Building Service Agreement
What is a Building Service Agreement?
A Building Service Agreement (BSA) is a formal contract between a property owner or building manager and a service provider for the ongoing maintenance, repair, and management of building-related tasks. This agreement ensures that the property is well-maintained, safe, and compliant with applicable standards while clearly defining the roles, responsibilities, and expectations of both parties.
It clearly outlines terms such as:
- Service Scope and Frequency: Defines the specific tasks (e.g., weekly cleaning, monthly inspections) and how often they should be performed.
- Roles and Responsibilities: Clearly separates the duties of the service provider and the building owner or manager.
- Timelines and Response Time: Specifies service hours, emergency response expectations, and repair turnaround times.
- Payment Terms: Includes monthly fees, billing cycles, late payment penalties, and cost escalations (if any).
- Compliance and Safety: Ensures that services comply with local municipal, fire safety, and labor laws.
- Performance Standards: Establishes benchmarks for service quality, supervision, and periodic reporting.
- Termination Clauses: Allows contract exit under conditions like breach, non-performance, or change in service needs.
- Indemnity and Liability: Covers loss, damage, or injury arising from negligence or non-compliance.
- Insurance Requirements: Outlines insurance responsibilities for third-party damage or worker injuries.
- Dispute Resolution and Jurisdiction: Specifies how disputes will be resolved usually via arbitration and under which city’s jurisdiction.
Example: You manage a commercial building with various infrastructure needs housekeeping, elevator maintenance, fire safety, etc. Rather than coordinating multiple vendors informally, you sign a Building Service Agreement with a facility management company. This agreement ensures that all essential services are handled under one umbrella, with clarity on scope, expectations, and legal protections.
Result?
✅ Streamlined Operations by centralizing services under one formal agreement. ✅ Legal & Safety Compliance through defined standards and responsibilities. ✅ Accountability & Transparency via performance metrics and regular reporting. ✅ Reduced Risk & Confusion with clear terms, insurance coverage, and dispute clauses. ✅ Long-Term Value for both the building and the service provider through structured engagement.
Why a Building Service Agreement is Important?
A Building Service Agreement is essential for maintaining property standards while preventing operational disruptions. It clearly outlines expectations for maintenance, repairs, cleaning, and other building-related services ensuring transparency between property owners and service providers. This is especially important when dealing with large premises, multiple contractors, or time-sensitive projects.
A well-drafted agreement allows both parties to focus on performance and compliance, with defined standards for quality, timelines, and liability that are legally enforceable. Without it, you risk miscommunication, unsafe conditions, and unplanned expenses.
Who needs a Building Service Agreement?
A Building Service Agreement is essential for:
- Landlords managing residential or rental properties – Whether you're overseeing a single apartment block or multiple units, a formal agreement with service providers ensures consistent upkeep, timely repairs, and tenant satisfaction.
- Facility managers of commercial buildings – For office parks, malls, or industrial spaces, scheduled maintenance, cleaning, HVAC servicing, and pest control require clear terms to avoid disruptions.
- Co-working space owners – Ensures the environment stays clean, secure, and operational, helping maintain a professional setting for businesses and freelancers.
- Housing societies or apartment associations – When hiring vendors for essential services like security, landscaping, plumbing, or electrical maintenance, a proper agreement avoids confusion and conflict.
Example: Imagine you manage a co-working space and hire a maintenance agency to handle daily cleaning and monthly AC servicing. A building service agreement clearly sets expectations for what areas are cleaned, how often, service hours, penalties for missed work, and payment details so you avoid last-minute surprises or service gaps.
Types of Building Service Agreement
1. Fixed Price Contracts
The service provider agrees to complete a defined scope of work for a fixed total price, regardless of time or materials used. Ideal when the project requirements are clearly defined and unlikely to change.
Example: A property manager hires a cleaning company for ₹60,000/month to clean a commercial building daily, including floors, restrooms, and common areas. The price remains the same throughout the contract term, ensuring cost predictability.
2. Cost-Plus Contracts
The client reimburses the service provider for actual costs (labor, materials, subcontractors) plus an agreed-upon percentage or fixed fee as profit. Best for large or complex maintenance contracts with variable or unpredictable costs.
Example: A housing society hires a vendor for building repairs. The vendor is paid for actual expenses (materials, labor) plus a 15% margin. This allows flexibility in case of unforeseen damage or repairs.
3. Time and Materials Contracts
Charges are based on the actual time spent and materials used. Suitable for projects where the scope can’t be fully defined upfront often used for ongoing, ad hoc maintenance or emergency repairs.
