Agreement for sale: clauses to check before signing

2.7.1 What is an agreement for sale under RERA?

An agreement for sale is the written contract in which the builder agrees to sell you a flat and you agree to pay for it. Section 2(c) of the RERA Act, 2016 defines it as “an agreement entered into between the promoter and the allottee”. The promoter is the builder or developer. The allottee is you, the buyer. For a new flat in Bangalore, this agreement governs the period from signing until possession and conveyance. It records what the builder will build, your payments, the possession date and the interest for default. The agreement for sale does not transfer ownership to you. Under Section 17 of the Act, the builder transfers the title later, through a registered conveyance deed, which buyers usually call the sale deed. Get every promise into the agreement or its annexures, because the agreement sets your contract terms. Separately, Section 12 lets you claim compensation for a loss from a false statement in an advertisement, prospectus or model apartment.

Section 4(2)(g) of the Act lists three standard documents that the builder files with K-RERA at registration, as proformas.

Document	When you get it	What it does
Allotment letter	At booking	Allots a specific flat. Under Section 11(3), the builder must also make the sanctioned plans and the stage-wise completion schedule available to you at this time. The plans can be on display at the site.
Agreement for sale	Before you pay more than 10 percent of the cost (Section 13)	Sets the full terms: specifications, payments, possession date and default interest
Conveyance deed (sale deed)	After the occupancy certificate (Section 17)	Transfers the title of the flat to you

2.7.2 When must the builder sign and register the agreement for sale?

The builder must sign and register the agreement for sale before collecting more than 10 percent of the flat’s cost. Section 13(1) of the RERA Act says a promoter “shall not accept a sum more than ten per cent. of the cost of the apartment” as an advance or application fee. That limit applies until the builder signs a written agreement for sale with you and registers it. For a flat that costs ₹1 crore, the limit before registration is ₹10 lakh. The K-RERA portal’s RERA FAQ (question 46) says the same: for any further collection, the promoter must enter into an agreement for sale. The Act says that registration happens “under any law for the time being in force”. In Karnataka, the Department of Stamps and Registration registers documents at Sub-Registrar offices, and stamp duty and a registration fee apply. Sachi did not check the current stamp duty article for an agreement for sale for this chapter. Confirm the stamp duty and fee with the Sub-Registrar or your lawyer before execution.

1. Note the total cost of the flat in the cost sheet.
2. Add every payment you made so far: token, booking amount and application fee.
3. If a demand would take the total above 10 percent, ask for the registered agreement first.
4. Keep a receipt for every payment.

2.7.3 What must an agreement for sale contain by law?

Section 13(2) of the RERA Act lists what every agreement for sale must specify. It must give the particulars of development of the project, including the construction of the building and the flats. It must give the specifications, and the internal and external development works. It must state the dates and the manner of your payments. It must state the date of possession. It must state the rates of interest that the builder pays you, and that you pay the builder, in case of default. The section also allows “such other particulars, as may be prescribed” by the state rules. A clause that is vague on any of these points leaves you without a clear right to enforce. For example, “possession expected in 2028” is weaker than a fixed date. Use the table below as a checklist on your draft. Mark each row as present, vague or missing, and send the builder one written list of questions.

Particular required by Section 13(2)	What to check in your draft
Development of the project and construction of the building and flats	Tower, floor, flat number, carpet area and the attached floor plan
Specifications, internal and external development works	Flooring, fittings, amenities and common areas, listed in an annexure
Dates and manner of payments	Each instalment, its trigger (date or construction stage) and the amount
Date of possession	One fixed date, the same as or explained against the K-RERA completion date
Interest payable by the promoter and by the allottee on default	One rate for both sides, as Rule 16 and Section 2(za) require

2.7.4 How do I compare my draft with the K-RERA proforma agreement?

Compare your draft clause by clause with the proforma agreement for sale that the builder filed on the project’s K-RERA page. Section 4(2)(g) of the RERA Act requires the builder to file a proforma of the agreement for sale with the registration application. On rera.karnataka.gov.in, open Services, then Project Status, find the project, and open the Uploaded Documents tab. Form C of the Karnataka RERA Rules, 2017 is the registration certificate. Its condition (a) says the promoter “shall enter into an agreement for sale with the allottees as provided in Annexure A”. The 40-page copy of the 2017 Rules on the K-RERA portal does not contain that Annexure A. So the filed proforma is the practical baseline for your project. The RERA FAQ on the portal (question 47) says the agreement is binding. It adds that “internal flexibility” can cover other provisions that the parties decide. A difference from the proforma is a reason to ask questions. It is not proof of a violation by itself.

