Last Modified: 30 May 2020
Home Buying Guide
The ‘Agreement For Sale’ is a contract to transfer property from the seller to the buyer. It is a legal document that outlines the terms of a real estate transaction. It includes details of the amount at which property is to be sold and also all the future date of full payment and is signed by the seller as well as the buyer. It is also known as the Contract of Purchase, Contract for Sale, Contract Agreement or Sale Agreement. However, even after both the parties sign the agreement, the property is not completely transferred and the deed isn’t in the buyer’s name. After this contract is signed, the owner retains ownership of the home while the buyer makes monthly payments just as he or she would make to a loan lender. When the purchase amount is paid off completely, the seller signs the deed over to the buyer. Based on the Agreement For Sale the Sale Deed is drafted.
This is a very important document for property transactions and that is the reason why both the parties, the seller and the buyer need to understand all the terms and conditions included in it and it should be obeyed throughout the sale process. Here is all that you need to know about Agreement For Sale
- It is a contractual property agreement between the seller to sell a particular property on particular terms and an agreed-upon price to the buyer.
- It is not an actual sale as the sale deed is not yet signed but it is a written promise to carry out the contract at a future date.
- Registered under the Indian Contract Act, 1872, the sale contract is legally binding on both the parties.
- It is a roadmap on how property transaction will be completed in the future, the sale agreement is a precursor to the Sale Deed where the actual transfer of property takes place.
- Usually, a couple of months’ time is given to the buyer so that they can arrange the required funds required. The contract also has details of any other formalities that are required to be carried out before the actual transaction takes place.
- To maintain the legal sanctity of the document, both parties need to mutually agree on what clauses to be added to the contract.
- These clauses can be related to penalty for not honoring the contract, terms and conditions pertaining to who will pay the outstanding dues, right to call off the deal, etc.
- This agreement needs to clearly state the names of the buyer and the seller, the size of the property, its direction, carpet area, and other necessary information.
- What is the type of the property, is also listed in the contract i.e. whether the property is leasehold, mortgaged or freehold, and the terms and conditions are also spelled out properly.
- In this contract, the buyer promises to bear the cost of transfer of the property and the seller pledges to give the property free from all encumbrances.
- The token money that is paid is also listed in the manner in which the remaining payment is to be made so as to avoid any further disputes.
- This document is dated and is signed by both the parties in the presence of two witnesses.
It is suggested to get all the real estate investment agreements and documents done from a lawyer, who can draft the agreement by understanding your needs and concerns