Example: An office building contracts an HVAC service provider at ₹800/hour for labor and additional charges for parts replaced. This setup allows the facility manager to call for service as needed, without a fixed scope.
4. Unit Rate Agreement
The contract defines rates per service unit, for example, per square foot cleaned, per window washed, or per equipment maintained. It provides transparency and cost control when service volumes fluctuate.
Example: A co-working space hires a janitorial service at ₹2/sq. ft. per cleaning. If the space expands or usage changes, the costs scale accordingly without renegotiation.
Why is Building Service Agreement Important?
A Building Service Agreement plays a crucial role in ensuring smooth operations, legal protection, and maintaining the quality of services provided to the property.
Key Benefits of a Building Service Agreement
- Defines Roles and Responsibilities - Clearly outlines who is responsible for what whether it’s maintenance, cleaning, repairs, or compliance. The agreement sets expectations upfront so both property owners and service providers stay aligned, avoiding confusion down the line.
- Ensures Legal Protection - A written contract gives both parties legal recourse if things go wrong. Whether it’s unfinished work, service abandonment, or a dispute over liability, the agreement becomes your safety net in enforcing accountability.
- Clarifies Payment Terms - No more ambiguity around rates, payment schedules, or hidden charges. The agreement lays out exactly how and when payments will be made, and under what conditions minimizing the chances of billing disputes or non-payment.
- Sets Quality and Compliance Standards - No more ambiguity around rates, payment schedules, or hidden charges. The agreement lays out exactly how and when payments will be made, and under what conditions minimizing the chances of billing disputes or non-payment.
- Manages Project Timelines and Deadlines - No more ambiguity around rates, payment schedules, or hidden charges. The agreement lays out exactly how and when payments will be made, and under what conditions minimizing the chances of billing disputes or non-payment.
- Safeguards Confidential Information - If your service provider has access to internal systems, security setups, or tenant records, confidentiality clauses protect your sensitive data from being shared or misused.
- Reduces Risk and Liability - Distributes responsibilities and legal risks fairly. If a worker gets injured, equipment is damaged, or there's a legal violation, the agreement makes it clear who bears the burden.
- Provides a Dispute Resolution Mechanism - If things don’t go as planned, built-in clauses for mediation or arbitration allow disputes to be resolved efficiently without costly legal battles, ensuring minimal disruption to ongoing services.
When should you use a Building Service Agreement?
You should use a Building Service Agreement when:
- You’re hiring a contractor or service provider to perform regular maintenance, cleaning, repair, security, or facility management tasks.
- The work involves access to your property and you need to control liability, safety standards, and compliance.
- You want to clearly define the scope of work, schedule, payment terms, and responsibilities before services begin.
- You are managing multiple vendors and need a uniform legal structure to ensure consistent performance and accountability.
- You want to protect yourself from delays, substandard service, or disputes related to non-performance or unexpected charges.
- You require enforceable remedies in case the service provider fails to meet agreed standards or walks off mid-contract.
- You need to establish expectations for equipment usage, staff qualifications, hygiene protocols, or emergency procedures.
- You’re dealing with long-term or high-value maintenance contracts and want to secure your investment through a legally binding agreement.
Important Indian Laws Related to Building Service Agreement
Indian Contract Act, 1872
In India, the validity of Service Agreement is governed by the Indian Contract Act, 1872 (Sections 10, 14, 23, 27 and 73). Service Agreement must be lawful and voluntary. The reasonable restrictions on trade to protect confidentiality are mentioned under Section 27.
Consequences of Breach
GST Implications
Governing Laws
Indian Contract Act, 1872
If any party breaks the Service Agreement by not providing the services, another party can take action under the Indian Contract Act, 1872. Consequences may include:
- Legal Action - The aggrieved party can approach the court to enforce the agreement and recover losses caused by the breach.
- Compensation - The defaulting vendor may be held liable to pay monetary damages for any financial or business loss suffered by the client.
- Termination of Agreement - The non-breaching party can choose to terminate the contract immediately without further obligations.
- Impact on Professional Reputation - A breach can harm the vendor’s credibility in the industry, affecting future projects, client trust, and long-term business prospects.
GST Implications in Service Agreements
As per the Goods and Services Tax (GST) Act, 2017, services rendered under the agreement are subject to GST. The service provider must charge and remit GST at the applicable rate. Both parties should clarify whether the prices mentioned are inclusive or exclusive of GST.