1. Download the proforma agreement from the Uploaded Documents tab.
2. Mark every clause in your draft that was added, deleted or changed.
3. Ask the builder to explain each change in writing.
4. Have a lawyer read the changes before you sign.

2.7.5 What should the possession date and delay clauses say?

The possession clause must state the date on which the builder hands over the flat, because Section 13(2) requires it. Section 18(1) of the RERA Act uses that date. If the builder fails to complete or give possession “by the date specified therein”, you have two choices. You can withdraw and get back the amount you paid, with interest and compensation. Or you can stay in the project and get interest “for every month of delay, till the handing over of the possession”. Rule 16 of the Karnataka RERA Rules, 2017 sets the rate. It is the State Bank of India highest marginal cost of lending rate (MCLR) plus 2 percent. Rule 17 says the builder must pay a refund, with interest and compensation, within 60 days from the date it becomes due. Sachi checked the 2017 text of the Rules, not later amendments. Read any extension, force majeure or notice clause closely. Compare the agreement date with the proposed completion date on the K-RERA project page.

Clause in the draft	What the RERA Act and Karnataka Rules say
Possession date	Required by Section 13(2). Section 18 counts delay from this date.
Interest to you for delay	Section 18(1): for every month of delay till possession. Rule 16: SBI highest MCLR plus 2 percent.
Refund if you withdraw	Section 18(1): refund with interest and compensation. Rule 17: within 60 days of becoming due.
Interest from you for late payment	Section 2(za): the same rate the builder pays you on default

2.7.6 What do the payment, default and cancellation clauses mean for me?

The payment clauses bind you as much as the possession clause binds the builder. Section 19(6) of the RERA Act says you must make payments “in the manner and within the time” that the agreement specifies. You must also pay your share of registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent and other charges. Section 19(7) makes you pay interest at the prescribed rate if you pay late. The explanation to Section 2(za) says the rate the builder charges you on default must equal the rate the builder pays you on default. Under Section 19(8), both sides can agree to reduce these. Section 11(5) says the builder can cancel your allotment only in terms of the agreement for sale. If the cancellation is outside those terms, unilateral and without sufficient cause, you can approach K-RERA. The sections Sachi checked do not fix a cancellation deduction. So read the cancellation and forfeiture amounts in your draft before you sign.

Check these points in the draft:

1. Each instalment has a clear trigger and amount.
2. The late-payment interest equals the delay interest the builder pays you.
3. The cancellation clause states the notice period, any deduction and the refund timeline.
4. The list of extra charges matches your cost sheet.

2.7.7 Can the builder change my flat or the building after I sign?

The builder cannot change your own flat’s plans or specifications without your previous consent. Changes to the building or common areas need two-thirds of the allottees to agree in writing. Section 14(1) of the RERA Act says the builder must complete the project as per the sanctioned plans and specifications. Under Section 14(2)(i), only minor changes need no consent. These are changes you ask for, or changes an architect or engineer recommends, after the builder tells you. The Act says “minor” excludes structural changes, for example a change in area or height, or work on a wall, column or beam. Under Section 14(2)(ii), changes to the building plans or common areas need the previous written consent of at least two-thirds of the allottees. The promoter does not count as an allottee for this vote. Section 14(3) adds a defect liability. You can report a structural defect, or a defect in workmanship, quality or services, within five years of possession. The builder must then fix it free within 30 days.

2.7.8 What happens after I sign the agreement for sale?

After you sign, the builder cannot mortgage or create a charge on your flat. Section 11(4)(h) of the RERA Act says that any such mortgage or charge “shall not affect the right and interest of the allottee”. Keep paying as per the schedule in the agreement, and keep every receipt and demand letter. When the building gets its occupancy certificate, Section 19(10) says you must take physical possession of the flat within two months. Section 17(1) makes the builder execute a registered conveyance deed in your favour. If no local law sets the timing, the builder must do this within three months from the date of the occupancy certificate. Section 19(11) says you must take part in the registration of that deed. Before you sign the sale deed, compare it with the agreement for sale: names, flat number, carpet area, price and annexures. Sachi reads K-RERA project pages and filed proformas for Bangalore projects. To compare your draft with the filed proforma, Ask Sachi.