The Real Estate Regulatory Authority (RERA) in the state has issued an advisory on the payment module for projects, reminding both developers and buyers that no advance should be made unless the sale agreement is executed. It quoted Section 13 of the UP-RERA Act to inform homebuyers that no developer can take an advance of more than 10% of the total cost of a flat, plot or building.
This advance can only be taken after the builder-buyer agreement has been signed. Officials said the advisory followed multiple complaints about the way builders had been taking advance payments. In some cases, buyers were being made to cough up more than 10% as advance while in other instances, they were being told to pay even before the sale agreement had been signed. This advisory is for both promoters and homebuyers on how and when to make payments. Under no circumstances can a builder charge more than 10% of the unit cost as advance. That, too, only after the sale agreement is ready,” said Sanjay Bhoosreddy, the UP-RERA chairperson.
The document must contain all details about the project, such as the dates of constructions and particulars about internal development work as well. It should also list the important dates regarding payments and the manner in which they should be made. The date of possession should be mentioned as well. These apart, the rate of interest that a promoter or an allottee should pay in case of defaults should be specified in the agreement. These rates should adhere to the Marginal Cost of Funds Based Lending Rate (MCLR). In these cases, it should be an additional 10%. MCLR is defined as the minimum rate of interest benchmarked for banks.
