Understanding Why Drafting an ‘Agreement To Sell’ Is Vital for Homebuyers

May 22, 2024
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Your home is the most significant investment of your life, so it is necessary to get familiar with the rights that you can enjoy as a homeowner. Hence, before we get to know why it is important to have an ‘agreement to sell,’ let us understand what it means!

What Is an Agreement To Sell?

Prior to the sale deed, an ‘agreement to sell’ is crucial. Legally sanctified, the document states the seller’s intention to sell the property and the buyer’s intention to purchase it. Say if you liked a 1 BHK flat in Ghatkopar and you intend to purchase it, you must have a written contract with the seller that certifies the verbal terms of the sale, including the transaction date, the earnest money deposit amount, the right to a refund in the event the sale falls through, and the buyer’s legal protection in the event the title to the property is ever contested.

What Information Does an Agreement To Sell Contain?

Here’s a list of points to remember when you prepare a purchase agreement as a buyer:

Clause for provision of government records

In order to ensure that you are the rightful owner of the property upon completion of the sale, you should add a clause that requires the seller to provide all government records. A possession letter, a transfer form from a housing society, a form from a landlord’s association, etc., are some of the documents that are included in these records.

Clause concerning the completion timeframe for deals

Clearly mention the timeline (date) within which the sale will be completed. The date can be mutually agreed upon by buyer and seller. If an extension is agreed upon, it should also be stated in the agreement to sell.

Don’t forget to add that if the sale is not completed within the agreed deadline, it stands cancelled, and the seller may seek a new buyer.

Return clause

The seller asks for earnest money from the potential buyer before the sale can go through. This sort of trust payment enables them to secure the property until the real transaction takes place. At any point, though, the buyer may choose to withdraw without getting their money back. To sidestep any possible disputes, it’s advisable to include a return clause in the contract. This states that if the property isn’t sold within the given period of time, any agreement will be null and void and the seller must refund the deposit to the buyer.

Indemnity clause

If you’re looking to buy a property, it’s important to know that there are a lot of things that can go wrong. From construction issues to defects in the title deed and breaches of sale agreements, there are many ways your purchase could be affected. In their agreement to sell, the seller should have an indemnity clause which protects or indemnifies the buyer against any damages or losses resulting from defects or lapses in legal requirements.

Exclusivity clause

If you’ve chosen a property and have verbally agreed with the seller that it will be kept exclusively for you, it’s important to add a clause in your agreement to sell that states that the property is held exclusively for you (the buyer). This will prevent the seller from selling or negotiating with third parties about other properties.

Due diligence of property clause

When you’re buying a property, it’s important to make sure that the seller is being honest about their ownership information. You can do this by having a due diligence clause in your contract.
This means that the seller will have to provide all relevant information and legal documents related to their property ownership. This will allow you to verify the authenticity of the property on sale, so that you know if everything is as advertised.

Clause concerning outstanding dues

This provision should specify that the seller has paid all fees associated with the property up to the date of purchase, including the property tax, maintenance charge, power and water bill, etc.

So whether you are looking at buying apartments in Mumbai or any other city, make sure you look into all the vitals mentioned above. To be safe and ensure all your paperwork is in safe hands, it is important to collaborate with the right property partner. L&T Realty is one of the trusted real estate developers in Mumbai. Bestow your trust upon us, for your dream of a beautiful home is our dream to fulfil!