Flat Purchase Agreement (Under-Construction)

A Flat Purchase Agreement (Under-Construction) in India completes the transfer of the asset to the buyer, fixing the consideration paid and confirming the seller's right to sell.

RERA 2016 transformed residential real estate transactions in India by mandating registration of projects above specified thresholds with state RERA authorities, prescribing a Model Agreement for Sale that all promoters must follow, requiring mandatory disclosures on the RERA project registration portal, and establishing dedicated adjudicating mechanisms — RERA authorities and Appellate Tribunals — for disputes between buyers and promoters.

The Agreement for Sale under RERA must be registered with the Sub-Registrar of Assurances under Section 17 of the Registration Act 1908 before the promoter demands more than 10% of the total consideration (this condition is specified in the rules of most states implementing RERA). An unregistered agreement cannot be enforced against the promoter and does not give the buyer title protection.

Section 2(k) of RERA 2016 defines carpet area — the net usable floor area of an apartment, excluding external walls, service shafts, exclusive balcony and terrace areas — as the only permissible basis for pricing in RERA-registered projects. Pre-RERA practice of pricing on super built-up area (which included proportionate common areas and could be 25-45% larger than carpet area) is prohibited for RERA-registered projects.

Section 14(3) of RERA imposes a five-year structural defect liability on the promoter — any structural defect or workmanship defect reported by the allottee within five years of possession must be rectified by the promoter free of cost within thirty days. Section 18 of RERA entitles allottees to claim interest at the prescribed rate (currently equal to the State Bank of India's Marginal Cost of Lending Rate plus 2%) for every month of delay in possession beyond the committed date, or to a full refund with interest if they choose to withdraw from the project.

State-specific RERA rules — MahaRERA (Maharashtra), Karnataka RERA, Delhi RERA, Haryana RERA, Telangana RERA, and others — prescribe additional requirements, different model agreement formats, and varying stamp duty and registration fee structures. Stamp duty on flat purchase agreements varies significantly: Maharashtra levies stamp duty of 5-6% of the agreement value (with reduced rates under concession schemes), while states like Karnataka and Telangana have their own stamp act rates.

The legal framework governing the Flat Purchase Agreement (Under-Construction) in India draws on several key statutes and regulatory bodies. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Parties executing a Flat Purchase Agreement (Under-Construction) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Transfer of Property Act, 1882 sets the foundational requirements.

A Flat Purchase Agreement is required in India whenever a buyer purchases an under-construction flat from a builder or developer, and must be executed before the builder demands more than 10% of the consideration under RERA 2016.

First-time home buyers purchasing from RERA-registered builders must insist on the RERA-prescribed Agreement for Sale. Section 13 of RERA prohibits promoters from accepting advance payments above 10% of the flat's cost without first executing a registered agreement. Buyers who pay beyond 10% without a registered agreement lose the protections of RERA for amounts paid in excess of the 10% cap.

Home loan borrowers need the registered flat purchase agreement as the primary legal document for the bank's legal vetting and disbursement process. Institutional lenders — SBI, HDFC Bank, ICICI Bank, Kotak Mahindra Bank — require a registered RERA-compliant agreement before disbursing home loans against under-construction properties. The bank's legal counsel (empanelled advocate) reviews the agreement for RERA compliance, title, and charge creation.

Investors purchasing under-construction flats for resale (commonly called pre-launch or under-construction investments) must obtain a registered agreement from the builder before they can subsequently sell or assign the allotment to a third party. RERA requires promoters to maintain records of all allotments, and assignments by allottees require the promoter's written consent under Section 15 of RERA in most states.

NRI buyers (Non-Resident Indians and Persons of Indian Origin) purchasing residential property in India under the FEMA (Non-Debt Instruments) Rules 2019 must obtain a registered Agreement for Sale to document the transaction. NRI buyers also need the agreement for claiming Section 80C deductions on principal repayment and Section 24(b) deductions on interest on home loans.

Buyers in delayed projects must have a registered agreement before approaching the RERA Authority for possession delay compensation under Section 18 of RERA or filing a complaint before the RERA Adjudicating Officer. An unregistered agreement significantly weakens the buyer's position before RERA authorities.

A RERA-compliant Flat Purchase Agreement must contain all mandatory provisions specified by the state RERA rules and the Model Agreement for Sale, as well as practical clauses protecting both the buyer's and the builder's legitimate interests.

Project RERA registration details must appear prominently: the project registration number issued by the state RERA authority, the RERA project name, the RERA website URL where the project's quarterly progress reports, approved plans, and financial statements are publicly available. Under Section 11(2) of RERA, the promoter must keep the RERA registration current throughout the project.

Flat specifications describe the unit in precise RERA-compliant terms: floor number, unit number, wing or tower, carpet area in square metres (as defined under Section 2(k) of RERA 2016), the percentage undivided share in the land, and the amenities included. Annexures to the agreement should include the floor plan showing the unit, the site plan showing the project layout, and the list of specifications for internal finishes (flooring, sanitary ware, electrical fittings).

Total consideration and payment schedule state the total agreed price in INR, expressed on a per-square-metre carpet area basis as required by RERA. The payment schedule — whether construction-linked (CLP) or time-linked — must specify the exact rupee amount payable at each milestone, the milestone description (foundation completion, plinth, slab by floor number, fit-outs, OC receipt, possession), and the due date for each instalment. The sum of all instalments must equal the total consideration.

Committed possession date under RERA must state a specific calendar date — not a duration from the date of agreement. Section 18 of RERA entitles the allottee to interest from the promoter for every month of delay beyond this date. Buyers should verify that the possession date matches what is stated in the RERA project registration on the state RERA portal, as discrepancies between the two have been litigated before RERA authorities.

Force majeure clause must conform to RERA's prescribed list of force majeure events — natural calamities, civil commotion, and government regulations (such as court orders or licensing authority delays) are typically recognised. Under Section 6 of RERA, extensions of RERA registration can be granted by the authority for genuine force majeure, but the extension does not automatically relieve the promoter of interest liability for the delay period.

Defect liability clause must incorporate Section 14(3) of RERA verbatim: the promoter's obligation to rectify, without charge, any structural defect or defect in workmanship, quality, or provision of services reported within five years of the date of handing over possession.

Title and encumbrance: The promoter must represent and warrant that the land on which the project is being built has clear, marketable title, is free from encumbrances, and that all approvals necessary for the construction (building plan sanction, RERA registration, environmental clearance, fire NOC) have been obtained. The agreement should attach the title summary prepared by the promoter's advocate.

Maintenance and society formation clause specifies the post-possession obligations: the monthly maintenance charges for the period until the Residents' Welfare Association (RWA) or housing society is registered, the timeline for calling the society formation meeting, and the handover of common areas and documents to the society. Under the Maharashtra Ownership Flats Act 1963, the promoter must form the housing society within four months of allotting 60% of the flats. The forms-legal.com Flat Purchase Agreement (Under-Construction) template covers the mandatory elements under Transfer of Property Act, 1882.