ASSURED RETURN AND LEASE GUARANTEE AGREEMENT
This Assured Return and Lease Guarantee Agreement (this "Agreement") is made at __________ on __________.
BETWEEN
__________, __________, of __________, PAN __________ (the "Developer", which expression includes its successors in interest and permitted assigns);
AND
__________, __________, of __________, PAN __________ (the "Buyer", which expression includes his, her or its heirs, legal representatives, successors in interest and permitted assigns).
The Developer and the Buyer are each a "Party" and together the "Parties".
RECITALS
A. The Buyer has purchased, or agreed to purchase, the Unit described in Schedule I from the Developer under an Agreement for Sale, particulars of which are: __________. That Agreement for Sale, and not this one, is the instrument that transfers the Unit; this Agreement adds a separate guarantee of return and does not vary the price, the description or the possession terms of the Unit under it, except as this Agreement expressly states.
B. As an inducement to the Buyer and as part of the commercial terms on which the Unit has been sold, the Developer has agreed to pay the Buyer a guaranteed return for a stated period, calculated as set out below, whether or not the Unit is in fact let out or occupied during that period.
C. The Parties record that a developer's promise of an assured or guaranteed return on a real estate purchase, whatever it is called, carries a regulatory characterisation risk going beyond an ordinary commercial term. Depending on how it is structured and marketed, and in particular on whether it is offered on materially the same terms to other buyers in the Project, such an arrangement is capable of being treated as a Collective Investment Scheme within the meaning of section 11AA of the Securities and Exchange Board of India Act, 1992, or as a deposit within the meaning of the Companies Act, 2013 or the Banning of Unregulated Deposit Schemes Act, 2019. The Parties have entered into this Agreement on the understanding that it is a bilateral arrangement tied to the specific Unit the Buyer has purchased and not, so far as the Parties are aware, part of a pooled scheme; nothing in this Recital or in this Agreement is a representation by either Party as to how a regulator or a court would in fact characterise it, and clause 10 and "what a lawyer should check" record why that question calls for independent advice this Agreement does not give.
D. The Parties intend this Agreement to be read together with, and as collateral to, the Agreement for Sale referred to in Recital A, on the footing recorded in clause 8.
NOW THIS AGREEMENT WITNESSES as follows.
- DEFINITIONS
1.1 "Guaranteed Return" means the sum calculated under clause 3 of this Agreement, as escalated under clause 3.4 where applicable.
1.2 "Guarantee Period" means the period described in clause 4.
1.3 "Persistent Default" has the meaning given in clause 7.2.
1.4 References to a statute are to that statute as amended or re-enacted. Headings do not affect interpretation. The singular includes the plural.
- THE UNIT AND THE AGREEMENT FOR SALE
2.1 The unit to which this Agreement relates is described in Schedule I (the "Unit"), being __________ forming part of __________ at __________, in __________.
2.2 The Total Sale Consideration for the Unit under the Agreement for Sale referred to in Recital A is __________.
2.3 This Agreement does not affect the Buyer's rights under the Agreement for Sale, including any right to compensation or interest for delay in possession, and clause 8 states how the two documents relate to each other.
- THE GUARANTEED RETURN
3.1 The Guaranteed Return is __________.
3.4 Escalation: The Guaranteed Return __________.
- THE GUARANTEE PERIOD
4.1 The Guarantee Period begins on the earlier of (a) the date the Developer offers possession of the Unit to the Buyer under the Agreement for Sale, and (b) __________, and continues for __________ months from that date, subject to clause 9 (End of the Guarantee Period).
4.2 Fixing the date in clause 4.1(b) means the Guarantee Period starts on that date even if possession of the Unit has not by then been offered, so that the Developer cannot defer the Guaranteed Return by delaying possession. Nothing in this clause postpones or otherwise affects the Buyer's separate rights under the Agreement for Sale on account of delayed possession.
4.3 The Guaranteed Return is payable under this Agreement whether or not the Unit is in fact let out, occupied or capable of being let out during the Guarantee Period, and whether or not the Buyer has taken possession of it.
- PAYMENT OF THE GUARANTEED RETURN
5.1 The Guaranteed Return is payable __________, in advance, on or before day __________ of each such period, by electronic transfer to a bank account the Buyer notifies to the Developer in writing. Tax required to be deducted at source under clause 11.1 shall be deducted before payment.
5.2 The Guaranteed Return for part of a period is payable pro rata, calculated on the number of days of the Guarantee Period falling within that period.
- SECURITY FOR THE GUARANTEE
6.1 The Developer's obligation to pay the Guaranteed Return is secured by __________.
- DEFAULT BY THE DEVELOPER
7.1 If any instalment of the Guaranteed Return is not paid within __________ days of its due date under clause 5.1, the Developer shall pay interest at __________ on the overdue amount from the due date until payment, without prejudice to the Buyer's other rights under this clause.
7.2 If the Developer fails to pay __________ or more consecutive instalments of the Guaranteed Return within the time allowed by clause 7.1, or otherwise commits a material breach of this Agreement that is not remedied within thirty days of written notice, that failure is a "Persistent Default".
7.3 On a Persistent Default, the Buyer may, by written notice to the Developer and without prejudice to any other remedy available at law, do any or all of the following: (a) enforce or call upon the security described in clause 6, to the extent of the sums in default; (b) demand immediate payment, as a single lump sum, of the whole of the Guaranteed Return remaining payable for the balance of the Guarantee Period; or (c) terminate this Agreement by written notice and sue for the instalments already in default, with interest under clause 7.1, and for damages. Where the Buyer elects the remedy in (b), the Parties agree that the amount so demanded is a genuine pre-estimate of the Buyer's loss and not a penalty, and it remains subject to section 74 of the Indian Contract Act, 1872.
