Do you intend to sell a house? If so, it’s critical to safeguard your interests and make sure the transaction closes successfully. An agreement to sell is relevant in this situation.
We’ll cover all you need to know about it in this blog. We’ll go over the main elements of this agreement, what an agreement to sell is, what the law requires, and how important it is in different kinds of sales transactions. By the time you finish reading this blog, you’ll know exactly how it can help you as a seller and how to draft a strong contract that safeguards your rights.
WHAT IS AN AGREEMENT TO SELL?
We may interpret an Agreement to Sell in a variety of ways. But, here’s what it really means:
An agreement to sell is a legally enforceable contract that defines the terms and circumstances of a transaction between a buyer and a seller. It is a vital tool for avoiding misunderstandings and disagreements by explicitly describing each party’s expectations and duties.
An agreement to sell is defined legally as a contract that lays out the terms and conditions for the selling of products or services between a buyer and a seller. The purpose of the parties to acquire and sell the property, as well as the terms of the transaction, such as the purchase price, payment plan, date of possession, and other crucial details, are established in this crucial document.
IS A SALE AGREEMENT A LEGAL DOCUMENT?
In order to allow both parties to discuss and finalise the details of the transaction, an agreement to sell is typically executed prior to the actual conveyance deed or sale deed being signed. Following the signing of the agreement, the seller must give the buyer possession of the property in accordance with the terms and conditions specified in the agreement, and the buyer must pay the agreed-upon purchase price. It is a crucial legal agreement that safeguards the rights of the seller and the buyer and works to prevent future misunderstandings and conflicts.
IS A SALE AGREEMENT LEGALLY BINDING?
A contract that is validated by law amongst a seller and a buyer is said to be a legally binding agreement of sale. This format of written contract comprises of everything right from the acquisition cost, instalment plan, occupancy date, and other major stipulations of a property transaction.
This agreement of sale is only completed when certain requirements are fulfilled such as both parties’ signatures are done along with an in-depth explanation of the asset for transfer and a concise summary of terms and conditions of the business deal. Besides, there must be no unwarranted influence or compulsion and the agreement must be mutually agreed upon.
The moment it is locked with a signature, an agreement of sale becomes a binding contract that both parties must uphold. The opposite party may opt for legal solutions, such as Compliance, reparations, or contract dissolution if either party breaches the agreement clauses.
Prior to signing a contract, buyers and sellers must ensure that all terms and conditions are grasped and assented to as well as the legal ramifications of the agreement. Having a legal counsel also helps to certify that the contract is legally obligated from there on.
IN INDIAN LAW, WHAT IS AN AGREEMENT TO SELL?
As per the Indian Contract Act, an agreement to sell stands as a legal contract in which the seller agrees to transfer ownership of the property to the buyer in due course, governed by a set of conditions, such as buyer’s document fulfilment, settlement of the sale price, and other provisions acknowledged by both the parties involved.
It is an essential legal document that establishes the parties’ purpose to buy and sell the property plus the deal’s condition. For both parties, it is a pivotal contract that protects their interests and mitigates the risk of forseen disputes or communication failures. In India, the completion of a sale or conveyance deed, which formally bestows property title to the buyer, commonly takes place after an agreement to sell.
WHAT DISTINGUISHES A SALE FROM AN AGREEMENT TO SELL?
RETURNING OWNERSHIP
SALE – As soon as the sale deed is executed, ownership of the property is changed from the seller to the buyer.
AGREEMENT TO SALE – At a later time, once certain requirements are met, ownership of the property is passed from the seller to the buyer.
CREDIT FOR THE PURCHASE PRICE
SALE – When the selling deed is executed, the purchase money is paid.
AGREEMENT TO SALE – In accordance with the terms of the agreement, the purchase price is paid in installments or at a later time.
OFFICIAL STATUS
SALE – As soon as the sale transaction is executed, the buyer assumes all risk of loss or damage to the property.
AGREEMENT TO SALE – Until ownership is passed to the buyer, the seller bears the risk of loss or damage to the property.
DUTY STAMPS AND REGISTRATION
SALE – For the transfer of ownership to be considered legitimate, a sale deed must be recorded and stamp duty must be paid.
AGREEMENT TO SALE – Registration is not necessary for an agreement to sell, however state regulations may demand the payment of stamp duty.
In real estate transactions, both buyers and sellers must understand the basics of an agreement to sell. Since it’s a legally enforceable agreement, it ensures not only defined obligations for the involved parties but also grants a seamless property transfer process. Moreover, by adhering to the terms of the agreement under the legal guidance, people benefit from safe and successful real estate purchase!