• Procedures and costs

Hello,

We have a clear title on a plot with 2-storey building and want to sell. There's a willing buyer and a common lawyer between us. Both (buyer and seller) are clients of the lawyer. We wish to enter into an agreement for sale before the actual sale deed for a value of Rs 1 crore in white. Can you please list out: 
 - What are the procedures involved in the sale?
 - What are the different costs involved for the seller?
 - What is the recommended procedure for receiving advance and final payment, and handing over signed sale deed.
 - As a seller, what are the risks that I should be aware of?
- What happens if buyer signs agreement for sale gives an advance but later wants to back out? Should there be a clause in the agreement for sale by when buyer can back out, after which he is obligated to buy?

Thanks,
Asked 4 months ago in Property Law from Canada
Religion: Christian

1. An agreement to sell can be entered into. 

2. There is no procedure for receiving advance amount. It is for the parties (seller and buyer) to decide the figure. The mode of payment should be mentioned in the agreement. 

3. Get a flawless agreement to sell drafted by a lawyer. This should take care of every other aspect of sale. 

4. Incorporate a forfeiture clause in the agreement so that you can forfeit the advance if buyer backs out. 

5. Also, there has to be a clause to enable the aggrieved party to file a suit for specific performance if the other party commits a breach of contractual obligations.

Ashish Davessar
Advocate, Jaipur
26103 Answers
775 Consultations

5.0 on 5.0

1) time should be essence of contract 

 

2) agreement for  sale should contain clause regarding period within payment would be made 

 

3) 10 per cent advance payment should be made by seller and balance 90 per cent within period of 3 months or so 

 

4) if purchaser fails to make payment on time there should be clause that advance payment made would be forfeited 

 

5) get agreement for sale vetted by local lawyer 

Ajay Sethi
Advocate, Mumbai
65429 Answers
3960 Consultations

5.0 on 5.0

Why have you guys appointed a lawyer if he is not competent to draft the agreement for sale and the sale deed and procedures? 

 

Netra Mohanchandra Pant
Advocate, Navi Mumbai
1011 Answers
1 Consultation

4.4 on 5.0

The property must be registered and should have a clear title and that can be ascertained by engaging a lawyer who will do the needful due diligence and inform you through a report.

As the property is yours and you are the seller you need not take care of this aspect.

Other than this...the sale deed myst be effectuated between you and the amount paid in full. 

If he wishes to pay the rest of the money after some time a specific clause must he inserted that the sale deed stands cancelled in case of non payment of the remaining amount.

A specific performance of contract liability arises on both of you in case you don't honour the contract/deed.

Regards 

Rahul Mishra
Advocate, Lucknow
4113 Answers
11 Consultations

5.0 on 5.0

Hi, when you sell the property there is no risks involved once you received the advance  amount, you can entered into Agreement to Sale and in the agreement you must mention that the Sale Deed has to be done with in 90 days and if the buyer is not ready to come forward to pay the full amount  with in 90 days then do not execute sale deed and you can forfeit the amount paid in advance.

Pradeep Bharathipura
Advocate, Bangalore
4618 Answers
229 Consultations

4.5 on 5.0

Firstly there should be registered sale agreement between seller and buyer , in agreement the amount and payment terms and timeline should be mentioned.

The agreement should be registered before the sub registrar.

After complete amount is received.go for sale deed, the stamp duty and registration cost has to be paid by buyer.

If the agreement is registered then any of party can file for specific performance of the agreement.

Shubham Jhajharia
Advocate, Ahmedabad
18230 Answers
71 Consultations

5.0 on 5.0

1) You should registered this "Agreement to Sale" and mentioned all terms & Conditions, termination and payment clauses etc.

Ganesh Kadam
Advocate, Pune
7095 Answers
60 Consultations

4.9 on 5.0

Execute a registered agreement To sell and mention all terms and conditions  

Mohammed Mujeeb
Advocate, Hyderabad
9337 Answers
3 Consultations

4.5 on 5.0

Dear Client,

You should sign a agreement with the buyer asking him 50% of the sale consideration. If buyer backs out, you don't need to pay this 50% amount of the Sale consideration.

Jaswant Singh
Advocate, Gurugram
429 Answers
1 Consultation

4.8 on 5.0

If will execute agreement to sell with possession - 5% stamp duty. Through online mode or DD.

Without complete payment don`t register the sale deed and do not delay in sale, as by passing of time, price of property rises and strain in deal.

Keep a default clause in agreement, if buyer violated the conditions or payment terms, agreement stand expire and no refund.

