The fine print: terms & conditions NRIs should read twice

Nobody enjoys reading a builder-buyer agreement. They run to forty or fifty pages, the font is small, and the language seems designed to make your eyes slide off the page. Most buyers sign them after a quick skim. We understand why. We just wish they wouldn't.

Because when something goes wrong - the possession date slips by two years, a surprise "escalation charge" lands in your inbox, the clubhouse turns out to be an extra - the answer is almost always somewhere in that document. Usually on a page you initialled without reading.

This post walks through the clauses we always read twice for our clients. Think of it as the bits worth putting the kettle on for.

Area: carpet, built-up and "super"

This is the oldest trick in the book, and RERA has done a lot to fix it. But you still need to know the terms.

Under RERA, a developer must sell a flat on the basis of carpet area. You can still be shown a "super area" figure for comparison, but the price must be tied to the carpet area. If an agreement quotes a price per square foot on super area with no carpet area figure, ask why.

Also look for a clause on what happens if the final carpet area differs from what was promised. A fair agreement will say you pay for any increase only within a small limit, and get refunded for any decrease.

The possession date, and what happens when it moves

Every agreement will have a possession date. Most will also have a grace period, and a list of reasons the developer can use to extend it.

What you want to find is:

• The exact date, not "approximately 36 months from the date of booking."
• How long the grace period is, and whether it's automatic.
• What compensation you get for each month of delay after that.

RERA gives you real rights here. If the developer fails to hand over on the agreed date, you can either withdraw from the project and get your money back with interest, or stay in and receive interest for every month of delay until possession. The interest rate is prescribed under the state's RERA rules. Older agreements sometimes offered buyers a token amount per square foot per month, which was rarely worth the paper. RERA overrides that kind of one-sided clause.

Force majeure

This is the "acts of God" clause. Floods, earthquakes, war, a pandemic. Fair enough. But read the list carefully. We've seen agreements that slip in "delay in approvals," "shortage of labour" or "any order of any court" as force majeure. Those are ordinary business risks, not acts of God, and you shouldn't be the one carrying them.

The price is never just the price

A sales sheet will lead with a base price. The agreement will list everything else. Go through each line and ask whether it's included in your quote:

• Preferential location charges (PLC) - for a park-facing unit, a corner flat or a higher floor.
• Car parking - covered and open, sometimes priced separately per slot.
• Club membership - often a one-time charge, sometimes with annual fees on top.
• External and internal development charges - common in some states.
• Power backup, gas pipeline, meter connection charges.
• Interest-free maintenance security (IFMS) - a deposit the maintenance agency holds. Check whether it's refundable and on what terms.
• Advance maintenance - sometimes a year or two collected up front at possession.
• GST on under-construction homes, and stamp duty and registration on top of everything.

Then look for an escalation clause. This lets the developer raise the price if construction costs go up. In our view, a fixed-price agreement is the only sensible kind. If there's an escalation clause, push to have it removed or tightly capped.

Ask the developer for an "all-inclusive cost sheet" signed on letterhead. If they won't give you one, that tells you something.

Payment plans: linked to what, exactly?

There are broadly two kinds.

A construction-linked plan ties each instalment to a stage: foundation, each floor slab, brickwork, finishing. You pay as the building rises. If construction stalls, so do your payments.

A time-linked plan asks you to pay on fixed dates, whatever is happening on site. It can come with a discount, but you're carrying the risk if the project slows down.

From abroad, where you can't drop by the site every month, the construction-linked plan is usually the safer choice. Whichever you pick, read the clause on late payment interest. Some agreements charge buyers a steep rate on late instalments while paying them far less for the developer's own delays. RERA requires the interest rate to be the same both ways.

Cancellation and refunds

Life changes. A job moves, a family situation shifts. You should know what walking away costs you before you're in that position.

Look for:

• How much of your money is forfeited as an "earnest money" deduction.
• Whether taxes and brokerage are refunded.
• How many days the developer has to return the balance.

Some forfeiture is normal. A clause that lets the developer keep a large chunk of everything you've paid is not. Many state RERA rules set a reasonable limit on this, so check what your state says.

The specifications annexure

Tucked at the back is a list of what your flat will actually contain: flooring, fittings, kitchen, doors, windows, electricals. This is the only list that counts.

The brochure render with marble floors and a modular kitchen is a picture. The annexure is the promise. If the annexure says "vitrified tiles" and "provision for modular kitchen," that's what you'll get. Also watch for wording like "or equivalent brand," which gives the developer a lot of room.

And remember, under RERA, a developer can't make major changes to the sanctioned plans or common areas without the consent of at least two-thirds of the buyers.

Transfer and resale charges

Thinking you might sell before possession? Many agreements charge a transfer fee for changing the buyer's name, and some don't allow transfer at all until a certain percentage has been paid. If flexibility matters to you, this clause matters too.

Title, encumbrance and the certificates that matter

None of the clauses above help if the land itself has problems. Before signing, have a lawyer confirm:

• Clear title - that the developer owns the land or has a valid development agreement with the owner.
• Encumbrance certificate - that the land isn't mortgaged or tied up in a dispute. If there's a construction loan, the bank should issue a no-objection for your unit.
• Commencement Certificate (CC) - permission to begin construction.
• Occupancy Certificate (OC) - confirmation that the building is complete and fit to live in. No OC, no possession. It's that simple.

What RERA actually gives you

RERA isn't a magic shield, but it changed the balance of power quite a bit. In short:

• Projects must be registered, with plans, approvals and timelines published.
• Sale must be on carpet area.
• No more than 10% advance before a registered agreement for sale.
• A large share of buyer money must be kept in a separate project account and used for that project.
• Delay compensation or a full refund with interest.
• Five years of defect liability after possession.
• A complaint mechanism you can use without going straight to court, and often online.

If you've got a draft agreement sitting in your inbox and you're not sure what to make of clause 14(b), send it our way. An NRIVEST advisor can go through it with you and flag what's worth negotiating.

Property law and RERA rules vary by state and change over time. Please confirm the current position with a qualified property lawyer before you sign.