The Maharashtra Real Estate Regulatory Authority (MahRERA) has introduced a new clause in the model sale agreement aimed at enhancing transparency regarding real estate brokerage fees.
As published by Business Standard, clause 15A acknowledges the right of real estate agents or property brokers to receive payment in the form of fees, charges, commissions, or remuneration for their services.
Clause 15A specifies the responsibility for paying brokerage fees in the available-for-sale (AFS) securities agreement. The responsibility can fall on either the allottee, the promoter, or both parties, as mutually agreed. This change is expected to improve accountability and reduce potential conflicts between parties involved in real estate transactions.
Jinal Mehta, a partner at Cyril Amarchand Mangaldas, explained that the inclusion of Clause 15A would clarify who is responsible for paying the brokerage fee, whether it is the allottee, the promoter, or both. She also pointed out that the AFS could set out the consequences in cases of delayed or non-payment of brokerage fees by either party.
However, Clause 15A is not mandatory, and some parties may choose not to include it in the AFS. In such cases, Mehta recommends executing a separate written agreement between the broker, the allottee, and the promoter. This agreement should clearly outline payment obligations, milestones, and penalties for delays in brokerage fees.
What Will Be the Impact on Buyers?
The introduction of Clause 15A will enhance transparency regarding financial obligations related to real estate agents. Buyers will now be fully informed about any commissions or fees payable to the agent. This will help avoid disputes between sellers and agents, as all parties will be part of the sale agreement under Clause 15A, said Alay Razvi, managing partner at Accord Juris.
Kunal Sharma, a partner at Singhania & Co., emphasized that it is crucial for buyers to carefully review the agreement to ensure their interests are protected. He advised that the agreement should address several key aspects:
- Clear Payment Terms: The agreement should specify the payment structure between the promoter and/or allottees and the real estate agent. This includes whether the payment is made in a lump sum, in tranches, or as a percentage of the sale consideration. It should also define the payment timeline and identify who is responsible for making the payment—whether it is the promoter, the allottee(s), or the homebuyer.
- Breach of Clause 15A: In the event of a breach of Clause 15A by the promoter, it should not affect the allottee’s right to seek possession of or ownership over the property.
- Dispute Resolution Mechanism: The agreement should include a dispute resolution mechanism to address any failure in making payments to the agent according to Clause 15A.
Sharma cautioned that failure to address these points could lead to financial liabilities, delays in possession, and legal complications for buyers. Therefore, it is crucial for buyers to ensure that these provisions are meticulously addressed in their agreements.