Builder-Buyer Agreement: 10 Clauses to Read Twice Before You Sign (Punjab RERA Model Agreement)
Property1313 Team · October 23, 2026 · 9 min read
Quick answer: Before you sign a builder-buyer agreement in Punjab, compare it with the model agreement for sale in the Punjab RERA rules (Form Q, earlier Annexure A). Read these ten builder-buyer agreement clauses twice: total price and escalation, carpet area, payment plan, possession date and force majeure, delay interest, cancellation and forfeiture, defect liability, changes to plans, parking and common areas, and conveyance and disputes. Any extra term that conflicts with the model, the Act or the rules is a red flag.
The agreement for sale is the document your whole purchase rests on. Yet most buyers in Mohali, Zirakpur and New Chandigarh sign it within a day of receiving it, often after paying a booking amount. That is backwards. The law already gives you a standard to measure the draft against: the model agreement prescribed under rule 8 of the Punjab State Real Estate (Regulation and Development) Rules, 2017.
The model agreement in brief
- Section 13(2) of the RERA Act says the agreement for sale must be in the form prescribed by the rules.
- In Punjab, rule 8(1) prescribes it. It was Annexure A to the 2017 rules and was renamed Form Q by the amendment notified on 25 September 2020.
- The model allows the parties to add terms, but only if they are not "in derogation of or inconsistent with" the model, the Act and the rules.
- Rule 8(2) says anything you signed before the agreement for sale, such as an application form or allotment letter, does not limit your rights under it.
You can read the rules on the RERA Punjab Acts, Rules and Regulations page. Keep the model open next to your draft.
Note: In Pioneer Urban Land and Infrastructure v. Govindan Raghavan (2019), the Supreme Court held that a builder cannot bind a buyer to wholly one-sided clauses, and that such terms can be an unfair trade practice. That is a useful principle when you negotiate.
Clause 1: total price and escalation
The model says the total price is escalation-free, except for increases in development charges or other levies by the competent authority. When the promoter raises such a demand, it must attach the notification or order and the increase applies only to later payments.
What to check:
- Is the total price written as one figure, with each part (basic price, parking, PLC, club, other charges) listed?
- Is there any clause allowing an increase for "cost of materials", "market conditions" or "any other reason"? That goes beyond the model.
- Are GST, stamp duty and registration shown separately? Our guide to GST on flats helps you check the tax lines.
Clause 2: carpet area and how it is adjusted
The agreement must state the carpet area, as defined in the Act: the net usable floor area within the walls, excluding external walls, service shafts, exclusive balconies and open terraces. Under clause 1.7 of the model, the promoter confirms the final carpet area after completion and the certificate. If it is smaller, the excess is refunded within 90 days with interest at the rules rate. If it is larger, the extra is charged at the same rate per sq.ft.
What to check: the price should be tied to carpet area, not only to "super area". Our guide to carpet, built-up and super area explains the terms.
Clause 3: the payment plan and the 10% rule
- Under Section 13(1), the promoter cannot take more than 10% of the cost before the agreement is signed and registered.
- The 2020 amendment says the payment plan is to be mutually set out and annexed to the agreement.
- The model makes time of the essence for both sides: you pay on time, and the promoter builds to the schedule linked to those payments.
What to check: link payments to construction stages you can verify, not only to dates. Our comparison of construction linked vs down payment plans explains the trade-offs.
Clause 4: possession date and force majeure
Clause 7.1 of the model requires a specific possession date. Force majeure is defined narrowly: war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the project.
What to check:
- Is there one clear date, or a range such as "36 months plus a 12-month grace period"?
- Does the possession date match the completion date on the project's RERA registration? Check it using our RERA registration guide.
- Has force majeure been widened to include labour shortage, delayed approvals, court orders or "any reason beyond control"? That is the single most common way delay rights are weakened.
Clause 5: delay interest, the same rate both ways
If the promoter fails to give possession by the agreed date, the model gives you two choices: withdraw and get all your money back with interest within 90 days, or stay and get interest for every month of delay until possession. Rule 16 fixes the rate at SBI's highest Marginal Cost of Lending Rate plus 2%, and the same rate applies when you pay late.
Worked example, an illustration only. Suppose an agreement says the buyer pays 18% a year on late payments, but the builder pays ₹5 per sq.ft. a month for delay. On a 1,500 sq.ft. flat, that is ₹7,500 a month, or ₹90,000 a year. If you had paid ₹80 lakh, interest at an assumed rules rate of 11% would be ₹8,80,000 a year. The difference shows why the rate must be the same both ways.
Clause 6: cancellation and forfeiture
Clause 7.5 of the model: if you withdraw without any fault of the promoter, the promoter may forfeit 10% of the total consideration, interest and other dues payable for the allotment, and must return the rest within 90 days.
