New Hope for Property Buyers – Non-Violating party can terminate the agreement

As per the Real Estate (Regulation & Development) Agreement for Sale Rules 2016, both the buyer and the promoter/developer now has the right to end the agreement entered into by them in case of any defaults by either of them. This rule is currently applicable to union territories – Chandigarh, Dadra and Nagar Haveli, Lakshadweep, Daman and Diu and Andaman and Nicobar Islands. One can expect the implementation of this rule in other states as well. The main motive behind these set of rules is to ensure timely implementation of real estate ventures taken up by promoters and to get rid of any kind of bias to either of parties in their scope of agreement.

What do the rules specify?

According to Real Estate (Regulation & Development) Agreement for Sale Rules 2016, the sale agreement between the parties must clearly mention the expected delivery date of completion of the project for possession by the buyer and the payment schedule for the buyer as agreed upon by both parties. In case of non-conformance with these rules by either of the parties, the non-defaulting party possess the right to terminate the agreement.

What if the promoter defaults?

A promoter is in violation of the agreement if he fails to finish the project and provide possession per the agreed upon time between the parties, the buyer has every right to terminate the agreement and is at liberty to get the refund of amount paid with interest in 45 days of such termination.

Furthermore, if the buyer doesn’t intend to terminate the agreement, but is ready to wait till the project is made available for possession, the promoter is liable to pay interest till the project is completed. However, if the promoter is not at fault, if the project completion delays are due to force majeure conditions like floods, cyclone, war, drought, etc.

Summary – Buyer’s rights include

  • Termination rights – if there is a delay in project completion and its delivery
  • Compensation rights – if the buyer is willing to wait until the project is available for possession
  • Rectification rights – in case of structural defects in the property, buyer can demand rectification of the same from the promoter for a period of 5 years, commencing from the date of issuance of the occupancy certificate.

What if the buyer defaults?

The buyers is in violation of the agreement terms if he doesn’t comply with the agreed upon payment schedule ever after a specified number of demands have been made by the promoter. In such a case, the promoter has the right to end the agreement with the buyer and cancel the property allotment made to him. Promoter has to repay the buyer the amount that has already been paid by the buyer after deducting the booking charges and interest liabilities.

Summary – Promoters’ rights include

  • Termination rights – Cancel the property allotment in case of payment defaults by the buyer.


With implementation of these new set of rules, it looks like a win-win for all, for the buyers, promoters as well for the industry. With upcoming regulatory support, more and more buyers will now confidently make decisions on their property purchases, while promoters can expect constant flow of capital for construction purposes. It’s the industry that is going to gain the most – increased confidence among property buyers; constant stream of capital inflow and reduction in delayed projects.

A perfect blend for the sector to grow!

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