Governing Laws - Arbitration and Conciliation Act, 1996
Under the Arbitration and Conciliation Act, 1996, disputes can be resolved through arbitration, offering faster, confidential, and fair resolution. Section 7 mandates arbitration if included in the Builder Service Agreement, while Section 8 allows courts to refer disputes to arbitration
An arbitration clause in your agreement ensures benefits like:
- Faster Resolutions: Avoids lengthy legal battles.
- Scope of Services: The description of services provided by the parties.
- Confidential Proceedings: Keeps sensitive business information private.
- Fair Dispute Resolution: A neutral arbitrator decides the case.
Building Service Agreement: Key Inclusions and Structure
1. Parties Involved
- Service Provider (Builder) - Service Provider can be a company or individual responsible for providing building services such as maintenance, cleaning, security, plumbing, electrical work, or facility management. They ensure that the agreed services are completed as per the contract terms.
- Client (Building Owner/Property Manager) - Every person, business, or organization that hires the service provider to maintain or manage a building. They define the service requirements, payment terms, and quality expectations while ensuring timely payments.
2. Scope of Work and Deliverables
This clause defines the specific services the Service Provider is expected to perform. It may include:
- Construction, renovation, maintenance, or repair activities
- Project phases, deadlines, and milestones
- Expected materials, quality benchmarks, and final deliverables
- Site inspection and handover protocols
3. Obligations of the Service Provider
Outlines the Service Provider’s responsibilities throughout the engagement, including:
- Performing work in compliance with industry standards and legal regulations
- Securing necessary licenses, permits, and insurances
- Maintaining safety protocols at the job site
- Timely delivery of services and proactive communication
4. Payment and Invoicing Terms
This clause explains how and when the Service Provider will be paid. It may include:
- Fixed pricing, hourly rates, or milestone-based payments
- Reimbursement of material costs or pre-approved expenses
- Payment schedule and penalties for delays
- Taxes, deductions, and invoice requirements
5. Duration and Termination
Defines how long the agreement is valid and how it may be terminated:
- Project start and end dates
- Early termination clauses for breach, delays, or mutual consent
- Notice periods and final payment obligations
- Conditions for suspension or extension of services
6. Confidential Information
Ensures protection of sensitive data shared during the project, covering:
- Client information, blueprints, pricing, and vendor lists
- Prohibition on sharing or using information beyond the project scope
- Obligations that continue even after project completion
7. Intellectual Property Rights
Clarifies who owns the creative outputs and technical materials:
- Assignment of rights over designs, drawings, and documents
- Restrictions on reusing client-owned assets elsewhere
- Licensing provisions (if applicable)
8. Non-Compete Clause
Prevents unfair competition during or after the agreement:
- Restricts the Service Provider from offering similar services to competitors
- Applies within a defined timeframe and location
- Especially relevant for projects with unique methods or strategic value
9. Non-Solicitation Clause
Protects the client’s workforce and supply chain:
- Service Provider may not poach the client’s employees, vendors, or subcontractors
- Applies during and for a set period after the agreement ends
10. Indemnity and Liability
Protects both parties from legal or financial consequences:
- Service Provider indemnifies the client against damages from negligence or non-compliance
- May limit liability for unavoidable losses or third-party actions
- Can include insurance requirements
11. Force Majeure
Accounts for events beyond either party’s control:
- Covers natural disasters, labor strikes, pandemics, and regulatory changes
- Temporarily suspends obligations without penalty
- May allow contract termination if delays exceed a defined duration
12. Subcontracting
Regulates the delegation of work to third parties:
- Requires client consent before outsourcing
- Service Provider remains liable for subcontractor actions
- Subcontracted work must meet the same standards and timelines
13. Dispute Resolution
Outlines the method and venue for resolving disagreements:
- Encourages mediation or arbitration before court proceedings
- Specifies applicable law and jurisdiction (e.g., Indian Contract Act, 1872)
- Seeks to resolve issues quickly and affordably
14. Compliance with Laws
Mandates adherence to all applicable rules and regulations:
- Includes labor laws, safety codes, tax regulations, and building permits
- Both parties are responsible for their respective legal obligations
15. Amendments and Modifications
Controls how changes to the agreement are made:
- Requires written, mutually signed amendments
- Prevents misunderstandings by documenting all revisions
Common Mistakes to avoid
✅ DOs | ❌ DON’Ts | 💬 Expert Tip |
Clearly define the scope of work, cost, and timelines in writing | Don’t begin work without a signed agreement | A signed contract prevents scope creep and gives legal clarity on payments, deadlines, and responsibilities. |
Maintain progress updates and transparency throughout the project | Don’t ignore client concerns or feedback | Regular updates build trust and help avoid miscommunication or last-minute conflicts. |
Use quality materials and follow agreed specifications | Don’t cut corners or substitute cheaper alternatives | Stick to what's specified. Using inferior materials can lead to legal claims and loss of credibility. |
Get approvals in writing for any changes (cost, design, timeline) | Don’t exceed budget or deadlines without client consent | Written change orders protect both parties. Verbal approvals rarely hold up in legal disputes. |
Ensure labor compliance and safety standards | Don’t violate local construction or environmental laws | Legal non-compliance can shut down the site or expose you to penalties. Stay compliant to avoid disruption. |
Checklist for a Building Service Agreement in India
Below is the Practical Checklist to Ensure Your Building Service Agreement is Legally Sound and Enforceable
Keep Multiple Copies
Action: Maintain at least two signed physical copies—one for the client and one for the service provider. Tip: Store digital scans securely on platforms like Google Drive or DigiLawyer Cloud. Expert Insight: In construction-related disputes, signed copies with original markings and annotations can help establish timelines and responsibilities.
