We are selling shop and the buyer has given us 18% of the amount as a token and he is now offering us 40% as the 2nd installment and for the remaining 42% he does not have money and needs to apply for a loan in a bank and would only be able to pay once the loan is disbursed. The buyer of the property has been in possession of it for the last 10 years as it is a rental property and he has been paying us the rent under Leave and Licence Agreement. The Buyer while paying the 2nd Installment wants us to sign a agreement in which we will be documenting that we have received this much payment and then the remaining will be paid later and other clauses. Should we go ahead and accept the 2nd installment and sign the agreement or will this lead to any legal complications?
Dear Sir/Madam,
1. Please look into the details of every single clause the buyer wants you to sign.
2. This documentation shall be binding on both the parties, so depending on the nature of the contract and its terms and conditions, make a decision.
Thank you
You can sign the agreement
But do NOT register it under any circumstances
Also make sure there is a penalty clause for the buyer if he defaults
Ask buyer to apply for bank loan
2) once loan is disbursed he can make balance payment
3) don’t accept 40 per cent only as second installment
- Flats are shops are sold by builders in this fashion only.
- 20% is paid and then bank loan is applied.
The Bank loan details are entered in sale deed and its registered.
The possession happens after full payment.
- But you already have Leave and Licence Agreement and buyer is in possession which makes it different.
You have to get fail-safe conditions mentioned in agreement.
Hope this helps.
Dear Concerned,
It is suggested that such agreement can be done BUT register this agreement, and clearly mention the details of remaining payments. Better consult a local counsel for vetting the terms as per your suitability.
Best of Luck
Yes there is no issues.
It is quit legal and accepted practice. No risks are involved in signing such agreement provided there should be clause of duration within which the final sale deed will be executed and penalty on the party defaulting. The buyer need to submit the title deeds to bank for verification. You can take the documents to the bank and allow them to verify in your presence but don’t hand over the document to bank unless sale deed is registered and sale consideration is paid.
The leave and license agreement is totally a different subject to that of the sale agreement.
You can enter into a sale agreement with clauses to handover possession of the property only full sale consideration is made within the time stipulated in the sale agreement and subsequent to the execution of the registered sale deed.
You can include the cancellation clauses also in the sale agreement and make sure to mention that the current leave and license agreement will not entitle the buyer for physical possession until the clause of payment of full sale consideration is fulfilled or satisfied.
You may get the agreement of sale executed in registered deed.
1. It is perfectly normal to acknowledge the receipt of payment by the seller.
2. Be that as it may, agreement to sale should have been entered into before the acceptance of first instalment.
- Yes, for obtaining the loan from a bank , agreement for sale between the seller and buyer is necessary in the absence of a Sale deed , and this agreement is valid till the sanction of loan and execution of sale deed.
- The details of payment is not mandatory except that you have entered into an agreement for selling your property for the consideration amount , where the loan amount has to be paid before the execution of sale deed.
1. Leave and license agreement for a continuous period of 10 years is a risky one since he can now claim it to be a tenancy agreement in the garb of leave and license agreement and file a declaratory suit to that effect.
2. However, you can sell the said property by registering the sale agreement detailing all the terms and conditions of the sale specially payment terms, forfeiture of advance clause etc.
3. The drafting of the sale agreement is very important in the instant case.