Worked example, an illustration only. Flat price ₹90 lakh; you have paid ₹30 lakh; you cancel for personal reasons.
| Under the model (10% of total consideration) | Under a draft that forfeits 20% | |
|---|---|---|
| Forfeited | ₹9,00,000 | ₹18,00,000 |
| Refund due | ₹21,00,000 | ₹12,00,000 |
What to check: the percentage, what it is calculated on, whether GST and brokerage are also deducted, and the refund timeline.
Clause 7: defect liability for five years
Under Section 14(3) of the Act and clause 12 of the model, if you report a structural defect, or a defect in workmanship, quality or services, within five years of possession, the promoter must fix it within 30 days at no charge. If it does not, you are entitled to compensation.
What to check: that the clause runs for five years from handing over possession, not from the occupancy certificate or a "deemed possession" date, and that it is not limited to "structural" defects only.
Clause 8: changes to plans and specifications
- Rule 8(3) and clause 1.6: no additions or alterations beyond 5% in the sanctioned plans, layout plans and specifications of your apartment without your prior written consent.
- Section 14(2): changes to the sanctioned plans and layout of the building and common areas need the written consent of at least two-thirds of the allottees.
What to check: watch for a blanket "the buyer consents to all future changes" clause. Consent should be specific and in writing.
Clause 9: parking and common areas
The 2020 version of the model asks the agreement to describe the garage or closed parking with its exact location and area, and your pro rata share in the common areas. Common areas are handed to the association of allottees.
What to check:
- Is your parking numbered and located, or only "allotted at the time of possession"?
- Are clubhouse, lawns or terraces listed as common areas, or "reserved" for the developer?
- Are you being charged separately for anything that is a common area under the Act?
Clause 10: conveyance, maintenance and disputes
- Conveyance: under clause 10 of the model, the conveyance deed is executed within three months of the occupancy or similar certificate, once you have paid the price, stamp duty and charges.
- Maintenance: the promoter maintains essential services until the association takes over, and the model says that cost is included in the total price.
- Disputes: the 2020 amendment says disputes not settled by discussion go to the Authority or the Adjudicating Officer under the Act. A clause forcing you into private arbitration only, in a far-off city, should be questioned.
Have a draft agreement and want a second pair of eyes before you meet your lawyer? We can point out where it departs from the model on the clauses above. Call or WhatsApp 89100 01313, or share the details via our contact page. The legal review itself should be done by a lawyer.
How to use these builder-buyer agreement clauses
- Ask for the draft agreement before you pay the booking amount, or at the latest before you pay more than 10%.
- Mark every clause that differs from the model and ask for a written explanation.
- Do not accept "everyone signs the same". The rules give you a standard; use it.
- Keep the signed, registered agreement safe. If anything goes wrong, it is the basis of a complaint with RERA Punjab.
- Read our questions to ask a builder before buying and, at handover, the possession checklist.
Shortlisting projects in Mohali, Zirakpur, Kharar or New Chandigarh? Every Property1313 listing shows the RERA number so you can check the registration before you read the agreement. Call or WhatsApp 89100 01313, or leave your details on our contact page.
This is general information, not tax or legal advice. Check your case with a chartered accountant or lawyer.
Frequently Asked Questions
- Is there a model builder-buyer agreement in Punjab?
- Yes. The Punjab State Real Estate (Regulation and Development) Rules, 2017 prescribe a model agreement for sale under rule 8. It was first Annexure A and was renamed Form Q by the amendment of 25 September 2020. A developer may add terms, but they must not be inconsistent with the model, the Act or the rules.
- How much can a builder take before signing the agreement?
- Not more than 10% of the cost of the apartment as an advance or application fee. Section 13(1) of the RERA Act requires a written agreement for sale to be signed and registered before the promoter takes more.
- How much can a builder forfeit if I cancel?
- Under clause 7.5 of the Punjab model agreement, if you withdraw without any fault of the promoter, the promoter may forfeit 10% of the total consideration, interest and other dues payable, and must return the balance within 90 days.
- What interest must a builder pay for late possession in Punjab?
- Interest at the rule 16 rate, which is SBI's highest Marginal Cost of Lending Rate plus 2%, for every month of delay, if you stay in the project. If you withdraw, you get your money back with interest at the same rate. The same rate applies to you if you pay late.
- How long is the builder liable for defects?
- Five years from the date of handing over possession. Under Section 14(3) of the Act and clause 12 of the model agreement, the promoter must fix structural defects and defects in workmanship, quality or services within 30 days of being told, without charge.
- Can the builder change the floor plan after I book?
- Not beyond 5% of the sanctioned plans, layout and specifications for your apartment without your written consent, under rule 8(3) and clause 1.6 of the model agreement. Changes to the overall layout or common areas need the consent of at least two-thirds of the allottees under Section 14(2).
- Does the allotment letter override the agreement for sale?
- No. Rule 8(2) of the Punjab rules says that an application or allotment letter signed before the agreement for sale does not limit your rights under the agreement.
- What does force majeure cover in the Punjab model agreement?
- War, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the project. Watch for agreements that add labour shortages, approvals or market conditions to this list.