—and the remedies if cancellation results from the promoter's default.
These are not the same situation.
A buyer cancelling for a personal reason may face contractual deductions, subject to the governing law and the fairness and enforceability of the terms.
Where a promoter materially defaults and statutory RERA refund rights arise, different protections apply.
Review any definition of booking amount, earnest money, cancellation fee and administrative deduction.
Ask when the remaining amount must be refunded.
Telangana Rule 16 provides a 90-day period for refunds along with applicable interest and compensation that become payable under the relevant Act and rules. Particular orders can impose their own directions, so this is not a universal statement that every voluntary cancellation receives full repayment in 90 days.
Section 11(5) also restricts arbitrary or unjustified promoter cancellation and preserves the allottee's ability to seek relief.
Red flag: The builder can cancel and retain a very large amount for any minor buyer delay, but the buyer has no meaningful remedy when the builder defaults.
What to request: Clear cancellation events, notice and cure periods, permitted deductions, statutory rights and an identifiable refund deadline.
Clause 9: Occupancy, handover, defects and maintenance
What to check: Whether possession means a genuinely usable and legally appropriate property—not simply collection of keys.
The agreement should explain the documentation and conditions for a valid possession offer, including applicable occupancy or completion certification.
Check when the promoter must provide essential services and promised common facilities.
Review responsibility for property taxes, utility charges and maintenance before and after handover.
The agreement should also address conveyance and transfer of relevant documents and common areas as required.
RERA Section 14(3) gives allottees important rights concerning qualifying structural defects and specified defects brought to the promoter's notice within five years from handing over possession, with statutory rectification provisions.
This is not a blanket guarantee that every surface scratch will be repaired indefinitely.
A practical buyer should inspect the apartment and create a dated snag list at handover.
Red flag: Maintenance begins long before the unit is ready, the buyer must accept possession without relevant certificates, or the contract purports to eliminate statutory defect remedies.
What to request: Handover checklist, relevant approval documents, defect-notification process, maintenance start date and the schedule for delivery of common facilities.
Clause 10: Registration, notices, dispute resolution and annexures
What to check: Whether the agreement is properly executed and registered as required, and whether its dispute clauses respect applicable statutory remedies.
A contract may describe methods for serving notices, mediation, arbitration or court proceedings.
Such wording should not be treated as automatically eliminating rights available under RERA or other applicable consumer law.
The identity and address for official notices must be accurate.
Buyers should identify the competent authority and available complaint processes.
Also confirm that every important schedule referred to in the agreement is actually attached.
Typical annexures may cover the apartment plan, property schedule, price, payment plan, finishing specifications, common amenities and relevant declarations.
A signed agreement that refers to “Annexure C” without supplying that annexure creates unnecessary uncertainty.
Telangana Rule 38 states that certain earlier booking or allotment documents cannot be used to limit the allottee's rights under the agreement, Act, rules or regulations.
Red flag: Missing schedules, blank dates, contradictory possession clauses or language suggesting the buyer has waived every statutory remedy.
What to request: The complete final executed document, all referenced annexures, evidence of registration where required and copies of every signed amendment.
11. What an ₹80 lakh apartment buyer should calculate before signing
Consider an illustrative under-construction apartment priced at ₹80 lakh in the agreement.
Before the registered agreement for sale is executed, the Section 13 advance-payment threshold is generally:
₹80,00,000 × 10% = ₹8,00,000.
That does not mean ₹8 lakh must be paid or that every booking payment below this amount is risk-free.
It establishes the relevant statutory threshold for the promoter's collection before the required agreement and registration.
Now suppose the developer asks for another ₹12 lakh after the agreement.
The buyer should confirm the contractual milestone, the total amount already paid and whether the demand matches the signed schedule.
If a bank is financing the purchase, the borrower should coordinate lender disbursement with the agreement's payment requirements.
Finally, the buyer should calculate the complete financial commitment beyond the base price.
The correct figure may include applicable taxes and legitimate transaction costs that were not part of the headline property price.
Do not assume the advertising price equals the complete cash requirement.
12. A practical red-flag comparison
| Contract wording or problem | Why it needs attention |
|---|---|
| “Possession expected subject to circumstances” | No clear enforceable timeline |
| “All area as per super built-up measurement” | Carpet area may be undisclosed |
| “Additional charges as decided by company” | Uncertain final price |
| “Promoter may revise layout without consent” | Potential conflict with statutory change protections |
| “No compensation for any construction delay” | Potential conflict with RERA remedies |
| “All booking money forfeited on any cancellation” | Possible unfair or disproportionate cancellation consequences |
| “Buyer waives right to complain before authorities” | Cannot simply be assumed to extinguish statutory rights |
| Annexures referenced but missing | Key commitments may be unverifiable |
A concerning provision does not automatically establish that the entire agreement is void.
It signals the need for an independent legal review and appropriate amendment or clarification before signing.
13. What to do if the builder refuses to change a clause
First, identify whether the issue is a genuine statutory inconsistency, an unclear statement or a commercial term the buyer would prefer to negotiate.
For a statutory concern, refer to the applicable RERA provision and Telangana's prescribed agreement.
Ask the developer to explain its legal basis in writing.
For commercial questions, request an express amendment or signed clarification.
Do not rely solely on a salesperson's verbal promise.
If the issue involves a major legal or financial risk, engage an independent property lawyer.
A refusal to provide the full draft, relevant plans or a clear possession date is itself a reason to reconsider the transaction.
The buyer should also verify that the person making commitments has authority to bind the legal promoter.
The right time to resolve important uncertainty is before substantial payments become difficult to recover.
14. How to verify the agreement against official records
Use Telangana RERA's official project search to verify the registration, promoter and relevant phase.
