Know How: Agreement for Sale of Property
You have zeroed down on the much coveted property and your ‘dream house’ is just a signature away. There is a good chance that you are more broke now than you were when you had begun saving for your property. It is a matter of a lifetime of savings and loans. We suggest that you read the fine print in the contract before you sign on the dotted line because in matters as these, you can never be more careful. We have decoded the ‘Property Sale Agreement’ for you. Here it goes.
The agreement will have certain terms which needs to be understood properly. Sale refers to transference of ownership of property in exchange for money paid or promised to be paid in part or as a whole. Freehold Property refers to that property which is owned by someone for a price paid.
Even though, the law doesn’t make a written agreement mandatory, it is best to have a written contract. After all, it is the practical thing to do. Also, oral agreements cannot be proved in the court of law. It is essential that you get your agreement registered. A non-registered agreement will not be considered legal and the deal between the seller and the buyer will not be considered as a sale.
A ‘Property Sale Agreement’ will have numerous clauses. The list will include a description of the property, contact details of the parties’ involved, negotiated price, the manner of payment, stipulated period in which the transaction has to be completed, provision of payment of stamp duty and an account of the property title.
The reason why a ‘Property Sale Agreement’ is important is because it lays down a framework for both the buyer and the seller to conduct the sale of the property under legal terms and conditions. The contract will state if the price of the property is being paid in cash, paid partly or if a promise has been made by the buyer to pay it in future. There are some clauses meant only for the property purchasing party. Clauses will be included that will direct him to pay municipal taxes, maintenance charges, and if he is buying a flat, then pay up charges towards the society.
The ‘Property Sale Agreement’ in India is governed by Indian Contract Act.1872, Registration Act.1908, and Transfer of Property Act. It doesn’t matter if the seller is a family friend, a relative or a stranger. One is advised to enter into a written contract with the buyer and establish the authenticity of the ownership of the property. You must get the deed verified; link the documents, attachments and encumbrances under the supervision of an expert lawyer.
If you are buying property from a company, for example, in the case of apartments, check with the Registrar of Companies if the property is a freehold property. The property in question should not be mortgaged or should not be substituting as a security against any loan. The buying party must always get the documents re-checked by an advocate to validate their authenticity.
That is the ‘Property Sale Agreement’ in a nutshell. Do not get intimidated by the almost-Latin like language in the agreement. You must know that if you have been careful, consulted a lawyer, verified the documents and kept all the papers in order, the whole process will be a cake-walk.
