Consumer Affairs Dept Suggests Incorporating Exit Clause in Builder-Buyer Agreement

A round table conference was organized on April 18, 2023, by the Department of Consumer Affairs, wherein it was suggested that the builder-buyer agreements incorporate an exit clause for homebuyers which would be valid until the builder obtains the Occupancy Certificate (OC) or Completion Certificate (CC) and offers possession of the property.

The conference was held to discuss the ways in which issues existing in the real estate sector could be dealt with. It was highlighted that more than 54,000 real estate cases were pending in consumer commissions. In light of the same, the consumer commissions and RERA have been urged to ensure that mediation and conciliation are adopted for the speedy disposal of cases.

Several important issues were identified at the conference, such as delays in handing over possession of the property, failure to adopt the RERA model builder-buyer agreement, etc. To address these issues and promote the consumers’ welfare, a committee is proposed to be set up which will be comprised of the National Consumer Disputes Redressal Commission (NCDRC), State Consumer Disputes Redressal Commissions, Real Estate Regulatory Authority (RERA), Department of Consumer Affairs, Insolvency and Bankruptcy Board of India (IBBI), Voluntary Consumer Organisations (VCOs) and Builders as members.

Considering the challenges faced by homebuyers, it has been proposed to enforce a model builder-buyer agreement which could be drafted in such a manner as to avoid the occurrence of disputes between builders and homebuyers. Certain changes to the builder-buyer agreement have been put forward, such as disclosing additional charges in the schedule, specifying grievance redressal mechanisms, including the permissions required to be taken from the concerned authority on the agreement’s first page, etc.