The Agreement for Sale Under Section 13: What a Promoter Cannot Take Before It Is Signed

Most buyers breach their own protection on day one, at the booking-amount stage, because nobody told them a limit existed. The limit is one sentence long, sits in a central statute, and constrains the promoter rather than the buyer — which is why it is worth knowing before the cheque, not after.

What section 13(1) says

Section 13(1) of the Real Estate (Regulation and Development) Act, 2016 provides that 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 that person and registering that agreement for sale under any law for the time being in force.

Three things are doing work in that sentence, and each is regularly misread.

Booking amount, application fee, advance: which of these the cap covers

All of them. The section names an advance payment and an application fee, and it caps the sum accepted rather than the label attached to it. A booking amount, an expression-of-interest payment, a unit-blocking amount and a token are all sums accepted from a person towards the cost of the apartment, and renaming a payment does not move it outside the section.

The cap is a proportion of the cost of the apartment, not a fixed figure, so it scales with the unit. What it is not is a floor: nothing obliges a buyer to pay up to that proportion, and a smaller sum before the agreement is entirely ordinary.

"Registered agreement for sale" — the two words that do the work

The section does not stop at a written agreement. It requires the promoter to enter into the written agreement and register it. An unregistered draft sitting in a sales office satisfies neither half, and an allotment letter satisfies neither half either.

Registration matters for a reason beyond compliance: a registered instrument is a public record with a date on it, which is what makes the promises inside it enforceable against a later denial.

What must be in the agreement, and where the form comes from

Section 13(2) requires the agreement for sale to be in such form as may be prescribed, and to specify:

• the particulars of development of the project, including the construction of the building and apartments, along with the specifications and internal and external development works;
• the dates and the manner by which payments towards the cost of the apartment are to be made by the allottee;
• the date on which possession of the apartment, plot or building is to be handed over;
• the rates of interest payable by the promoter to the allottee and by the allottee to the promoter in case of default; and
• such other particulars as may be prescribed.

The form itself is prescribed by the State rules made under the Act, and the model agreement annexed to those rules is what a promoter's draft is measured against. Where a clause in the draft you are handed departs from the model — on the payment schedule, on default interest, on cancellation, or on what happens if the carpet area changes — that departure is the thing to negotiate, and it is visible only if you read the two side by side.

What happens to money paid before an agreement exists

It does not disappear, and it does not become unrecoverable. But it is held against a document that says less than the agreement would have said, which is the whole exposure.

Two provisions matter here. Section 12 makes a promoter liable to compensate a person who makes an advance or a deposit on the basis of information contained in a notice, advertisement or prospectus, or on the basis of a model apartment, and sustains a loss because of an incorrect statement in it. Section 18(1) makes a promoter liable, on demand, to return the amount received with interest where he fails to complete or is unable to give possession in accordance with the terms of the agreement for sale.

Both attach to representations and to an agreement. The earlier you have a registered agreement, the more of both you have.

How to raise it without losing the unit

The conversation is easier than people expect, because the request is procedural rather than adversarial. Sales teams at compliant developers deal with it routinely.

• Ask, in writing, for the draft agreement for sale before paying anything beyond a nominal sum, and ask when it will be registered.
• Where a larger payment is requested first, ask which clause of the agreement it is being paid against. If the agreement does not exist yet, the answer is that there is no clause.
• Keep the request to the document rather than to the person. You are asking to see an instrument the statute requires; you are not accusing anyone.
• Get the allotment letter as well, and keep it. It is useful evidence of what was set aside and when, even though it is not the agreement.

The paperwork sequence a compliant purchase follows

A promoter contravening a provision of the Act other than sections 3 and 4 is liable under section 61 to a penalty which may extend up to five per cent of the estimated cost of the project as determined by the Authority. That is the enforcement behind the sentence, and it is why a well-run sales process treats the cap as a routine step rather than a challenge.

The difference between an allotment letter and an agreement is answered directly on the FAQ page, the full purchase sequence is set out stage by stage in the buyer guide, and every SUYUG registration number, with its regulator and validity, is transcribed on the registrations page so the first row of that table can be checked before anything else is.