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This article is written by Hemnaag I, who is pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.

Introduction

Building your own house is still a dream for many of us at this moment especially when you’re looking at this article. Someone at the corner of the world would be dreaming about building a dream house or trying to find an answer to the possibility of being able to build his/her dream house. You must have some ideas about domestic building contracts to enter between the builder before you start your dream house. Come let’s have a look at some information regarding the domestic building contract.

Domestic building : a place of residence  

A ‘domestic building’ is a place of residence that has no more than one family unit living in it, and which may be a place owned by the owner himself/herself or a family may be semi-permanently residing there by way of lease/rental. The most common example of a domestic building is a ‘House.’  

Rules that are required to be followed 

There are certain rules and by-laws to be followed by the owner while constructing his/her house/building. These by-laws vary from state to state, the rules and regulations can be viewed by anyone in official gazettes of the government website. 

The general aspects that building by-laws have are:

  1. Area of construction compared with the space of road and residence surrounded,
  2. Rule and regulation regarding ventilation,
  3. Indian Electricity Rules,
  4. Green Building Norms (rainwater harvesting, solar & clean energy),
  5. Open space sq. feet,
  6. Parking standards,
  7. Sewerage facilities,
  8. Building height,
  9. Floor space area, and
  10. Rules and regulations regarding metro water.  

These rules are mandatory to be followed by anyone who constructs a house/building. These rules are made by the government to protect buildings against fire, earthquakes, and structural failures which may cause danger to human beings. These are some of the general rules to be followed while constructing a house/building.  

Essential tips that one can take the course of

There are certain tips to keep in mind before starting the construction. 

1. Budget

Set a budget for your house and plan the construction according to your budget, a house is an asset for many people. You can’t stop the construction in the middle due to lack of your budget, which would lead to a number of wastages so make a perfect budget and plan accordingly. 

2. Contractor   

Select the best constrictor who meets your requirements at your budget, view some of the previous works of the contractor you have chosen, check the quality of the works done by him/her, and last but not least, check his/her goodwill in the field of his/her work and plan your dream house after having a discussion with your constrictor. 

3. Plan and design

Before starting the construction make a plan of your house with the ideas in your mind or according to your needs, make an end design of your project. Design A to Z of your plan, get all the measurements and specific designs according to your ideas, draft the plan in a chart for future reference and then discuss the plan with the contractor before starting the construction.

4. Time period 

You must set a flexible time period to finish your house construction as we all know without any time limit, any work would go endless, but make sure you have a flexible time period because even if the work is delayed due to a major situation like an act of god, you can plan accordingly. 

5. Contract

Enter a contract with the contractor and have all the specific clauses according to your requirement, by having a contract between the contractor you can avoid the conflict and more important both of you will have proof as well.           

Important clauses in a domestic building contract 

Term and termination 

Details that are mentioned in this clause are:

  1. Commencement date of the agreement.
  2. The time period of this agreement.
  3. The right of both the parties to terminate this agreement.
  4. The time period of notice to be sent in the event of termination. 

Term and Termination (sample)

  1. This Agreement shall commence from ____ and shall last for ___ months/year (Depending on the convenience to the parties).
  2. Both the Parties have the right to cancel this Agreement at any time by giving ___ days’ notice to the other Party.
  3. Any Party can terminate this Agreement in the event of non-performance of duty by the other Party.  

Land description  

Detailed descriptions of the land to be constructed are mentioned here.

Land description (sample)   

The Contractor shall construct the House in the described land;

Plot No: 123 1000 sq. feet Adders: No,42/140 Khan Street Chennai – 600038 opposite to ____, to the Westside Plot No 122, and to the Northside Plot No;121 and main road at the South facing. 

Area of construction 

The area of land to be constructed and the specific measurements of all the construction places are mentioned in this clause.

Area of Construction (sample)

The total area of construction space is ___ sq. feet.

  1. Living room ___ sq. feet.
  2. Bedroom ____ sq. feet.
  3. Washroom ____ sq. feet. 
  4. Kitchen area _____ sq. feet.
  5. Parking space ____ sq. feet.

Payment schedule 

Details that are mentioned in this clause are: 

  1. Schedule of the payment.
  2. Payment time period.
  3. Date/day of the payment.

Payment schedule (sample)

The total value for the construction of the House is Rs. _____ ,(words) the Owner shall make payment to the Contractor in 5 installments each installment shall be paid by the Owner only after completing each part of the Contractor’s duty.

The Owner shall pay Rs_____ (Words) as advance amount within 4days from the Execution Date of this Agreement. 

