You have often heard this is in all ads that are featured on the television,radio etc. that say
“Please read the offer document carefully before investing“
The real estate deals are not exempt of this due diligence, in fact it is here that you need more patience and do your home work right.
In the scenario that you have looked at a property that is up for sale, seen its documents of the Khata, encumbrance certificate,title deed etc, got it legally verified by property lawyers around or got an online verification of these documents done and got their green signal and decided that you shall go ahead and buy the property. The paperwork that is normally associated with buying a dream home is still not complete without the sale agreement, transfer of the name in the title deed etc.
What is the sale agreement ?
Like the word itself says, it is an agreement between the seller and the buyer that details all the aspects of the sale,the property details, the address or the location of the property, the agreed upon price of buying, the date at which the transfer shall happen etc.
Why is this important?
The answer to this question lies in the aspect that this document is legally binding to both the buyer and the seller, if the conditions of the sale is not met as agreed in the sale agreement, the grieving party can sue the other legally and obtain the compensation for it.
What can the sale agreement normally have ?
Like it is mentioned previously, there are a few set of information that is almost always available, the details of the property being transacted with, if it is a single independent house, a warehouse that is shared among others or an apartment that is being built or already available to move in.
Also mentioned shall be the information regarding the actual sale, i.e the amount to be paid for the property, inclusive only of the carpet area for the apartments. The details of the initial amount to be paid,also known as token advance or earnest money, the date of payment of installments if any. It is suggested that there are clauses neatly mentioned that indicate the plans for contingencies, if the buyer backs out, the seller makes changes to the building plan or the property is being bought as is or with renovations made as requested.
With the advent of RERA, the property buyers in Bangalore and all over India are now in a place to ask the apartment sellers for penalty in case the completion of the project is delayed from the time of agreed delivery.
It is best that one hires an expert lawyer to get the work done, because a shoddily done sales agreement can lead to complications later.
Areas of pain that can be avoided –
1) Draft a condition if in case the buyer or seller draws out of the contract
2) Make sure the agreement details whether renovations are to be made or given as is.
3) Please include the details as to what happens to the earnest money after completion of the sale.
4) In case of houses in lease, details regarding the payment of the dues or change in the owner to whom the money shall go should also be mentioned.
5) In case of houses under loan already, it is best to note if the amount is used to clear off the loan and get the papers back to the original seller and then proceed.
6) Check on the details such as property tax payments, no dues at all the government agencies.
Although these are markers for consideration, every sale agreement is different in its composition since its a system of agreement based on two entities of the seller and buyer. But it is something that needs to be read through twice, maybe even thrice so that nothing can come back and haunt you later.
So take your time and read draft a strong sales agreement that can keep both parties at peace. It is important to read the offer document before investing or signing on the deal of your house/property.