An agreement for sale of a house is a legal contract between seller and purchaser regulating the mutual promises made by each party. It is a formal document that evidences the sale and purchase of immovable property(house). An agreement for sale is a legal document and a written promise to transfer this immovable property for consideration (money). It records the terms of such transfer and such payment and also the penalty in case of non-transfer of the house in question or non-payment of consideration.
An agreement for sale of immovable property or house is drafted stating a seller’s and buyer’s willingness to sell and buy this property, respectively. It determines the terms and conditions of sale between the parties. The agreement is binding on both the parties. It is an important step as all the rights and liabilities of the parties are stated clearly and thus avoids future legal trouble and confusion. One of its main purposes is to serve as written evidence of the selling and buying of such property. It safeguards the interests of both the seller and the buyer. It is a legal document and is enforceable in the Court of law.
It should consist of all the necessary terms and conditions. The following are important terms that must be included in a agreement for sale of house among others:
a. The relevant personal details of the parties such as full name, residential addresses and ages of the parties to the agreement,
b. Description of the property i.e. house to be sold by the seller,
c. Terms of the payment, including the mode of payment, the amount to be paid by the purchaser to the seller and the duration within which the payment is to be completed,
d. Terms regarding the taxes, including house tax, water and electricity charges and other dues,
e. Indemnity clause designed to seek compensation from the seller should there be any losses/expenses in the future,
f. Penalty clause explaining the details of what the penalty would be if the seller or purchaser defaults in performing their duties as per the agreement,
g. Clause stating the right to call off the deal,
h. General clauses such as termination of agreement, applicable laws, arbitration clause, etc. and
i. Date of signing of the agreement.
Draft of Agreement for Sale of a House
This Agreement of sale made at . on this . day of . 20___, between A son of . resident of . hereinafter called the vendor of the ONE PART and B son of . resident of . hereinafter called the purchaser of the OTHER PART.
WHEREAS the vendor is absolutely seized and possessed of or well and sufficiently entitled to the house more fully described in the Schedule hereunder:
AND WHEREAS,the vendor has agreed to sell his house to the purchaser on the terms and conditions hereafter set-forth.
NOW this Agreement Witnesseth as Follows
1. The vendor will sell and the purchaser will purchase that entire house No. Road . more particularly described in the Schedule hereunder written at a price of Rs. . free from all encumbrances.
2. The purchaser has paid a sum of Rs. . as earnest money on . (the receipt of which sum, the vendor hereby acknowledges) and the balance amount of consideration will be paid at the time of execution of conveyance deed.
3. The sale shall be completed within a period of. months from this date and it is hereby agreed that time is the essence of the contract.
4. The vendor shall submit the title deeds of the house in his possession or power to the purchaser's advocate within one week from the date of this agreement for investigation of title and the purchaser will intimate about his advocate's report within . days after delivery of title deeds to his advocate.
5. If the purchaser's Advocate gives the report that the vendor's title is not clear, the vendor shall refund the earnest money, without interest to the purchaser within . days from the date of intimation about the advocate's report by the purchasers. If the vendor does not refund the earnest money within . days from the date of intimation about the advocate's report, the vendor will be liable to pay interest @ . p.m. upto the date of repayment of earnest money.
6. The vendor declares that the sale of the house will be without encumbrances.
7. The vendor will hand over the vacant possession of the house on the execution and registration of conveyance deed.
8. If the purchaser commits breach of the agreement, the vendor shall be entitled to forfeit the earnest money paid by the purchaser to the vendor and the vendor will be at liberty to resell the property to any person.
9. It the vendor commits breach of the agreement, he shall be liable to refund earnest money, received by him and a sum of Rs. . by way of liquidated damages.
10. The vendor shall execute the conveyance deed in favour of the purchaser or his nominee as the purchaser may require, on receipt of the balance consideration.
11. The vendor shall at his own costs obtain clearance certificate under section 230A, Income tax Act, 1961 and other permissions required for the completion of the sale.
12. The expenses for, preparation of the conveyance deed, cost of stamp, registration charges and all other cut of pocket expenses shall be borne by the purchaser.
Schedule above referred to
IN WITNESS WHEREOF the parties have set their hands to this Agreement on the day and year first hereinabove written.
Signed and delivered by Shri A.
the within named vendor
Signed and delivered by Shri B ………..
The within named purchaser
There are no specific documents required for the drafting and execution of an agreement for sale of house. However, ID proofs of the parties in order to confirm the names and permanent addresses of the lender and borrower should be scrutinised. Documents evidencing clear title of the property/house of the seller in question should also be examined, along with documents proving the history of transfers of several ownerships of the property in question, if any.
No set procedure is applicable in the making of an agreement for sale of property. The property documents evidencing the ownership of such property by the seller must be examined by a lawyer thoroughly. Once the agreement has been drafted by a lawyer, it should be specifically and carefully read by both the parties to the agreement. Any necessary changes required to be made shall be carried out and once the agreement is finalised, it shall be signed by both the parties along with the requisite witnesses. The agreement for sale of house is legally binding when it is printed on judicial stamp paper/e-stamp paper and signed by both the parties. The stamp paper value depends on the particular State in which it is executed. Each party should thereafter keep a signed copy of the Agreement for sale of house/immovable property.
An agreement for sale of house is a legal document which includes clauses stating the terms and conditions between the parties. It needs to be printed on a judicial / e-stamp paper of the correct value and signed by both parties. Since this agreement involves immovable property, it is required to be registered after stamping with proper value, as per State laws.
One of the first and the most important steps that you must undertake is to hire a good documentation lawyer as he/she is aware of the nitty gritty of the legal procedures and necessary requirements involved in drafting of agreements for sale. A lawyer would draft an agreement for sale of a house, better than you can yourself, for obvious reasons. A lawyer has the necessary legal knowledge and experience to handle and draft such documents. He/She will be able to guide you and draft for you according to your particular situation - the facts, circumstances and needs involved. A documentation lawyer is aware of good drafting technique and the clauses that must be included in your agreement. Hiring a good lawyer in order to draft such important legal documents is a prerequisite and will help you in more ways than one. He/She can also help with proper stamping and registration of the agreement for sale of house/immovable property.