The 1st installment amount _____ (words) shall be paid by the Owner within one week after completion of the foundation work.

The 2nd installment amount ____ (words) shall be paid by the Owner within one week after the completion of the pillar and walls to the House. 

The 3rd installment amount _____ (words) shall be paid by the Owner within one week after the completion of the sealing.

The 4th installment amount ____ (words) shall be paid by the Owner within one week after the completion of the paintworks and tiles works to the House

The 5th installment amount ____ (words) shall be paid by the Owner only after finishing all the construction work by the Contractor and handing over the House keys to the Owner, the Owner shall pay the 5th installment amount ____ within 2 days after handing over the keys to the Owner by the Contractor.

Payment method

The method of payment to the Contractor by the Owner is mentioned in this clause cash in hand or bank transfer of cheque are mentioned, if bank transfer the bank account of the Contractor is also mentioned. 

Payment Method (sample)

All the payment to be made by the owner as per this agreement shall be paid to the contractor promptly through bank transfer to the contractor bank account as mentioned below;

  • Account No;
  • Bank;
  • IFSC;
  • Branch;
  • Name;

Materials to be used

The materials and any specific raw material brands to be used by the contractor to construct the house are mentioned in this clause.

Material to be used (sample)

The contractor shall use only the following materials to construct the house: 

  1. Only HH company’s bricks shall be used by the contractor to construct the house.
  2. RR company’s cement shall be used by the contractor to construct the house.
  3. ZZ company’s iron 6mm road shall be used by the contractor to construct the house. 
  4. River sand shall be used by the contractor to construct the house.   

Warranties and liabilities 

Both the party’s warranties and liabilities regarding this agreement are mentioned in this clause.

Warranties and liabilities (sample)

The contractor liabilities and warranties that:

  1. To use only the materials and raw materials specified by the owner.
  2. Will finish the construction on time. 
  3. To ensure the quality and workmanship of the house.
  4. No extra work will be made other than specified in the work plan of the house.
  5. Any damage caused while construction no extra payment shall be charged to the owner the contractor shall be liable for the same. 

The owner liabilities and warranties that:

  1. To pay the money without delay on the specified date as per this agreement. 
  2. To follow as per the terms and conditions of this agreement.  

House plan 

Measurements and design of the house and any specific requirement according to the owner’s choice are mentioned here. The building/house plan can be attached to the agreement to avoid conflict.

House plan (sample)

The contractor shall construct the House as per the following plan and measurement. 

  1. Northwest facing kitchen ___ sq. feet
  2. East facing the entrance to the house.
  3. Southeast bedroom ___ sq. feet.
  4. West facing washroom ____ sq. feet.

Total sq. feet of the construction are ____ House plan is attached to this Agreement as Annexure – A.

Indemnity 

In the event of any damage caused while construction, who will make good the loss to the other party is mentioned in this clause. 

Indemnity (sample)

The contractor indemnifies the owner in the event of any structural damage to the house and while construction the contractor shall make good the loss to the owner. The contractor shall rebuild the same without any additional charges, this does not imply any damages caused by the act of god.  

Extension of time 

In the event, if the construction of the house is not completed by the given time period to the contractor, the process/ways to extend time is mentioned in this clause.

Extension of time (sample)

Due to certain unforced/ uncontrollable circumstances the contractor requires any extension of time for completing the house, he shall immediately make known the same to the owner, if the extension is reasonable the owner may extend the time period to complete the house according to the circumstances.     

Dispute resolution

In the event, if any dispute arises between the parties regarding this agreement, how would the parties resolve the dispute is mentioned in this clause. 

Dispute resolution (sample)

  1. Any dispute arising out of this agreement or relating to the interpretation of the terms of the agreement shall be resolved by the arbitration process. 
  2. The arbitration process shall be conducted by a sole arbitrator and shall be appointed by both parties mutually.
  3. The proceeding of the arbitration shall be conducted in English and the venue of the arbitration shall be Hyderabad.

After termination 

Any terms and conditions to be followed by the parties after the termination of this agreement are mentioned in this clause. 

After termination (sample)

After termination of this agreement the contractor will give a 1 (one) year structural warranty to the house, any damage caused after the termination of this agreement within 1 (one) year the contractor with no additional/extra charges will rebuild/ rework the damaged part whichever is necessary.   

Conclusion

Hope this article gave you some ideas about the things to be followed before starting the construction of your house. One must make sure to have all the important clauses in their agreement. It is essential to follow all the rules/by-laws and regulations according to their state where your house is constructed or going to be constructed and keep all the tips in your mind before starting your dream house.  

References


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