• MOU in a land deal

We have a land in Karnataka State in a prominent city. It is inherited by 12 of us by way of a Will of an aunt. A buyer has approached us. Price agreed. We told him we want only outright sale (without an interim sale agreement). He agreed. After legal scrutiny of our papers by his Lawyer, he is asking a Memorandum of Understanding (MOU) in a Rs200 stamp paper. The sale will be within one month and there is a damages clause for a payment if either party fails to execute the sale deed. There is no advance money. The MOU will be null and void after the sale / date. Their Lawyer had written very strict language to which we objected and we re-drafted it our own simple language. Still some of our beneficiaries are afraid to sign an MOU in a stamp paper. Is it safe?
Asked in Property Law from Bangalore, Karnataka
Religion: Hindu
1) you cannot be forced to enter into MOU 

2) inform purchaser that you don't want to enter into MOU but are comfortable signing sale deed only 

3) since no advance money is being received it makes no sense in signing MOU 
Ajay Sethi
Advocate, Mumbai
28427 Answers
1542 Consultations

5.0 on 5.0

1. DO not go for MOU.If agreement fails you will be in sweep if the buyer wishes to entangle the property.
2.Rather get into sale agreement and receive a big amount and no token amount as advance.
3. Make a clear time line for balance ayent so sale deed is executed within that time only in dafult wo whch you can cancel the agreement.
4. Registration of dale agreement is advisable.
5 I can not advise to go for MOU for sure.
Devajyoti Barman
Advocate, Kolkata
7265 Answers
82 Consultations

4.9 on 5.0

Hi, Normally before entering into sale deed either agreement to sell or MOU is entered between the parties and it is normal procedure, if you want to safe guard your interest better engaged any advocate and get opinion from him.
Pradeep Bharathipura
Advocate, Bangalore
4202 Answers
153 Consultations

4.3 on 5.0

If no advance is paid, then MOU with damages clause can be removed altogether. Only if token advance is paid then damages clause can be retained.
If this is done, then it is safe to sign.

Kiran N. Murthy
Advocate, Bangalore
829 Answers
62 Consultations

5.0 on 5.0

If you have refused to execute a sale agreement for the proposed sale then there is no need for a MOU either.

In fact the recitals in the MOU should be beneficial to both the side and it should not be lopsided.

You have all the rights to reject such MOU especially when the co-sharers are not willing to enter into such an agreement in the disguise of MOU.


You may ignore this arrangement and go for the execution of sale itself directly especially when the buyer is not ready to pay any advance amount for this purchase.
T Kalaiselvan
Advocate, Vellore
18636 Answers
176 Consultations

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