7.4 A Persistent Default under this Agreement is a default under this Agreement only. It does not by itself entitle the Buyer to rescind, or to treat as repudiated, the Agreement for Sale referred to in Recital A, and does not by itself give rise to the Buyer's remedies under section 18 of the Real Estate (Regulation and Development) Act, 2016 for delayed possession, which arise independently on the terms of that Agreement and not from this one.
- STATUS OF THIS AGREEMENT
8.1 This Agreement is __________.
8.2 Nothing in this Agreement varies, waives or supersedes the Developer's obligations under the Agreement for Sale referred to in Recital A, except as this Agreement expressly states, and nothing in the Agreement for Sale limits the Buyer's rights under this Agreement.
- END OF THE GUARANTEE PERIOD
9.1 __________
9.4 A renewal under this clause is a fresh exercise of an option and not an automatic continuation; the Guarantee Period ends on its stated date unless the Buyer has validly exercised the renewal option, where one is given, before that date.
- REGULATORY CHARACTERISATION
10.1 The Parties acknowledge Recital C and record that this clause exists because that risk deserves an operative acknowledgement, not only a recital. If a court, tribunal or regulator of competent jurisdiction determines that this Agreement, or a scheme of which it forms part, is void, illegal or unenforceable under the Securities and Exchange Board of India Act, 1992, the Companies Act, 2013, the Banning of Unregulated Deposit Schemes Act, 2019, or any other law governing the raising of money from the public, the Parties shall in good faith attempt to restructure the arrangement between them so as to achieve its nearest lawful equivalent, without prejudice to the Buyer's right to recover, as a debt, any sum already paid to the Developer under or in connection with this Agreement.
10.2 Neither Party has represented to the other that this Agreement, in the form executed, is free from the risk described in Recital C, and clause 10.1 is not to be read as such a representation.
- TAXATION
11.1 Income tax: __________. The Parties record that this is the position they have adopted for the practical purpose of deducting and accounting for tax under this Agreement, that the characterisation of a developer's assured-return payment for income-tax purposes is fact-dependent and not settled by any provision of this Agreement, and that each Party shall obtain its own tax advice and may need to revisit this clause if that advice differs. A deduction made consistently with this clause shall be treated between the Parties as payment of the Guaranteed Return pro tanto, and the Developer shall furnish the Buyer the certificate of deduction the law requires.
11.2 Goods and services tax: __________.
- INDEMNITY
12.1 The Developer shall indemnify the Buyer against claims, losses and reasonable legal costs arising from the Developer's breach of this Agreement or from a misrepresentation in Recital B or C.
12.2 Neither Party is liable to the other for indirect or consequential loss, except in respect of sums expressly payable under this Agreement.
- ASSIGNMENT
13.1 The Developer's obligations under this Agreement are personal to it and shall not be assigned, delegated or transferred without the Buyer's prior written consent, except to a person who acquires the whole of the Project, or the Developer's whole interest in it, and who assumes those obligations in writing; the Developer shall notify the Buyer of any such assumption.
13.2 The Buyer may assign the benefit of this Agreement together with, and only together with, its title to the Unit, on written notice to the Developer.
- NOTICES
14.1 Notices under this Agreement shall be in writing and delivered by hand against acknowledgment, or by registered post or reputed courier with proof of delivery, to the Developer at __________ or __________, and to the Buyer at __________ or __________, or to such other address as a Party notifies in writing. A notice of default or termination must be given by hand, registered post or courier and not by email alone.
- STAMP DUTY, REGISTRATION AND EXECUTION
15.1 __________ shall bear the stamp duty on this Agreement, computed under Article 5 (Agreement or Memorandum of an Agreement), Schedule I-A to the Indian Stamp Act, 1899 as applicable in __________; the exact figure shall be confirmed at the Sub-Registrar's office before the stamp paper is bought.
15.2 Where the security under clause 6 is a mortgage or charge on another property, the stamp duty and registration charges on that separate instrument are borne as agreed between the Parties in the document creating it, and are not covered by clause 15.1.
15.3 This Agreement is executed in duplicate, one for each Party, each an original.
- DISPUTE RESOLUTION AND GOVERNING LAW
16.1 The Parties shall first attempt to resolve any dispute by discussion between their authorised representatives within thirty days of written notice of the dispute.
16.2 __________.
16.3 The city named in clause 16.2 is __________.
16.4 This Agreement is governed by the laws of India as in force in __________.
- GENERAL
17.1 This Agreement, with its Schedule, is the entire agreement between the Parties about the Guaranteed Return and supersedes all prior discussions and understandings about it; it does not supersede the Agreement for Sale referred to in Recital A.
17.2 No amendment is effective unless made in writing and signed by both Parties.
17.3 A failure or delay in enforcing a right is not a waiver of it.
17.4 If any provision is held invalid or unenforceable, the rest of this Agreement continues in effect, and the Parties shall replace that provision with a valid one of the nearest effect.
17.5 The clauses on Default, Status of this Agreement, Regulatory Characterisation, Taxation, Indemnity and Dispute Resolution survive the expiry, termination or end of the Guarantee Period.
SCHEDULE I — THE UNIT
__________, forming part of __________ at __________, in __________.
IN WITNESS WHEREOF the Parties have executed this Agreement at __________ on __________.
SIGNED AND DELIVERED by the DEVELOPER
__________
PAN: __________
Signature: ______________________________
SIGNED AND DELIVERED by the BUYER
__________
PAN: __________
Signature: ______________________________
WITNESSES
- __________
__________
Signature: ______________________________
- __________
__________
Signature: ______________________________