Homebuyers should understand that builder contracts often link payments either to a construction milestone or a specific date, whichever happens first. In 2022, Ramesh Mehta purchased an apartment in Pune that was still under construction. His contract stated that each payment was due when a certain milestone was reached or 60 days after booking, whichever came first. The second payment was supposed to be made after the first-floor slab was finished. But the builder asked for payment just 60 days after he booked, even though the slab work hadn’t begun. Since the clause allowed it, Mehta had to pay despite no visible progress. Later, work on the building stopped for months, leaving him stressed financially with no guarantee of moving in on time.
This example shows how important it is to fully understand all parts of the purchase, especially when buying property in India. Check the payment schedule in the agreement carefully.
What does this mean?
The “whichever is earlier” clause links payments to either reaching a certain construction stage or a set date—whichever happens first. “If the date comes before the milestone is met, the buyer still has to pay, even if the project is delayed. This can cause financial problems for the buyer,” says Jayesh Rathod, co-founder of The Guardians Real Estate Advisory.
In property agreements, this clause usually applies to deadlines, like a three-month period, or to events such as loan approval or builder obligations being met. “If the event happens before the deadline, the buyer must pay immediately. Not paying on time could mean losing the advance or losing the agreement,” explains Santhosh Kumar of ANAROCK Group.
Though builders often show progress photos or engineer certificates, the contract should clearly require proof of milestone completion before demanding payment.
What should buyers do?
“Align payments with actual project work. It stops early payments and helps avoid loan and EMI issues,” says Shubhi Jain, head of CRM at Square Yards.
“You might get a notice for missed payments. Ignoring it could lead to penalties, interest, or cancellation of the booking,” says Kumar. “Clear milestone details in the contract help. If they are vague or misleading, you can challenge this through RERA or consumer courts,” he adds.
Know your rights under law
RERA gives buyers the power to negotiate payment terms in India. The law encourages linking payments to actual construction progress instead of arbitrary dates.
“To do this well, payments should be tied to verified construction stages, like slab completion or internal work,” Rathod explains. When you request payment, the developer should provide proof that the milestone is met. It’s smart to seek legal advice to make sure your contract favors you and clearly spells out payment schedules.