Builder Buyer Agreement (BBA) in Real Estate: Meaning, Importance, Clauses, & RERA Impact
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05 JANUARY, 2023

A Builder Buyer Agreement (BBA) document is vital for both the buyer and seller. As the name states, it is a contract between the buyer and seller stating specific clauses, modalities, and conditions both parties need to follow. Each of the clause is important as these are related to builder-buyer agreement terms, property details, delivery details, and so on. All the clauses are detailed and what is most important for you is that it is a legally binding document subject to the laws of the state.

What we have done is compiled the major aspects of the BBA, what it means, what it covers, its importance, and more.

What Does Builder Buyer Agreement Refer To?

The Builder Buyer Agreement refers to a legal agreement between the buyer and seller, which is known as a contract of sale. The BBA real estate sets out the terms and conditions of buying a property, including payment arrangements, delivery date, inspection period and other obligations on both parties.

The importance of this document increased rapidly, conforming to the Real Estate (Regulation & Development) Act 2016. The RERA Act mandates that all private real estate developers register their projects with their respective state governments within three months of the notification being issued. Once registered, they will be required to publish an advertisement regarding their registered project before selling it off or offering possession to any consumer (buyer).

We have all heard of homeowners not getting the property they signed up for, and the BBA can help the buyer take legal action against the developer in such cases.

Importance of a Builder Buyer Agreement (BBA)

A Builder Buyer Agreement (BBA) is a legal document which states both the builders and the buyers responsibilities. It protects both parties - you as a buyer and the builder's interests, and maintains transparency between both parties throughout the procedure.

For a flat purchase agreement with a builder, a BBA can also cover matters such as the deposit money amount you will pay, the delivery timeline, and so on.

Why Should You Sign a Builder Buyer Agreement?

The agreement should cover all aspects of your building project, including:

  • Payment
  • Scope of work/products
  • The time frame for completion of work/product delivery
  • Quality standards and specifications, including warranty period
  • Code compliance certificates

What Are the Parts of a Builder-Buyer Agreement?

The Builder-Buyer Agreement (BBA) has all the terms and conditions of sale. Both parties should sign the BBA before handing possession of the property to the buyer.

The BBA can be divided into three parts:

  1. General Conditions – These are the standard terms and conditions applicable to all property buyers. The general conditions including but not limited to are the following - the builder's responsibility towards defects in construction, and payment of stamp duty.
  2. Special Conditions – These are special terms and conditions that apply to the buyer, such as payment schedule and possession date.
  3. Product Specifications – These are the house's specifications, such as the quality of materials used and design details.

The BBA is a legal document that needs to be signed by both parties before handing over possession of the property to the buyer, even though you are paying home loan EMI. The BBA should include all the terms and conditions of sale and any special clauses that apply to your case.

Read Also: Commercial Vs Residential Property: Which Is Best For The Investing And Rental Purpose?

Things to Keep in Mind before Signing a Builder-Buyer Agreement:

Check your Builder-Buyer agreement for:

  • Completion Certificate - The developer must provide you with a completion certificate before handing over your home. The requisite authority gives a certificate confirming that the housing unit complies with the approved plan. Your property must have this certificate to be registered and access other services. There should be a provision in your agreement regarding completion certificates. It should be included in the contract, i.e., the contract should specify that the builder must provide the certificate when the house is completed.
  • Possession - Be sure to read the clauses regarding possession of your property. Be very cautious whenever the contract states that delivery will be given within a specific period, such as 100 days after construction begins. You should be provided with a fixed possession date or a fixed date for the construction to begin, after which you will receive compensation from the builder.
  • Changing building plans - Builders shouldn't change building plans without the buyer's consent. The agreement should contain this type of clause, and your builder should ask for your approval whenever a change is needed to the plan.
  • A clause of indemnification - A clause of indemnification protects/secures the builder from any financial loss/burden should there be a legal issue/dispute regarding the property. The seller should include a clause stating that in the event of any legal issues, the buyer will be compensated for any loss.
  • Choosing to opt out- In specific circumstances, homebuyers should always have the option of cancelling their purchases without being penalised or fined. Let's say the builder fails to provide you with the necessary documents, or there is a legal or title issue before the sale deed is signed. If such conditions exist, buyers should have the right to cancel their contracts. The agreement between the Builder and Buyer should make this very clear.

Builder Buyer Agreement Before RERA

Also, there was no mention of transfer charges in the pre-RERA agreement, due to which the builders used to charge massive amounts as transfer fees.

Builder Buyer Agreement After RERA

The BBA document now stands as a guiding document for both parties that maintains transparency efficiently.


The builder-buyer agreement is an important document you should sign before moving into your new home. It may seem like a mammoth task but believe us it is an excellent way for both parties to understand the expectations from their partnership. It will help to resolve any legal issues you may face in the future with respect to quality of the house you receive or the timely delivery of your property. Once again, we cannot stress the importance of reading every clause carefully and in detail.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.