MahaRERA's New Rules On Broker Fee: Here's What Homebuyers Should Know

The Maharashtra Real Estate Regulatory Authority (MahaRERA) on October 22 released an order regarding broker’s fees that affects the agreements a homebuyer signs during a property purchase.

MahaRERA’s order states that a clause can be included in the agreement for sale signed between homebuyers and developers mentioning the amount (including tax) to be paid as fees, commission, brokerage to the agent by the developer, buyer, or both as the case may be.

Though this is RERA’s step towards formalising brokers’ remuneration, it also brings key considerations for homebuyers. Let’s understand its implication on homebuyers with a detailed breakdown of the new clause.

What Does the New Clause Say?

According to the issue released on October 22, the new Clause 15A in the model sale agreement states:

- If the transaction involves a registered real estate agent, the fees, commission, or brokerage (including applicable taxes) payable to the agent must be specified in the agreement.

- Payment terms are to be agreed upon by the developer, the buyer, or both parties.

This new inclusion aims to ensure timely payment of brokerages to agents and reduce disputes about unpaid brokerage.

What Would be its Implications on Homebuyers?

1. Including brokerage details in the sale agreement will reduce ambiguity by formalising the process. Homebuyers will have a clear and written understanding of the amount and terms involved with brokerage fees thereby preventing any hidden or surprise charges later.

2. Homebuyers must carefully review the agreement before they accept it (or sign) to understand who bears the responsibility for paying the brokerage - developer, buyer, or both. The same can vary depending on the negotiated terms.

Says Jayesh Rathod, Cofounder & Director of The Guardians Real Estate Advisory, “To maintain transparency, homebuyers should carefully review the sales agreement and ensure that Clause 15A contains explicit information about broking compensation.”

This includes determining the amount, duration, and payment specifications. “Verifying that the broker is registered with MahaRERA adds an extra layer of assurance, as only registered agents are legally recognised,” he adds.

Homebuyers should maintain payment receipts and documented broking agreements. “These documents act as payment verification and may help to avoid future issues. Using these procedures, homebuyers can meet MahaRERA criteria while also maintaining transaction openness,” he notes.

3. Since the clause is not mandatory, meaning both parties can negotiate the inclusion or exclusion of the brokerage terms, homebuyers can also talk with the associated parties about the removal of the same. Buyers can leverage this flexibility to clarify their obligations during the transaction.

4. While the clause formalises payment terms, real estate agents cannot seek redress for unpaid fees under RERA. However, “Buyers may face legal concerns if the brokerage's payment terms are unclear or ignored since brokers can pursue legal action against unpaid debts in consumer courts or civil forums, especially if Clause 15A is contained in the selling agreement,” says Rathod.

To prevent such risks, homebuyers should verify that the agreement specifies the broking payment terms and dispute resolution processes. Maintaining paperwork such as receipts and written agreements allows buyers to demonstrate compliance in the event of a dispute. These procedures are important since broker disagreements can cause delays, financial responsibilities, and severe consequences for property possession and ownership,” Rathod states.

How will the clause impact resale property transactions where brokers are involved?

Informs Rathod, “Clause 15A applies to both primary and resale property transactions, protecting broker’s fee rights.” To avoid disputes, he suggests that financial duties between the buyer and seller in resale transactions must be specifically established in the sale agreement.

“This clause requires transparency, minimising disputes over broker fees and promoting accountability. However, since resale deals frequently include unique arrangements, both parties should reach an agreement in writing before proceeding. Proper documentation and adherence to MahaRERA standards can help to speed the process, clarify financial commitments, and strengthen trust in resale property transactions,” he notes.