Clarification: Supreme Court – Contracts skewed against homebuyers are not binding
Relief to home-buyers who are usually in a disadvantageous position while signing property agreement with developers. These agreements usually contain stringent clauses against the buyers and lenient provisions against the builders for violation of the accord, the Supreme Court on Tuesday said such one-sided and unfair agreement would not be binding.
A bench of Justices UU Lalit and Indu Malhotra said a real estate company could not be allowed to bind home-buyers with one-sided contractual terms which protect the interests of the company at the cost of the buyers. “Terms of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder,” the bench said while directing a builder to refund Rs 4.83 crore with 10.7 per cent interest to a home-buyer.
A home-buyer is always put to a disadvantage in flat purchase agreement between the buyer and the company. The agreement is always skewed against buyers who are to pay higher rate of interest in case of delay in payment and the builders are allowed to cancel allotment in case of default of payment. But the punitive clauses against the builders are lenient with leeway given to them in case of delay in handing over possession and the interest rate in case of delay is very less.