The Turned and Twisted Model Agreements in RERA: Analysing Deviations and Disputes in MahaRERA

[Ayush is a student at National Law School of India University Bangalore.]

The ex-Chief Justice of India, Justice DY Chandrachud, with Justice AS Bopanna, had directed the Central Government to formulate a uniform model agreement for sale applicable to the States/UTs under Section 84 of the Real Estate (Regulation and Development) Act 2016 (RERA). The Supreme Court of India's order emphasised that the core of the model agreement must be uniformly followed, with some deviations allowed for personal adjustments. Following the order, multiple states rolled out the model agreement and highlighted the mandate for promoters. 

In this article, the author seeks to analyse the narrow space the Supreme Court of India left open, arguing that certain deviations are allowed as long as the core of the model agreement remains intact. The article seeks to answer the question of how much deviation is allowed for a promoter to make in the agreement for sale (AFS) or allotment letter (AL) vis-à-vis the model AFS or AL in Maharashtra. Simply put, how much deviation is too much deviation from the model agreement?

Penalty for Deviation: A Void Clause or Rejection of Registration?

At the outset, it is important to underline that a builder must follow the model agreement and avoid deviations. What is the deterrent that is stopping the promoter from deviating? The Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules 2017 (MahaRERA Rules 2017) are unfortunately not clear. The annexure to the rules, which contains the draft model agreement, contains an explanatory note stating "the forms may be modified and adapted … having regard to the facts and circumstances", but that "any clause … contrary to or inconsistent with any provisions of the Act, Rules and Regulations would be void ab initio." On the other hand, Order 60/2024 of MahaRERA states that any unauthorised or permitted deviations or modifications that are inconsistent with any provision of the law, the rules, and the regulations would lead to the real estate project being summarily rejected.

To put it simply, if a deviation is not permitted under the rules and regulations of RERA, the authority can consider the clause void ab initio if the project has already been registered, or, if the project is not yet registered, reject the registration of the project. The registration of the project, despite it deviating from the model agreement, is possible because the analysis of the clause and the determination of whether it goes against the core of the model agreement are subjective questions that may be decided differently depending on what the authority considers a "too much deviation". Further, some deviations may be raised as a complaint, and the authority then determines whether they are contrary to the model agreement.

Now, even if a deviation is found, under RERA, the authority has two options. First, under Section 7(1)(a) of RERA, the authority can revoke the project registration. Secondly, under Section 7(3), it avoids revoking the registration for the betterment of the project and homebuyers in general; rather, the Authority chooses to apply a clause from AFS (Anil P Vijaypure v. M/s Horizon Projects Private Limited). 

How Much Deviation is Too Much Deviation?

In this section of the article, the author analyses what the courts have kept at the centre of their determinations of deviations from the model agreement. At the end of the analysis, it is concluded that even in cases where neither the RERA Act nor the rules and regulations under it are violated, courts have still condemned the deviation for turning the AFS more favourably to the promoters. 

In Anil P Vijaypure v. M/s Horizon Projects Private Limited, the RERA observed that even in cases where Rule 10 of the 2017 rules and Section 13(2) of the RERA are not violated, the deviation would not be valid if it simply tilts the agreement in favour of the promoter. Similarly, Godrej v. Amit  Agarwal, the allottee cancelled the agreement for sale after paying 25% of the consideration, of which 20% was treated by the promoter as earnest money and sought to be forfeited under the termination clause. Godrej argued that the agreement was a private commercial contract aligned with the model AFS and that the forfeiture constituted agreed liquidated damages rather than an unfair practice. The authority rejected this approach, noting that the agreement did not clearly designate the amount as "earnest money" in the manner required by the Supreme Court of India in Satish Batra v. Sudhir Rawal. More importantly, since the promoter had resold the unit and suffered no actual loss, the court held that forfeiture could not be justified. Despite contractual consent and reliance on the model framework, the court prioritised the absence of real loss and ordered a refund, effectively overriding the agreed contractual allocation of risk in favour of the allottee.

In Godrej Projects Development Limited v. Anil Karlekar and Others, the Supreme Court of India decision arising from proceedings before the National Consumer Disputes Redressal Commission, the agreement provided that 20% of the sale consideration constituted earnest money and would be forfeited if the buyer terminated the contract. While the promoter relied on contractual consent and adherence to the Model AFS, the court examined the fairness of the clause itself. In line with industry practice, the court observed that 10% is the generally accepted benchmark for earnest money and treated any amount above that as prima facie unreasonable. It held that contractual terms which are ex facie one-sided and oppressive constitute an unfair trade practice, irrespective of consent. The court thus invalidated the forfeiture to the extent it exceeded this threshold, reinforcing that consumer welfare standards can override formally compliant contractual provisions. 

In Anubhav Baiswar v. Lucina Land Developers Limited, the MahaRERA addressed a situation in which the agreement expressly permitted the allottee to forfeit amounts paid upon termination. Despite the clarity of the clause and the buyer's consent, the Authority held that forfeiture could not be automatic. Since the promoter had resold the property, there was no demonstrable loss, and therefore no basis for retaining the amount as liquidated damages or earnest money. The decision emphasised that a forfeiture clause cannot operate as a penalty for mere inconvenience, and that Section 74 of the Indian Contract Act 1872 requires compensation to be reasonable and linked to actual loss. This case as well highlights that even a clearly worded forfeiture clause, compliant on its face, will be disregarded if consumer detriment outweighs the promoter's interest.

In the above cases, the builders have not deviated from the model agreement; even if they have, they have done so in accordance with the rules and regulations of RERA, as required by Rule 10 of the 2017 rules and Order 60 of 2025. However, even in such cases, the courts have taken it upon themselves to decide whether the agreement is fair to the consumer. If the court finds the latter is true, it chooses to reverse the explicit clause. This power comes from the abstract concept of consumer welfare rather than a specific statute. This results in the promoters being uninsured while drafting the contracts, even if they abide by the model agreement's statutory mandate. 

The remedy in such cases is to lay down what may constitute an “unfavourable agreement” towards the homebuyers in the explanatory note of the model agreement itself. A clause that disallows the builder from taking back the earnest money in case of abrupt cancellation by the homebuyer cannot be said to be unfavourable to homebuyers if the promoter manages to sell the premises to someone else (Anubhav Baiswar v. Lucina Land Developers Limited). In a clear breach of contract, where the contract itself provides a legally sound remedy, the deviation from that remedy, on account of some remote action by a third party, may be considered unjust towards the promoters.

A proposed definition of an unfavourable contract is required because the real estate sector is no longer solely adjudicated by the consumer protection law; the RERA plays a more significant role in real estate disputes. Therefore, the jurisprudence must also not centre on consumer welfare to the extent that the court overturns explicit and legal clauses of AFS and AL when the statutes clearly provide otherwise.

Conclusion

This article has argued on behalf of the promoters, who seldom need such representation because of the immense power they hold over real estate projects. Regardless of the power dynamics, this article has, simply put, argued for adherence to Rule 10 of the 2017 rules, Order 60/2024 of RERA, and the annexures thereof, containing the model AFS and model AL, and, in general, the RERA. Currently, deviations from the model agreement are considered violations if they contravene RERA's rules and regulations. Needless to mention, the rules and regulations are concrete. Yet the courts have decided to judge deviations not by these rules but by an abstract understanding of consumer welfare, thereby giving them the power to override explicit legal clauses.

This not only affects the promoters in drafting the AFS and the AL, but also creates uncertainty for homebuyers. The uncertainty may lead to avoidable litigation and place an additional, and often unnecessary, burden on the authority.