A Sales Agreement and its Features
A sales agreement which is also referred to as a sales contract is a legal enforceable contract between the seller and buyer where the terms of exchange are defined. Most commonly, it comes into existence during the purchase of a house. It is also important to understand the finer points of this agreement, so as to protect your interests, and enable the deal to proceed smoothly.
Major elements of a Sales Agreement
This contract is a blueprint that allows both the parties to know what their rights, responsibilities, and obligations are and where the obligations lie. Some of the key components of a sales agreement include:
- Identification of the parties to the contract
- Description of the good to be sold
- Description of the time frame for completion.
- Description of the settlement date
- What’s included with the sale?
- What’s not included with the sale?
- Such a description may be legally sufficient:
- Visible inspection date of the property
- A clause describing breach and the penalties
When Do You Require A Sales Agreement
If there is an intention to purchase or sell an item which entails more than just transfer of ownership, a sales agreement is crucial. Warranties can easily be avoided especially when purchasing a residential property. So many factors such as D.P., closing costs, insurance, Titles, and financing have to be communicated to both parties effectively.
Also, a sales contract is desirable if there is a transfer of goods, services, or property at a future date. The sales contract defines all the parties to the agreement in the term of ensuring that the sale plan is duly followed. In such situations, it is also advisable to enter into a sales agreement for the purpose of transferring the liabilities attached to the property, goods or services to some other person.
The Industry Standard Elements of a Sales Contract
The law expects the potential buyer to exercise reasonable and adequate consideration before signing a property sale contract. Section 55 of the Transfer of Property Act provides that the seller must furnish all material and effective information and declarations to the buyer. These include:
- The vendor must be the absolute owner of the property and be able to assign the executed sale agreement to the purchaser.
- Identifying material defects, disputes or claims with third parties; and such claims are in fact, material defects.
- Declaration of nil encumbrance/lien over the property.
- The sale of the property whereby all the title deeds are delivered by the vendor, all the purchase price has been paid and the possession of the property has been given to the purchaser.
- Payment of all outstanding balance of government bills related to the property.
- To ensure the protection of the buyer, the seller is also required to provide further documents for example, the transfer of municipal records & transferring utility to the name of the buyer.
In addition, the buyer is also suggested to ask for indemnity from the seller for the issues related to the title and for the breaches of the agreements. The indemnity contract should state that the property costs are at one’s discretion. This indemnity contract even after the sale contract is signed is very important because it gives the buyer the right to seek recourse against the seller for any future title defects.
Key Considerations prior to the Execution of Sales Agreement
- The agreement should be signed by the respective parties, this includes parents’ names addresses among others in the coverpage of the agreement.
- The total area of the property as well as the carpet area has to be included and a confirmation should be included that the area comes under the RERA laws.
- Confirm that the seller has all the authority’s right relating to the ownership of the property to be transacted.
- Mention the property details and dimensions such as the carpet area, the built up area.
- Get channel documents which outline the documents from which the property is derived from.
- Confirm the payment terms as contained in the agreement, whether the payments are made in advance or later.
- Verify the term which includes the time taken to transfer a property from seller to a buyer and investigate why there is a penalty clause for unreasonable waiting by the seller.
- Complete the encumbrance certificate stating that property does not have a mortgage or loan or any other kind of debt.
- Buyer and Seller’s signature on all the pages of the agreement is a requisite.
- Register and get the registration certificate which is not compulsory but which can be made on a stamp paper of Rs. 500 or Rs. 1000 (depending on the state laws). This paper should also contain at least two witnesses and their ID proofs attached to the agreement.
Conclusion
At Dream Location, our trust and competitive spirit with our home buyers and investors lays brick for our success. We appreciate the fact that handing over a house that suits your demand is critical which includes core parts such as the sale agreement, as such it can be easy for you to look for your desired location.
For more information about Dream Location and to search your dream property, please visit Dream Location on Google Map. Contact us today to know more about the best real estate deals in Delhi and North India; we will connect you to the right property investment.