Pay Applicable Stamp Duty
Action: Pay stamp duty based on your state’s rules. Tip: Most states impose ₹100 to ₹500 for service agreements; check with your local authority. Expert Insight: Use your state’s online portal or DigiLawyer’s Stamp Duty Calculator to ensure correct classification and prevent disputes over enforceability.
Clearly Define the Scope of Work and Deliverables
Action: Specify services to be performed e.g., construction stages, timelines, materials, quality standards. Tip: Use annexures for floor plans, Gantt charts, or material lists. Expert Insight: Ambiguities in work scope are a common cause of disputes—be precise and exhaustive.
Outline Obligations of the Service Provider
Action: Detail professional responsibilities, legal compliance, tax duties, and licensing requirements. Tip: Include a clause requiring the provider to follow safety codes and obtain all required permits. Expert Insight: Mandate proof of insurance and qualifications for all site workers or subcontractors.
Establish a Clear Payment and Invoicing Structure
Action: Specify pricing model—fixed, phase-based, or cost-plus—and payment schedule. Tip: Outline billing intervals, tax components, retention money, and penalties for delay. Expert Insight: Link payment milestones to site inspections or certificate of completion to avoid disputes.
Define Term and Termination Conditions
Action: Clearly mention project start and end dates, and when either party may exit. Tip: Include triggers like non-performance, legal violations, or force majeure. Expert Insight: Add a “termination without cause” clause with a notice period to give both sides exit flexibility.
Add Force Majeure Provisions
Action: Account for delays due to natural disasters, government actions, or strikes. Tip: Mention specific events and the required notice period for invoking force majeure. Expert Insight: Include a clause for project suspension or termination if the event exceeds a certain duration (e.g., 60 days).
Include Subcontracting Rules
Action: Require disclosure and approval before assigning work to third parties. Tip: Hold the main contractor accountable for subcontractor performance. Expert Insight: Include obligations for subcontractors to adhere to the same quality and safety standards.
Include Dispute Resolution and Jurisdiction
Action: Specify how disputes will be resolved—mediation, arbitration, or court. Tip: Choose a jurisdiction that is convenient for both parties (e.g., location of the site). Expert Insight: Arbitration is often preferred for construction contracts due to speed, privacy, and technical complexity.
Ensure Compliance with Building Laws and Regulations
Action: Verify that all activities comply with national and local building codes. Tip: Pay attention to labor law compliance, GST registration, and environmental clearances. Expert Insight: Projects involving public infrastructure or high-rise buildings may need additional permits or inspections.
Get a Legal Review
Action: Consult a legal professional to review the final draft. Tip: Lawyers can identify vague language, illegal clauses, or missing safeguards. Expert Insight: A well-reviewed agreement protects both parties and speeds up resolution if a dispute arises.
Why DigiLawyer?
DigiLawyer simplifies the process of drafting legally verified Building Service Agreements to help you establish clear, enforceable construction or renovation projects. Whether you're hiring contractors, civil engineers, or design-build teams, our Building Service Agreements clearly define scope of work, cost, timelines, and legal protections—safeguarding both client and service provider.
Each agreement is fully compliant with the Indian Contract Act, 1872, and includes essential clauses like delay in work delivery, quality standards, and termination, ensuring your project is legally protected from day one.
Whether you need a standard template or a custom-drafted agreement, DigiLawyer lets you tailor your Building Service Agreement to match your specific project needs, risks, and expectations.
