A buyer pays token money to the seller to seal the deal at the time of signing an agreement to sell. A standard clause is inserted 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, Trilegal’s counsel, says: “The sale agreement should clearly stipulate the timeline within which the sale will be concluded and if the sale is not terminated by such time, the sale agreement shall stand void, and any amount paid by the Buyer to the Seller as advance shall be refunded forthwith.”