I am about to sign a Memorandum of Understanding (MoU) for the sale of a jointly owned property (Property 1) with two other family members. Concurrently, we jointly own another residence (Property 2) where we currently reside in separate portions. Our understanding is that all three of us will vacate Property 2 a few days prior to receiving the sale proceeds from Property 1. My concern is that if the other owners change their intention to vacate Property 2 after signing the MoU, I would prefer not to proceed with the sale of Property 1. QUESTION: Could you suggest what kind of MoU or clauses I can include to protect myself regarding the sale of Property 1 and to allow for an exit if circumstances change after signing the MoU but before the sale? (I may not want to mention property 2 in the mou as it is with an external buyer)
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There should be clause in MOU that parties agree to vacate property 2 within period of 30 days of signing of MOU
2) in the event parties fail to do so sale of property 1 shall not be proceeded with
3) get MOU drafted by lawyer
4) there should be arbitration clause for resolution clause f all disputes
1. No contract confirms strict compliance of its terms. It only ensures damages or civil consequences in the even of breach of it.
2. What you can do is to make the agreement in property 2 before than the agreement for property 1. In other words once you get property 2 vacated, make your property 1 vacate.
You have to get the MOU prepared incorporating the conditions agreed mutually by all the three, reduced to writing and get it registered so that it will become enforceable through court of law in case anyone breaches the condition.
You can get it drafted properly with the assistance of an advocate in the local.
- As per Section 10 of the Indian Contract Act, all agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object and are not expressly declared to be void.
- Further, a MOU is a statement of understanding between two or more parties which when made has no enforceability in the eyes of law; as such an agreement has no intention to create a legal bond between such persons.
- But, when an MOU has been made as per section 10 of the Indian contract Act, then it is a valid agreement.
- Hence, you can mention therein that the parties of this MOU are bound by the terms as mentioned in the clauses.
- There can be a clause that all the parties are agreed to vacate the property 2 within a period of 30 days of signing of MOU , and in case of not vacating the property 2 by any of the party then the proceeding of selling the property 1 will be stopped.
Dear Client,
For protective purposes, one should insert a condition to the sale of Property 1 into the MoU that limits the occupation of Property 2 with the knowledge that before the property can be sold, all the owners have to move out by a certain date. Also include a provision regarding the ‘right of abode, thus making it possible for you to withdraw from the MoU if this condition is not satisfied. Make sure that there is a clause that calls for strict adherence to the contractual language and provisions by the parties and that there are consequences for failure to do so. Consider those clauses with a legal advisor to ensure they are drafted effectively and to guarantee enforceability on their part.
There are many conditions you can put depending on the entire facts of your property
