Reading an agreement for sale: the clauses that decide what happens if it goes wrong

The completion date and what happens if it slips

Find the date. Confirm it matches the date declared in the RERA registration, and confirm it matches what you were told verbally. Divergence between the three is common and is itself informative.

Then find what happens if the date is missed. There should be a compensation provision. Read what triggers it, how it is calculated, from when it runs, and what the developer has to do to avoid it.

• Does the agreement date match the RERA declared date?
• Is compensation for delay stated, and how is it calculated?
• From what point does it run — the stated date, or a grace period after it?
• How long is the grace period, and is it defined or open-ended?

Force majeure — the clause that can swallow the delay provision

Every agreement excuses delay caused by events outside the developer's control. That is reasonable in principle. The question is how widely the clause is drafted.

A narrow clause lists genuine external events. A broad one extends to things like difficulty obtaining approvals, labour shortage, or non-availability of materials — circumstances that are part of the ordinary risk of development, and which the developer is better placed to manage than you are. A sufficiently broad clause makes the delay compensation provision largely theoretical.

Carpet area and what happens if it changes

The agreement must state the carpet area of your specific flat. Check it against what you were shown and against the plan.

Then find the clause covering variation. Construction rarely delivers a figure to the millimetre, and agreements provide for a tolerance. Read what tolerance is permitted, what happens beyond it, and whether the adjustment works in both directions — some agreements require you to pay for an increase but provide no refund for a reduction.

• Is the carpet area stated for your specific unit?
• What tolerance is permitted before an adjustment is triggered?
• Is the adjustment symmetrical — refund on a shortfall as well as payment on an excess?
• Can you exit if the variation exceeds a threshold?

Specification, and the right to change it

The specification schedule lists what the flat will be built and finished with. Compare it against the show flat, which is usually finished to a higher standard than the schedule requires.

Then read the developer's right to substitute. A clause permitting substitution with materials of equivalent or better quality is normal; a clause permitting unilateral change at the developer's discretion is not the same thing.

The asymmetry worth pricing

Compare two numbers: the interest you pay if you are late with an instalment, and the compensation the developer pays if it is late with the building.

In many agreements these are strikingly different. That asymmetry is not a drafting accident, and while it may not be negotiable, it tells you how the developer views the relationship — which is useful information before you commit several years of payments to it.

Cancellation and transfer

Two provisions you hope not to use and should read anyway.

• Cancellation by you: what is forfeited, over what period is the balance refunded, and does the developer have to resell first?
• Cancellation by the developer: on what grounds, and with what notice?
• Transfer to another buyer before possession: is it permitted, on what conditions, and at what charge?
• Restrictions on selling after possession, particularly on leasehold land where CIDCO permission is also required.

Practical approach

You are not going to renegotiate a standard agreement wholesale, and you do not need to. The value is in knowing what you are accepting.

• Ask for the draft before you pay the booking amount, not after.
• Have a property lawyer read it. It is a small cost against the transaction.
• Raise the two or three clauses that matter most to you rather than a long list.
• Get every verbal assurance written into the agreement or a signed addendum.
• Register within the four-month window.