Yogendra Singh Rajawat
Advocate, Jaipur
12246 Answers
13 Consultations

4.6 on 5.0

1. There are no risks in an unregistered agreement. A suit for specific performance can be filed even on the basis of an unregistered agreement to sell. An agreement to sell is seldom registered. 

2. The cost of a registered agreement will be the drafting fee and registration charges. 

Ashish Davessar
Advocate, Jaipur
26103 Answers
775 Consultations

5.0 on 5.0

The buyer always bears the cost of the registration.

There cannot be an unregistered sale  deed as the law does not recognise it. This document has to be compulsorily registered.

Rahul Mishra
Advocate, Lucknow
4113 Answers
11 Consultations

5.0 on 5.0

If buyer fails to honour the terms mentioned in agreement for sale make balance payment then you can sue the buyer to make balance payment 

 

2) there should be clause in agreement for sale that you can forfeit advance payment made if he fails to make balance payment 

Ajay Sethi
Advocate, Mumbai
65429 Answers
3960 Consultations

5.0 on 5.0

see the buyer has to bear the cost of agreement and it is better to register the agreement as in case any of the party donor honor the agreement specific performance can be filed.

Shubham Jhajharia
Advocate, Ahmedabad
18230 Answers
71 Consultations

5.0 on 5.0

1) Yes. The terms of contract can include that buyer bears the cost of registration

Netra Mohanchandra Pant
Advocate, Navi Mumbai
1011 Answers
1 Consultation

4.4 on 5.0

Agreement of Sale or the agreement to sell becomes a sale when certain conditions are met. 

contract is a formal or verbal agreement that is enforceable by law. Every contract must have an agreement but every agreement is not a contract. The section 4(1) of the Sale of Goods Act, 1930 states  that – ‘A contract of sale of goods is a contract whereby the seller either transfers or agrees to transfer the property in goods to the buyer for a decided price.’

In Section 4(4) of the Act, it is maintained that for an agreement of sale to become a sale, the time has to elapse or the conditions have to be fulfilled subject to which the property in the goods is to be is to be transferred.

The section 4(3) of the sale of Goods Act defines it as, “where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.”

The crucial elements of a contract like competency of parties, the legality of object and consideration etc. have to be present like in any other contract.

The contract of sale may be absolute or conditional.

As per the Indian Registration Act, 1908, any agreement for transfer of any interest in an immovable property of value more than one rupee, is required to be registered. ... The ownership of the property still remains with the seller.

The agreement for sale is valid for three years. If there is a negative clause in theagreement, say, the buyer has to register the property within three months', then, the limitation is extended by such period.

you can cancel the agreement to sell as the purchaser has failed to comply with the terms and condition of the agreement. ... Thus, you can proceed to cancelthe agreement by issuing a legal notice to him through your lawyer. However, you have to refund the money paid by the purchaser for booking your flat.

If the non-breaching party is a seller, the seller can retain the good-faith deposit and terminate the contractsue for breach of contract to obtain money damages, or file suit for specific performance (ie. Making the buyer perform within the terms of the contract, or complete the home sale)

 

T Kalaiselvan
Advocate, Vellore
55240 Answers
674 Consultations

5.0 on 5.0

In Suraj Lamp & Industries Pvt Ltd v State of Haryana(1) the Supreme Court of India recently observed that it has become common practice to effect transfers of immovable property by way of either general power of attorney (GPA) sales or sale agreement, GPA or will transfers in order to evade, among other things, the payment of duties, taxes and other fees payable on transfer and registration (eg, stamp duty or registration fees).

Although it held that such transactions are illegal and cannot be recognised as valid under law, the Supreme Court further sought to distinguish these illegal transactions from genuine transactions entered into by parties in good faith. While referring to Sections 53A and 54 of the Transfer of Property Act and its decisions in Narandas Karsondas v SA Kamtam(2) and Rambhau Namdeo Gajre v Narayan Bapuji Dhotra,(3) the Supreme Court further observed that a transfer of immovable property by way of sale can be effected only by a deed of conveyance. In the absence of a deed of conveyance (which must be duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. The court further dealt with the importance of registering documents that record transactions of sale or transfer and the need for all states to take steps to curb malpractice, thereby reducing the circulation of unaccounted wealth (or 'black money') in society.

 

Please note that the stamp duty and registration charges for agreement to sale or sale is borne by the  buyer only and not by the seller.

The stamp duty may be enquired from the local registrar's office

T Kalaiselvan
Advocate, Vellore
55240 Answers
674 Consultations

5.0 on 5.0

Both the parties would have to execute ahe agreement to sell whenever you are receiving the advance amount.

