The rights and obligation of the parties to the contract of immovable property are captured in detail in a document called Agreement for sale. An agreement for sale, is a document to sell/convey/transfer a immovable property at later point of time. This agreement specifies the terms and conditions, rights and obligations under which the immovable property in transaction will be transferred/conveyed.

A contract for sale of immovable property shall take place in agreed terms between the parties, in accordance with Section 54 of Transfer of Property Act. An agreement for sale contains a promise to transfer an immovable property in future, on satisfaction of certain terms and conditions. To conclude the contract to satisfy such terms and conditions are important and critical.

In case of failure of the either of the party to the contract i.e., seller to sell or hand over possession of the property to the buyer, the buyer gets a right of specific performance, under the provisions of the Specific Relief Act, 1963, A similar right is also available to the seller under the agreement, for seeking specific performance from the buyer. Entering into Agreement for Sale is a normal / standard practice in real estate transaction and exists since many years. However, such Agreement for Sale was in different formats, different conditions, different sizes etc., as those Agreement for Sale drafted based on ability, wisdom, risk appetite of the builder, buyer, professional etc.

To bring the standardisation, transparency, accountability, equality between promoter and allottees in real estate business, RERA has made inbuilt provision by way of Agreement for Sale. i.e., RERA Act mandates the promoter and allottees to adopt the agreement for sale as prescribed by the respective States. Let us understand the provisions under RERA in relation to Agreement for Sale.

Section 13(1) of the RERA Act 2016 provision is as follows A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.

Section 13(2) of the RERA Act 2016 refer to respective RERA State to prescribe the format of Agreement for Sale. Accordingly, Karnataka RERA has inserted rule 8A (format of Agreement for sale) WEF 12th June 2020. The Extract of Rule 8A is RERA Since 1957 July 2021 63 "8A. Agreement for Sale - (1) For the purpose of subsection (2) of section 13 of the Real Estate (Regulation & Development) Act 2016, the agreement for sale shall be in the Format as per Annexure-A.

With the notification of Agreement for Sale format, it is mandatory for the promoter to follow the same format of agreement for sale / contents of the agreement for sale without dilution of any provisions of RERA Act 2016, Karnataka RERA Rules 2017. Section 13(2) of the RERA Act 2016 mentions that the contents of such Agreement for sale shall includes:

1. Particulars of development of the project including the construction of building and apartments
2. Specifications of such development
3. Internal development works
4. External development works
5. The dates and the manner of payments by the allottees
6. The date on which the possession to be handed over by the promoter
7. The rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default
8. Such other particulars, as may be prescribed

To conclude:

1. Agreement for Sale shall be in the format as notified by Karnataka RERA
2. The promoter shall enter into Agreement for Sale with the allottee well before acceptance of consideration more than 10% of the cost of the unit.
3. Such Agreement for Sale shall be registered with the sub registrar

Few important points while advancing promoters of the Real Estate Project:

• Modification or alteration to notified Agreement for Sale is permitted subject to compliance of all applicable provisions of RERA Act, Rules, and notifications. Such modification shall not result in depriving the rights of the Allottee.
• The agreement does not assume any situations where multiple sub-projects can be registered under RERA, within a single larger layout / plan. In such situations the common areas would be handed over in multiple phases, whereas the agreement states that all common areas would be handed over at the time of handing over of the apartments.
• The agreement provides that any increase in taxes after the expiry of the scheduled End date /completion of the project as per RERA registration with the authority the same shall not be collected from the customer.
• Agreement for Sale provides for cancellations by the customer without any defaults by the developer and requires the developer to refund the amount by deducting only booking amount.
• In cases of defaults / delays which are not attributable to the Developer (e.g., force majeure), the agreement provides for a cancellation process that requires the Developer to refund the entire amount. However, the Developer would have made many payments, such as taxes, to the authorities and he would not be able to refund such taxes etc.
• Non-Compliance of Agreement for Sale may attract penal provisions in accordance with the section 61 of the RERA Act 2016, the penalty may be extended upto 5 % of the estimated cost of the real estate project.

Conclusion:
Professionals (Legal/ Chartered Accountants) shall understand the various provisions under RERA and its relevance while preparing agreement for Sale. This helps the professionals while advising / providing service to any individual / home buyers on property purchase / investments. Value added services can be given to the promoters of the real estate project while advising on Joint development agreement, investment agreements, MOU's, application for grant of RERA Registration, document preparation for financial assistance with financial institutions etc.