CALL NOW +91 – 8800110989 The Indian real estate market is on a growth path in the post Covid period. Investment in property has always been a preferred choice among people of India. Whether it is a retail investor, commercial investor or any individual looking to buy or sell property. One important document in real estate transactions is Agreement to sell.
An agreement to sell is an integral part of buying and selling of immovable property. It allows both the parties involved in the transaction to review terms and conditions and engage in negotiation if required. It clearly defines the sales terms and value of the property. In this article we will take a closer look at key details of this legal document.
What is An Agreement to Sell?
An Agreement to Sell is used for future transactions based on certain conditions. It is a contract between a buyer and seller where the buyer and seller agree to complete the sale transactions after a certain period of time when all the conditions drawn in the contract have been met.
This document is created before the actual sale deed is registered, hence, it helps both the parties involved to understand the terms and conditions of the sale including the date when actual transfer of property will take place. In case any party does not agree with the outlined terms and conditions they get the opportunity to renegotiate the contract. Once Agreement to Sell is registered it becomes a legal binding on both the parties. It is important to carefully examine and understand the details of the terms and conditions mentioned in the document before entering into the contract. Seek guidance from a legal professional is advised to avoid any ambiguity.
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Details Mentioned in the Agreement to Sell:
An agreement to sell is something which is prepared before the sale. It gives opportunity to both the parties to understand the contract by providing details of the agreed terms. The key details of this document are
- Name of the buyer and seller
- Details of the property, area and address
- Agreed sale price of property
- Key dates of various stages of this transaction
- Details of any upfront payment
- Details of pending payment and promised dates of the payment
- The time duration for closing the deal
- Mention of any penalty or compensation in case of delay
- Date on which property transfer will take place
Furthermore, it can also mention any internal dispute resolution mechanism.
Significance of Agreement to Sell Property:
The process of buying and selling a property is quite long in India. One has to go through various documentation and legal formalities before a property can be bought or sold. In case transfer of property has to take place in future that is where agreement to sell comes in picture. Once the prospective buyer has selected the property they would wish to invest in, they will meet the seller for negotiating the terms and condition of these transactions To avoid any future dispute and ambiguity an agreement to sell contract is drafted. It acts as a precursor to the actual sale deed and helps both the parties to enter in a contract based on mutually agreed conditions.
Once registered with competent government authorities it works as legal binding and protects the rights of both buyer and seller. Though it does not give any title to the buyer over the property, it can be used as evidence in court by both buyer and seller in case any terms or condition is not fulfilled.
Agreement to Sell comes under section 4 of sale and agreement to sell. According to which it will become a sale after the stipulated time mentioned in the contract is passed or the terms and conditions of the contract are met. Upon successful completion it will facilitate a sales deed between the buyer and the seller.
Registration of Sales Contract/Agreement to Sell:
There is a mandatory requirement to register an Sales Contract in order to make it a legal binding on the parties involved. This way this document will help in protecting the rights of both the parties involved in the transactions.
- First of all the document has to be drafted by a legal expert to ensure accuracy and compliance with applicable law.
- Once the draft has been completed both the parties should review the terms and conditions before registering.
- If both the parties agree with all the terms and conditions outlined in the contract the next step is registration.
- Present the document to relevant government authorities of the state.
- Pay applicable fee and charges.
- After review by authorities, an Sales Contract will be registered.
The registration of Agreement to Sell confirms the legal validity of the document. It enforces legal action in case of violation by any of the involved parties.
Agreement to Sell Creates Right for Buyer:
An agreement to sell once registered acts as a legal binding on both the parties. This document only signifies that the transfer of property will take place in future after certain conditions are met. However, it does not give any title of rights to the buyer over the property.
This document serves as evidence in case of future disputes or if the seller fails to fulfill any commitment and obligation mentioned under the contract.