Said agreement needs to be signed in the presence of witnesses, and date for execution of sale deed is also mention there.

On the date mentioned, sale deed would be registered with the sub registrar office after the under consideration has been received by you.

Siddharth Jain
Advocate, New Delhi
4624 Answers
50 Consultations

5.0 on 5.0

Agreement to sell need not be registered.

It can be notorized for which the costs are negligible.

The stamp duty for registration of sale deed would be based on the percentage of the property which has to be Borne by the buyer fully.

Siddharth Jain
Advocate, New Delhi
4624 Answers
50 Consultations

5.0 on 5.0

You can first get a agreement to sale executed and registered during part payment.  Later you can execute sale deed with full payment.  Or you can directly execute sale deed during ful payment and give possession.  You can file breach of contract suit if he backs out. 

Prashant Nayak
Advocate, Mumbai
11640 Answers
18 Consultations

4.8 on 5.0

Unregistered  Agreement is valid up to 4 months of its creation. Aftr that it is invaid. IT is not admissible as evidence in a court of law. It is compulsorily Regisgterable. Otherwise we can't endforce it.

The registration fees is 1% of the advance money (not on the sale consideration).

Mohammed Mujeeb
Advocate, Hyderabad
9337 Answers
3 Consultations

4.5 on 5.0

  1. There should be an agreement to sale between buyer and seller, and that should specify the time period of remaining payment, token payment, deduction some portion of the amount if breached by the buyer etc.
  2. Then thereafter, there should be a sale deed.
  3. If buyer backs then you would have all the right to keep the money back with you.
  4. In fact, if he document is not registered but signed then also you can file a suit for it’s specific  performance for the deduction of money and damages.

Sanjay Baniwal
Advocate, South Delhi
4766 Answers
11 Consultations

5.0 on 5.0

Unregistered agreement cannot be use in evidence in court. In most cases,  buyer only pays registration cost. Execute agreement on 500rs stamp.

Yogendra Singh Rajawat
Advocate, Jaipur
12246 Answers
13 Consultations

4.6 on 5.0

No buyer can't put registration cost on seller. As the same cost has to bear by seller and its approximately 6 to 10% of the market value.

 

The risk is that buyer may deny or couldn't complete transcations on time or delay the transaction for next 10 years. Put the points in the favor of seller like termination clause or time period to complete the transaction etc.

 

Ganesh Kadam
Advocate, Pune
7095 Answers
60 Consultations

4.9 on 5.0

1. You should engage another lawyer to oversee the preparation of the docments/papers while selling  your said property. It will double check the steps.

 

2. You shall have to execute an agreement for sale with your prospective buyer carefully mentioning the time within which the sale shall have to be completed  by paying the entire consideration and also incorporating the forfeiture clause  by which youy shgall be able to forfiet the advance amount paid to you in case the prospective buyer fails to pay you the remaining amount of consideration within the specified period.

 

3. Ordinarily, the registration cost is borne by the buyer. For preparing the agreement for sale, your lawyer might charge Rs.40 K .

 

4. The seller has the risk that the buyer will pay a token advance and block the sale of the said property without paying the balance amount for which a timew for conclusion of the agreement and the forfieture clause is a must in such cases.

 

5. Even if the buyer backs out, you gain the advance amount paid by you and you can selol the property to some other person.

Krishna Kishore Ganguly
Advocate, Kolkata
22351 Answers
587 Consultations

5.0 on 5.0

1. The agreement for sale should mention that the cost of registration will be borne by the buyer.

 

2. The stamp duty to be levied will vary depending on the sale price of the property. It will be 9.60% in West Bengal including the registation charge.

Krishna Kishore Ganguly
Advocate, Kolkata
22351 Answers
587 Consultations

5.0 on 5.0

1. if the buyer needs time for making payment, then an agreement for sale can be signed and registered

2. balance payment can be made at time of registration of sale deed

3. if the buyer defaults in payment then you can have an interest clause on the amount due and if he defaults second time then you can terminate the contract, refund his money after deducting 10% 

4. refund will carry no interest

5. take a power of attorney from buyer which can be used for registration of cancellation deed when the buyer defaults in the payment

6. the stamp duty and registration charges are generally borne by the buyer

7. the transaction has to be completed within stipulated period stated in the agreement for sale

8. its advisable to have the agreement for sale registered because in case you are required to file a suit for specific performance of contract, when the buyer defaults, then the unstamped agreement should not be a roadblock, because as per the stamp act, an unstamped agreement cannot be taken in evidence unless it is duly stamped

Yusuf Rampurawala
Advocate, Mumbai
4317 Answers
22 Consultations

5.0 on 5.0

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