Review the approved or disclosed project details available through the regulator.
Obtain the sanctioned plan from the appropriate authority or through proper documentary verification.
Compare the apartment's number, floor, carpet area and stated amenities.
Read Telangana's Rule 38 agreement format to understand the intended contractual framework.
Examine the project's applicable approvals and encumbrance information with legal help.
If the developer advertises revised possession or a major plan change, ask for the corresponding official disclosures and documents.
RERA registration is a necessary check for projects required to register, but it is not an independent guarantee that the contract is fair or that construction will be completed.
15. The documents buyers should have before signing
A prepared buyer should retain copies of the booking form, allotment letter and draft agreement.
The property file should include the project RERA registration particulars where applicable, sanctioned-plan information, proposed unit layout, measurement details and property schedule.
The final price sheet must be complete.
All payment milestones should appear in a written annexure.
The promoter should explain the possession date and any grace period.
The buyer should examine cancellation, refunds and interest provisions together.
Obtain the proposed specifications and the list of common amenities.
Ask about property-title and encumbrance documents and have an independent lawyer verify them.
Where the purchase involves a loan, obtain preliminary confirmation that the proposed transaction and property satisfy lender requirements.
Finally, retain the final signed, registered agreement and every supporting schedule.
16. Agreement for sale versus sale deed
The agreement for sale sets out contractual commitments to sell and purchase the property on specified terms.
A sale deed or other legally appropriate final conveyance is a separate instrument through which the relevant property interest is transferred.
Registration of the agreement for sale should not be confused with the ultimate conveyance.
Nor does possession alone necessarily replace the legal transfer document.
A buyer should understand the documents required at every transaction stage.
For under-construction apartments, the agreement is especially important because the buyer may pay substantial amounts well before completion.
This is why a guide about builder-buyer agreement clauses serves a different purpose from a guide about checking a completed sale deed.
Conclusion: read the promises before they become disputes
The most important builder-buyer agreement provisions concern price, area, payment, possession and remedies.
A family should know exactly which apartment it is buying, how much it must pay, when the developer must deliver possession and what happens if either party fails to perform.
RERA offers important statutory protections, but buyers still need to understand their own signed terms.
In Telangana, the prescribed agreement format is a valuable benchmark for evaluating a developer's draft.
The strongest practical approach is to obtain the complete agreement well before signing, compare its annexures with the project documents and have an independent lawyer review any material uncertainty.
Do not sign simply because the developer calls the agreement standard. Confirm that the actual promises, amounts, timelines and remedies are understandable and properly documented.
FREQUENTLY ASKED QUESTIONS
1. What are the most important clauses in a builder-buyer agreement?
Buyers should verify the promoter and apartment identity, RERA carpet area, complete price and extra charges, payment milestones, contractual possession date, builder-delay remedies, permitted changes to plans, cancellation and refund rules, handover and defect obligations, and registration and dispute-resolution terms. Every referenced floor plan, price sheet and specification annexure should be attached. In Telangana, compare the draft with the agreement format prescribed under Rule 38 of the Telangana RERA Rules, 2017.
2. How much advance can a builder collect before signing an agreement for sale?
Under Section 13 of the Real Estate (Regulation and Development) Act, 2016, a promoter generally cannot receive more than 10% of the apartment, plot or building cost as an advance or application fee before entering into and registering the required agreement for sale. For an illustrative ₹80 lakh apartment, 10% equals ₹8 lakh. This is a statutory threshold, not a recommendation to pay that amount without checking the project's legal status and the terms of the transaction.
3. What can a buyer do if the builder delays possession or refuses a refund?
Where the conditions of RERA Section 18 are satisfied, an eligible buyer may seek the statutory refund and interest remedy when withdrawing or interest for the period of delay when continuing with the project. Telangana Rule 15 uses the SBI highest MCLR plus two percentage points as the prescribed interest-rate formula. The applicable amount depends on payments, dates and the facts of the case. Buyers should preserve the agreement, receipts, communications and possession commitments, and seek appropriate relief through the competent authority or other available legal route. Ordinary buyer-initiated cancellation is a different situation and must be assessed against the contract and applicable law.
VERIFIED OFFICIAL SOURCES AND FURTHER READING
1. Real Estate (Regulation and Development) Act, 2016 — India Code
https://www.indiacode.nic.in/indiacode/bitstream/123456789/2158/1/A201616.pdf
Relevant sections: 2(k), 11, 12, 13, 14, 18, 19 and 31.
2. Telangana Real Estate (Regulation and Development) Rules, 2017 — Official PDF
https://rera.telangana.gov.in/Uploads/RR1.pdf
Relevant provisions: Rules 15, 16 and 38, and the Annexure Agreement for Sale.
3. Telangana RERA — Official Website
https://rera.telangana.gov.in/
4. Telangana RERA — Registered Project Search
https://rerait.telangana.gov.in/SearchList/Search
5. Telangana RERA — Official Frequently Asked Questions
https://rera.telangana.gov.in/sfkdhgshrg98yr-TG-RERA-svhbui4596809368dsggvx
6. Telangana RERA — Published Order on Carpet Area and Agreement Terms, 2026
https://rera.telangana.gov.in/Home/ShowPdf?pdffilename=BU_130326161150574.pdf
7. Telangana RERA — Published Order Discussing Possession Date and Delay Rights, 2026
https://rera.telangana.gov.in/Home/ShowPdf?pdffilename=BU_200526184200445.pdf
Editorial disclosure: This is a consumer-education checklist for the agreement stage, not an assessment of any named developer. References to statutory rights are subject to applicable law, project classification and case-specific facts. The ₹80 lakh and delay-interest examples are illustrative calculations. An advocate familiar with Telangana real-estate law should examine the actual agreement before execution.
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