Part I: Everything you Need to Know about Sale Agreement!

Whether one is purchasing a plot for construction of a house or an apartment from a builder, the sale agreement is an important document that he will need during the process of purchasing a property, informs Mr Jagannaathen, managing director of Vintage Wealth Managers (India) Private Ltd. He shared his valuable insights on the same. Here are the excerpts of the discussion.
Are there different types of agreement for different property type: plots, apartments and villa?
Yes, each of this Property type has different type of agreement, based on the deliverable from the Developer. In each of the category, the finer points to be noted in the agreement are:

Plot – Agreement of Sale
• Total extent of Land that is being developed
• Surrender of the Common Areas, like Road, Pavement, Facilities etc., that is part of the overall project
• Builder is authorised to sell only 55% of the overall land, this is a stipulation by BBMP & BDA
• Cancellation Claus – should have specific time limit for refund of the payment in event of Cancellation
• Registration is allowed by BBMP only upon release of Khata for the specific plot – this is done by BBMP to ensure all approved works in the Plot is completed by the Developer before registration.
• Hence the BBMP releases Khata periodically, based on completion of the work in the Project.

Apartment – Sale & Construction Agreements followed by Sale Deed
• Extent of Undivided Share
• Likely time for construction
• Pricing divided into Sale Value for UDS & Cost for Construction
• Delayed payment charges & rewards for timely payments (incentivized by some Builders)
• Cancellation Clause – should have clear indication of the cancellation charges

Villas – apart from all of the above, it should have clear indication of the Land extent & if the same is being sold as UDS or separate Plot plus
Construction

What are the factors that one should check in the Sale Agreement while buying in secondary sale?
Resale of Property can be done in 2 different types:
a) Post registration of Property
b) Before registration of Property – by way of Assignment of rights by the Allotment/Agreement Holder in favor of the New Buyer, with due consent from the Builder, by which the registration happens directly from the Builder to the New Buyer
Hence the first the above needs to be established, before proceeding with the transaction. Points to be noted in case of

Registered Resale:
• Registration done by actual Buyers or thru POA, if thru POA, same needs to be verified
• If any loan is outstanding against the property – can be confirmed with the EC
• At the time of signing the LOI, Originals needs to be verified, if the property does not have loan. May not be done at Agreement stage, in case of Sellers not from Bangalore
• If Originals cannot be verified, a Certified copy of the Sale Deed (proof of Ownership) can be obtained from the Registrar Office
• Physical inspection of the apartment, to ensure all points pertaining to any structural issues can be addressed in the agreement

Documents to be received from Seller (all in Originals):
i. Sale & Construction Agreement (entered into between the Builder & the First Owner of the Property)
ii. Sale Deed (from the first sale from builder till the last sale from the present Seller)
iii. If ownership in between is changed, property supporting documents for the same – e.g. – in case of transfer sale in first sale from Builder – can be verified by checking the names in the First Sale Deed & the Sale and Construction Agreement
iv. Khata Certificate, Extract, Utrapatrika – wherever applicable
v. Upto date Tax paid Challans – should include the financial year in which the sale is made – but can be borne pro-rata between

Buyer & Seller
vi. POAs where applicable
vii. Copy of Title Deed for the property as a whole, as provided by the Builder to the first Registered Owner of the property, which should mandatorily include the Occupancy Certificate.

Unregistered Resale
• Confirmation from Sale & Construction Agreement, as well as updated statement of account from Builder to ensure no dues is left with Builder.
• If the transaction is done, where-in dues are payable over a period of time post the transfer, as the property is still to be constructed, clear confirmation of from when the dues are payable by the Buyer is to be established
• For the purpose, the parties Seller & Buyer should enter into an MOU, based on which the Builder will prepare Assignment Deed (could be tripartite)
• Once the assignment is completed, fresh statement of account should be sought from the Builder to verify if the new Buyer’s name is captured in the Builder’s system – a double verification/confirmation of the transfer

Documents to be received from Seller & Builder (all in originals)
i. Sale & Construction Agreement – entered into between the Builder & your Seller
ii. Assignment Deed duly signed by Seller, Buyer & Builder, confirming acceptance of the transfer
iii. Statement of account confirming NO DUES or Balance dues as the case may be
iv. Post registration directly from Builder, Original Sale Deed