Purchasing a property is a complex process that can be marred by false promises and vague agreements, often leading to legal disputes. A common issue is builders increasing the property price after receiving an advance payment. When the agreement is oral and not clearly documented in writing, the buyer has limited protection. Buyers frequently assume the quoted price is final, while developers may treat it as provisional. This underscores the necessity of a clearly written agreement.
Written Agreement for Cost Finalization
Buyers should only consider a formally written agreement as a definitive declaration of the final price. The agreement must explicitly state the total cost of the property, payment schedules, and any applicable charges. Once the agreement is executed, the mutually agreed price becomes legally binding under the Real Estate (Regulation and Development) Act (RERA). This means a builder cannot increase the price after the contract is signed, especially when the agreement clearly defines the total consideration.
Protection Under RERA
Under Section 13 of RERA, a promoter cannot accept more than 10% of the flat's cost as an advance or application fee before entering into a registered Agreement for Sale. Without this law, a builder could trap buyers due to the amount already paid and demand additional charges before an agreement is finalized.
Additionally, RERA mandates that property must be sold based on its carpet area—the total livable floor area inside a property—rather than the super built-up area, which includes the thickness of walls, balconies, or shared spaces like lobbies and elevators. This prevents builders from inflating prices by altering the area definition mid-way.
Legal Framework Under the Indian Contract Act
Under the Indian Contract Act of 1872, once parties sign a contract on an agreed price, it becomes binding and cannot be unilaterally increased by the builder.
What You Must Know as a Buyer
The problem arises because builders often rely on technical clauses and vague statements that are not properly explained during discussions with buyers. Meanwhile, buyers focus mainly on the headline price and frequently ignore the fine print.
As a buyer, you have the right to know the exact carpet area, a clear breakdown of costs, and any design changes before signing the agreement. All these details should be reflected in the agreement. You must also carefully check for any clauses stating that the price can be increased after the agreement is signed.
If a dispute arises, you can file a complaint with the RERA authority of the state where the project is located.
