To protect home buyers purchasing new projects in Noida, the Noida Authority has now made it mandatory to sign a tripartite ‘Sale Agreement’ between the buyer, builder and the Noida Authority as soon as the The buyer pays 10% of the cost of the property to the Noida Authority. promoter.

What’s new?

The recent decision of the Noida Authority requires lump sum registration at the time of initial payment, rather than on completion of the project. The tripartite agreement will now need to be registered shortly after the builder receives the buyer’s initial 10% deposit. Currently, buyers and builders are reaching an initial agreement on a ₹100 stamp paper and the Authority comes into the picture only after the developer obtains occupancy certificate and project completion certificate.

How will the Tri-Party Agreement Rule Help Home Buyers?

The Noida Authority, in its recent board meeting, decided that builders will now have to initiate registered sale contracts, or builder-buyer contract, for buyers who pay 10% of the total price of the property .

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Experts say the move is aimed at protecting apartment buyers and improving revenue collection through stamp duty. This will also ensure that the authority is informed of the transfer of ownership immediately after purchasing the property and that the entire process of purchasing a home is transparent.

A measure aimed at clarifying ownership and preventing fraudulent real estate sales

The tripartite agreement will ensure that buyers have legal proof of the transaction as soon as they make the 10% deposit. The legal document will include property details, total cost, payment terms and date of possession.

This will ensure that developers do not sell the same unit multiple times or cancel the sales contract unilaterally or for arbitrary reasons such as late payments or missed deadlines, experts said.

The Authority should now be informed of every sale and resale transaction and help prevent tax evasion. This will also prevent resale of properties without informing the Noida authority and prevent tax evasion. There have been cases where buyers resold the unit to the builder or a buyer without taking possession and paying stamp duty. The same unit could have been resold without the government collecting taxes, experts said.

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The tripartite agreement is in line with Section 13 of the Real Estate (Regulation and Development) Act (RERA), which prohibits builders from taking more than 10% of the cost of the property without a formal agreement. A 2% stamp duty will need to be paid initially, and the balance upon possession of the property and final registration.

“The builder will submit a copy of the builder-buyer contract along with a list of flat buyers. A tripartite act will be established in favor of the authority, the builder and the purchaser of the apartment. Following this, the buyer will be given possession of the apartment or store. This new rule has been implemented for group housing,” M Lokesh, managing director of Noida Authority, was quoted as saying in the press release.

According to Sunil Tyagi, managing partner of ZEUS Law Associates, the registered contract of sale or the buyer-builder contract has a dual advantage. On the one hand, it will protect the rights of both parties during the interim period until the transaction is closed and, on the other hand, it will increase stamp duty collections for the state.

Similar to the practice followed in Mumbai

This is similar to the practice followed in Mumbai and this requirement is in line with the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), Tyagi explained.

“A registered sales agreement or builder purchaser agreement ensures that the parties are bound by a legally enforceable document. In the event of a dispute between the parties, it can be used as valid evidence in court. A registered sale/builder-buyer agreement would also go a long way in discouraging the circulation of black money in the real estate sector,” he said.

The existing legal process

In Noida, the builder/developer first acquires rental rights over the land from the Noida Authority by execution and registration of a lease deed between the authority and the builder/developer.

The builder/developer, after obtaining clearances and approvals and registering with the Uttar Pradesh Real Estate Regulatory Authority, initiates sales/reservations of the salable areas of the project. Pursuant to which allotments are made in favor of the purchasers/allottees.

After payment of 10% of the total price of the property, the sales contract/builder buyer requires registration and payment of stamp duty. Upon completion of the project, grant of occupancy certificate and full payment of the total price of the property, possession is handed over and a tripartite sublease deed is entered into between the builder, buyer and the authority of Noida for transfer of the title of the unit in the preferred buyer/allottee, says Tyagi.

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The Noida Authority has now required submission of a registered Buyer Sale/Builder Agreement at the time of registration of such tripartite sublease deed, which will ensure that the authority is able to follow the entire unit allocation cycle from the beginning. The move would protect the buyer/allottee against duplicate allotment of the unit already allotted to him, it added.

Provides an extra layer of security and builds buyer confidence

By making registration mandatory from the outset, this new policy promotes transparency and accountability on the part of developers and home buyers. For developers, this provides greater incentive to meet project deadlines, while for buyers, it provides an extra layer of security and clarity over the property, said Sahil Aggarwal, CBO, Nimbus Projects Limited.

“The requirement for early registration will enhance buyer confidence by providing legal assurance from the time of investment, thereby reducing uncertainties surrounding possession timelines and project progress,” he said .

“The Noida authority’s decision to initiate a sale contract before more than 10% of the collection is a forward-looking measure to protect the interests of home buyers. By ensuring that buyers are not required to commit a substantial portion of the property’s value without a formal sales contract, this move builds buyer confidence. Additionally, the public availability of these documents increases transparency around property values, making it easier for buyers to make informed decisions in the market,” said Ravi Nirwal, Director of Sales and Senior Partner at Square Yards.

The challenges ahead

The new standards will certainly increase market transparency. The document will include details such as apartment size, price, specifications and delivery times, said Venkat Rao of Intygrat, a full-service law firm.

“The only thing that could bother builders would be the payment of 2% stamp duty. This could also have an implication on secondary sales, as the stamp duty paid on the sale (sub-lease) agreement does not would only be adjustable if the rental deed is signed between the same parties. Therefore, in the event that someone vacates or sells the unit, stamp duty charges may have to be incurred again. also that there will be no delay in registration of the agreements as they would now formally involve Noida and Greater Noida Authorities. The mechanism for approval of the project will involve its own set of challenges,” added Rao.

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