A buyer in Bengaluru had picked a flat in an under construction project and was ready to book, when the sales desk asked for a fifth of the price up front, before any agreement was drawn up. It was framed as normal, the way things are done, and the buyer nearly paid it. What he did not know was that the law caps the advance a builder can take before a registered agreement for sale at a tenth of the price, and that the agreement itself is where his possession date and his rights on delay would be written down. The booking felt like the commitment. In truth the agreement was, and paying a large sum before it existed meant committing without the protections the agreement is meant to carry.

The short answer. Under the Real Estate Act, a promoter cannot take more than 10 percent of the cost of an apartment, plot or building as an advance before entering into a written and registered agreement for sale. That agreement must set out the payment schedule and the date on which possession will be handed over, so before you sign it you should check that the possession date is clearly stated, that the payments are tied to construction milestones, that the delay interest clause applies the same rate to both sides, and that the carpet area and the RERA registration number are correct. The trade off is an afternoon of careful reading against an agreement that fixes your rights for the life of the project.

How much can a builder take before the agreement is signed?

A builder cannot take more than 10 percent of the price as an advance before a registered agreement for sale is in place. Under Section 13 of the Real Estate Act, a promoter is not allowed to accept a sum exceeding 10 percent of the cost of the apartment, plot or building as an advance payment or application fee without first entering into a written agreement for sale and registering it. This is a ceiling, not a guideline, so a demand for a larger booking amount before any agreement can be refused, and a buyer is within their rights to decline it. The purpose is to stop the common practice of collecting large sums on nothing more than a booking form, before the buyer has an enforceable document. For a buyer the rule is a simple line to hold. If you are being asked for more than a tenth of the price and there is no registered agreement for sale, the request is outside what the law allows, and the right response is to ask for the agreement first and keep the advance within the cap until it is signed.

What must the agreement for sale contain?

The agreement for sale is meant to be a detailed document, and the law requires it to spell out the things a buyer most needs pinned down. It has to specify the particulars of the development, including the construction of the building and the apartment, the specifications and the internal and external development works, so that what is being built is described rather than left to the brochure. Crucially, it must set out the dates and the manner in which the payments towards the cost are to be made, which is the payment schedule, and the date on which possession is to be handed over. These are not incidental clauses. They are the parts of the agreement that decide when you pay, how much, and by when the flat must be delivered, which together define the deal. Because the agreement is registered, it is a document you can rely on and enforce, unlike a booking form or a brochure. Reading it as the real contract, and checking that these required particulars are actually present and correct, is the heart of protecting yourself before you sign.

What clauses should a buyer check most carefully?

The table below sets out the clauses that matter most in an agreement for sale and why each one deserves attention.

Each of these is a place where an unfair agreement quietly shifts risk onto the buyer, through a vague possession date, a front loaded payment schedule, or a penalty clause that charges the buyer heavily for late payment while letting the builder off lightly for late delivery. Reading these clauses is not about distrust but about symmetry, because a fair agreement treats both sides by the same measure. Where a clause is missing, one sided or wrong, that is the point to raise before signing, since the agreement is far easier to correct on the table than to argue about later.

Why do the possession date and delay clause matter?

The possession date and the delay clause matter because they are what give a buyer leverage if the project runs late. The date on which possession is to be handed over is a required particular of the agreement, and it is the reference point against which any delay is measured, so a clearly stated date is what makes a delay a breach rather than a matter of opinion. Alongside it, the clause dealing with default and interest should apply the same rate to both parties, so that if the builder is late in handing over, the compensation to the buyer is on the same footing as the interest a buyer would owe for paying late. An agreement that leaves the possession date vague, or that penalises the buyer's delay far more than the builder's, is one to question. These clauses are easy to skim past because they concern something that has not happened yet, but they are precisely the ones you will rely on if the project slips, which is exactly when you will have the least ability to renegotiate.

Why should payments be tied to construction, not dates?

Payments in an under construction project are safer when they follow the construction rather than the calendar, because that keeps your money in step with the work. A payment schedule tied to construction milestones means you pay for a stage once it is built, so the developer is paid for progress made rather than time passed. A schedule tied only to dates, by contrast, can require large payments regardless of whether the corresponding work has been done, which shifts the risk of a slow project onto the buyer who has already paid ahead of it. When you read the payment schedule in the agreement, the question to ask is whether each instalment is linked to a construction stage you could verify, or simply to a date on a calendar. A milestone linked schedule protects you, because it ties the flow of your money to the flow of the building, and it gives you a natural pause if the work falls behind. This is one of the clearest ways an agreement can be fair or unfair, and it is worth reading closely.

What should I do before signing the agreement?

Work through these steps before you sign an agreement for sale.

1. Keep any advance before the agreement within 10 percent of the price.
2. Insist on a written agreement for sale that is registered, not just a booking form.
3. Confirm the possession date is clearly and specifically stated in the agreement.
4. Read the payment schedule and check it is tied to construction milestones.
5. Check the default interest clause applies the same rate to both sides.
6. Verify the carpet area and the RERA registration number are correct.
7. Raise any missing, vague or one sided clause before you sign, not after.

How does this fit the rest of my buying steps?

The agreement for sale is where the booking becomes a real contract, so it sits just after the money you first put down and just before the construction linked payments begin. The advance you pay at booking is capped and refundable in the way we set out in our guide to the booking amount, token advance and RERA refund, and the payment schedule in the agreement is what your lender will disburse against, which connects to our explainer on the tripartite agreement for an under construction home loan. For a flat in a project such as Sobha Madison Heights on Hosur Road, the agreement for sale is the document that fixes your possession date and your payments. The booking, the agreement and the loan disbursement are three linked stages, and the agreement is the one that turns a marketing promise into an enforceable commitment.

Frequently asked questions

How much advance can a builder take before the agreement for sale? Not more than 10 percent of the cost of the apartment, plot or building. Under Section 13 of the Real Estate Act, a promoter cannot accept an advance exceeding 10 percent before entering into a written and registered agreement for sale. This is a ceiling, so a larger booking demand before the agreement can be refused.

What must a RERA agreement for sale include? It must specify the particulars of the development and construction, the specifications, the dates and manner of the payments towards the cost, and the date possession is to be handed over. Because it is registered, it is enforceable rather than a booking form. Check the payment schedule and possession date are clearly stated before you sign.

Why does the possession date in the agreement matter? Because your rights if the project is delayed rest on it. The possession date is a required particular of the agreement and the reference point against which a delay is measured, so a clearly stated date makes a delay a breach rather than a matter of opinion. An agreement that leaves the date vague is one to question before signing.

Should the payment schedule be linked to dates or construction? To construction. A schedule tied to construction milestones means you pay for a stage once it is built, keeping your money in step with the work. A schedule tied only to dates can require large payments whether or not the work has progressed, shifting the risk of a slow project onto you. Prefer a milestone linked schedule.

Last updated 2026-08-31. PropNewz Team.