Create your Building Service Agreement in minutes—simple, secure, and legally sound.
With optional notarization, legal reviews, and 24/7 customer support, DigiLawyer ensures you’re never alone during any stage of your project.
Ready to formalize your construction or renovation arrangement? Let DigiLawyer draft your Building Service Agreement today!
Legally Compliant Drafts – Prepared by qualified legal professionals and aligned with Indian legal standards.
Quick & Hassle-Free – Create and customize your agreement online in a few easy steps.
Stamping & Legal Formalities – We help you meet all necessary legal requirements, including e-stamping.
Fully Customizable Clauses – Edit key terms such as project scope, payment schedule, deadlines, warranties, or termination.
Transparent Pricing – Affordable plans with no hidden charges.
Secure Cloud Storage – Store and access your agreements from anywhere, anytime.
On-Demand Legal Help – Access expert legal support for revisions or clarifications as your project evolves.
FAQs Related to Building Service Agreement
Yes. A Building Service Agreement is enforceable if it fulfills the essentials of a valid contract: mutual consent, lawful purpose, consideration, and legal capacity of the parties. Once signed, it holds up in court like any formal agreement.
Yes, if a termination clause is included. It allows either party to exit the contract under defined conditions—like breach of terms or with prior written notice. In that case also, certain clauses still remain intact such as Confidentiality, IP Rights
No, it's not mandatory—but it’s strongly recommended. A lawyer can ensure the agreement is enforceable and fully protects your interests. You can also get legally verified agreements from DigiLawyer.ai.
Notarization isn’t required but adds legal strength. It verifies signatures and the date of execution, which can help resolve disputes, especially in high-value or long-term arrangements.
Yes, but they’re harder to enforce. Verbal contracts are legally valid but difficult to prove in court. Always aim for a written agreement.
Yes. A comprehensive agreement typically includes clauses covering liability and insurance. These protect both parties in case of accidents, property damage, or third-party claims.
Absolutely. Both parties should negotiate terms like payment schedules, timelines, dispute resolution methods, and responsibilities before signing.
It clearly outlines terms such as:
- Service Scope and Frequency: Defines the specific tasks (e.g., weekly cleaning, monthly inspections) and how often they should be performed.
- Roles and Responsibilities: Clearly separates the duties of the service provider and the building owner or manager.
- Timelines and Response Time: Specifies service hours, emergency response expectations, and repair turnaround times.
- Payment Terms: Includes monthly fees, billing cycles, late payment penalties, and cost escalations (if any).
- Compliance and Safety: Ensures that services comply with local municipal, fire safety, and labor laws.
- Performance Standards: Establishes benchmarks for service quality, supervision, and periodic reporting.
- Termination Clauses: Allows contract exit under conditions like breach, non-performance, or change in service needs.
- Indemnity and Liability: Covers loss, damage, or injury arising from negligence or non-compliance.
- Insurance Requirements: Outlines insurance responsibilities for third-party damage or worker injuries.
- Dispute Resolution and Jurisdiction: Specifies how disputes will be resolved usually via arbitration and under which city’s jurisdiction.
This is a red flag. A refusal often indicates a lack of accountability. Consider it a serious risk—many users on social platform recommend walking away if the other party won’t sign the formal agreement.
If the agreement specifies quality standards and milestones, you may have grounds for legal action or claim withholding payments. Without a clear contract, your options become limited.
Yes its always advisable to add Penalty clauses for delays, retention of final payments until completion, and defect liability periods are all common and advisable.
Risks You Avoid by Signing a Building Service Agreement
- Delayed Completion or Abandoned Work - Many homeowners face situations where a contractor starts a job, then leaves midway either to take up another project or due to disagreements. Without a written timeline and penalty clause, it becomes difficult to hold them accountable.
- Low-Quality or Wrong Materials Used - If the agreement doesn’t mention material quality, a contractor might use cheaper substitutes to cut costs, leaving you with weak or unsafe structures.
- No Performance Standards - Without setting clear expectations on workmanship, you can end up with poorly finished work that’s hard to challenge legally like cracked tiles, uneven paint, or faulty wiring.
- Unclear Payment Terms - Disputes often arise when there’s no agreement on payment stages, late penalties, or handling cost overruns. Contractors might demand more money midway, or delay work waiting for advance payments.
- Liability Issues - If a worker is injured or damages neighboring property, you (as the property owner) may be blamed or must bear the cost unless liability clauses are clearly defined in the agreement.
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