Sale And Agreement to Sell Difference Between the Two Property Transaction Contract:
A sale contract and an agreement to sale are two fundamentally different contacts. An agreement to sell is a precursor to sale, it is generally drafted before the actual transfer of property takes place.
| Key Feature | Agreement to Sell | Sale Agreement |
| Transfer of Ownership | Happens after certain period of time as mentioned in the contract | Happens immediately after the legal execution of the deed. |
| Time of Preparation | Prepared before the sale or transfer of property | Prepared at the time of sale or actual time of sale |
| Ownership Right | Does not provide ownership rights and title on the property | Ownership is transferred to the legit buyer. |
| Type of Contract | It is a commitment which creates legal binding on both the parties for ensuring compliance with contract | It is the next step after agreement to sell, it completes the sale transaction. |
How to Distinguish Between Sale and Agreement to Sell
Sale and agreement to sale are to key contracts in real estate transactions of India. Both these documents are executed with different purposes by examining the function and key feature we can easily distinguish between Sale and Agreement to Sell.
- Examine the Transfer of Ownership: By examining the transfer of ownership in the document we can easily distinguish between sale and agreement to sell documents. An agreement to sell provides commitment of transfer of property after certain periods of time based on the fulfillment of the condition mentioned in the contract. Whereas a sale agreement provides immediate transfer of ownership to the legit buyer upon successful execution.
- Examining the Clause Related to Damage: During the period an agreement to sell is in effect the risk related to damage to property has to be borne by the seller as the seller remains under the obligation to transfer the property as per the agreed terms. However in case of sale deed, once the deed is executed any damage will become the buyers responsibility.
- Examining the Ownership Enforcement: Ownership can be enforced in case a sales deed is executed. The legit buyer is entitled to property transfer. However, in case Agreement to sell ownership can not be enforced, in case of any issue arise it can be disputed in the court.
These are the most common ways to find differences between sale and agreement to sell deeds. It is advisable to take help of legal experts in property law to better navigate such issues and avoid any ambiguity.
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How Insaaf99 an Online Legal Consultation Platform Helps in Agreement to Sell
Insaaf99 is an online digital consultation platform that harnesses the power of technology to help its clients to meet legal experts from the comfort of their home. We have a team of legal professionals with rich experience and expertise in property law. With our comprehensive legal service we make property transactions easy. The help Insaaf99 offers
- Online Consultation: You can consult with our legal professional online for any legal advice related to Agreement to Sell saving your valuable time.
- Drafting Agreement to Sell: In case you need help with drafting an agreement to sell you can connect with our legal expert provide them relevant details and they will provide you with accurate draft in compliance with all legal requirements.
- Understanding the Nuances: Our legal team can be approached to understand the nuances of the contract, they will explain to you the terms and condition of the contract in simple language, helping you to make informed decisions
Frequently Asked Questions.
What is an Agreement to Sell?
An Agreement to Sell is used for future transactions based on certain conditions. It is a contract between a buyer and seller where the buyer and seller agree to complete the sale transactions after a certain period of time when all the conditions drawn in the contract have been met.
Is Agreement to Sell enforceable?
Though an agreement to sell does not transfer the ownership rights, it is considered as admissible evidence in court in case of dispute.
What is an example of sale and agreement to sell?
1. Sales Deed: A full payment to get immediate ownership right of the property.
2. Agreement to Sell: Under Construction project and promise to transfer ownership after a certain time.
How do you write a sales agreement?
A sales agreement is a legal binding document. Is it advisable to take help of the legal professionals to draft a sales agreement to avoid any compliance issue.
How can an agreement to sell be proved?
Agreement to sell can be made valid by registering with relevant government authorities. Unregistered agreement to sell can be considered as evidence under certain circumstances.
Is agreement to sell mandatory?
An agreement to sell is not a mandatory document, it is required as per the nature of property transfer parties are getting into.
Who keeps an agreement to sell?
It is required for both buyers and sellers in order to protect their rights and know their available options if disputes arise.
What is the validity of an agreement?
For a contract to be considered as a valid agreement it has to be in compliance with Indian contract act of 1872. If it has all the required essential elements it becomes enforceable by law.
