Timeline for completing the deal
At the time of signing an agreement to sell, the buyer pays token money to seal the deal. A standard clause has been placed in the agreement that if the buyer withdraws from the deal, the entire token amount will be forfeited by the seller. However, this appears unfair to the buyer as the buyer should also be protected against a situation where the seller backs out. Real estate expert Nitin Bhatia says, “I would suggest adding one more line in this section that if the seller backs out of the deal then he will have to return the earnest money paid by the buyer as well as an amount equal to the penalty. ”
Adding to this, Arnav Nagalia, Lawyer, Trilegal, says: “The sale agreement must clearly set the timeline within which sales and if the sale is not concluded by such time or for any extended period as may be mutually agreed upon in writing by the parties, the sale agreement shall stand void, and shall be deemed to be an advance consideration by Buyer to Seller. Any amount paid must be refunded forthwith.”
On many occasions such sellers usually cancel the deal if they find a new buyer who can pay them more before the execution of the sale. Work, Adding a clause to the timeline will ensure that the transaction has an expiration date and if the deadline is not met, the parties are obligated under the sale agreement, in which case to protect the buyer’s interests. Suggesting a way to do it, says Nagalia. , “If this clause is not inserted, the seller will keep on looking for a new buyer who can pay him a little more,” says Bhatia.
Property due diligence
The sale agreement should place an obligation on the seller to provide full cooperation and assistance to the buyer for due diligence of the property. “This should include facilitating verification of the title of the property by providing the purchaser the necessary documents and answering all queries as required,” says Naglia.
Further, if the seller is a company, a search will also be conducted with the Registrar of Companies. Mithali Naik, Associate Partner, DSK Legal, said, “Search at the office of the Sub-Registrar of Assurance may reveal additional documents executed in respect of the property which the seller may not have provided to the buyer.”
right to cancel the deal
As a buyer, you must reserve the right to cancel the deal under certain circumstances without being penalized financially. “A clause should be added that if the potential buyer finds a defect in the seller’s title to the property or the seller does not comply with the terms and conditions of the sale agreement (if the seller misrepresents or provides false information), the buyer ) then the deal will be terminated and compensation will be sought,” says Naglia. “For example, if the buyer’s home loan petition is rejected by the bank due to some legal/statutory issue in the property, the same should be compensated by the seller. Also, the seller is required to provide all the original documents on time. The duty is bound to be imposed on him. Execution of the sale deed, failing which he will be compensated by the seller,” says Bhatia.
free from load
Unless otherwise agreed between the parties, Buyer must ensure that the Sale Agreement clearly stipulates that the Property is being sold by Seller free of encumbrance. “This section shall state that the seller has paid and is liable to all sums (including but not limited to property tax, maintenance charges, electricity charges, water charges, etc.) due and payable in respect of the property up to the date of sale. To discharge any such liability arising after but before the sale,” says Naglia. Bhatia adds that in the absence of this clause, the seller can demand additional money against all the deposits paid by him at the time of sale deed. “It is important for the parties to agree on the same before the sale to avoid any unnecessary dispute at a later stage with respect to any amount payable before the date of sale,” says Nagalia.
indemnity against legal defects
In Tier I cities, many properties are under litigation. “Some of the most common causes of legal disputes are property being transferred under force, effect or coercion or the legal heirs of the seller claiming his right over the property,” says Bhatia. “An indemnity clause is necessary to ensure that the buyer is protected against any adverse claim that arises due to a defect in title or some action/inaction of the seller,” says Naik.
“The sale agreement must also contain a clause on indemnity whereby the seller indemnifies the buyer for all losses and damages caused to the seller due to a defect in seller’s title or breach of the sale agreement. (if the seller misrepresents the buyer). or provides false information),” says Naglia. This is to protect and safeguard the Buyer from any financial loss that the Buyer may suffer in these accounts. Bhatia cautions that this section should be carefully prepared and should cover all possible scenarios.
update government records
It is imperative that the sale agreement contains a clause to impose an obligation on the seller to provide all necessary assistance to the purchaser, so that the purchaser is required to reflect the purchaser as the new owner of the property upon completion of the sale. Records can be updated, including providing all documents and information as required. “With further transfer deed or sale deed, the buyer must ensure that the required supporting documents such as possession letter, society transfer form are signed by the seller,” says Naik.
sales specification
On the issue of drafting the contract, Soumi Bhatt, General Counsel, bankbazaar.com, says that one should avoid a standard contract and get it drafted by a professional to include clauses suited to property, parties and other circumstances . “The sales agreement should contain clauses specific to your property and condition to avoid legal disputes after the contract. It should be mutually acknowledged in writing by both buyer and seller,” she says.
“The purchaser must ensure that the sale agreement includes a clause on the exclusivity under which the property is held exclusively for the buyer and that the seller shall not be permitted to enter into any discussion or negotiation with third parties in relation to the property.” Will not be allowed,” says Nagalia. He says this would restrict the seller from discussing the sale of the property with third parties. Bhatia adds that if the seller fails to provide vacant possession of the property at the time of execution of the sale deed, the deal can also be cancelled.