Does the buyer need to pay escalation cost?

Q: What is Escalation cost? Does the buyer need to pay escalation cost?

Wasim Mohammad, Pune

3rd August 2015

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Replies (3)

What fact should we keep in mind before signing the agreement?

Guruprasad, Chennai

3rd August 2015

Comment

Hi, I think before signing the agreement one should keep following point in his mind:
1. Basic price.
2. Additional charges for preferential location, club membership etc.
3. carpet area along with amenities
4. applicable taxes
5. Mode of payment
6. Schedule for possession of flat
7. Penalty clause
8. insurance of building
9. Stamp duty and registration charges.
10.Property tax payment.

Madhukar, Chennai

3rd August 2015

The buyer should be aware of the circumstances when they are liable to pay an extra cost.When the developer changes the specification of the unit or increases and improves the amenities provided with prior intimation to the buyers.Buyers are under no obligation to pay any escalation cost arising due to a delay in the delivery of the project.

Raghav TK, Chennai

3rd August 2015

Comment

Thanks Raghav,but I have read somewhere that the buyer is not liable to pay any escalation charges in case of the construction cost increases during the course of construction the developer can charge an escalation cost provided the clause is mentioned in the agreement.

Ananth KV, Chennai

3rd August 2015

Hi Wasim, Escalation Cost is an extra cost paid by the buyer for the home that he had booked for a lesser amount. Generally, there is a provision in the agreement or contract done by the developer or a landlord to increase the property price or lease amount due to certain increase in the cost of construction or inflation.

Venu Gopal, Chennai

3rd August 2015

Comment

@ Wasim, Escalation cost is a common real estate jargon that is often misunderstood by the common person. These costs are largely on account of changes made in the layout, increased amenities and specifications and increase in the raw material cost, or project delays.

Ananth KV, Chennai

3rd August 2015