Agreement to Sell

An agreement to sell is an important document in the process of sale/purchase of property. The agreement contains acts. It binds them to the terms and conditions agreed upon.

As against this, a sale deed is a written document executed by the buyer and the seller. It gives details on how the seller got the property, at what price he is selling the property, the sale consideration amount received, assurance to the purchaser that the property is free from any encumbrances, indemnity clauses etc. the sale deed is executed by both the seller and the purchaser and is registered in the office of the registrar. It is executed subsequent to the agreement to sell, and is based on the terms and conditions contained and agreed on while entering into the agreement to sell.

Agreement to sell precedes execution of a sale deed. The subsequent sale deed is based on the agreement to sell. The agreement is singed and executed by the seller and buyer on a non-judicial stamp paper. As such, it has legal value and can be produced as evidence.

Agreement to sell is the base document an which the conveyance deed is drafted. Every document of transfer of an immovable property by way of sale would be preceded by an agreement to sell. Usually, an agreement to sell is in writing. Although it may be oral, because of attendant risks, it is always in black & white.

Amongst other things, an agreement to sell contains:

• The names of the parties, along with their residential addresses and age.
• Date and place off execution of the agreement.
• Competency of parties to enter into an agreement.
• Rights and liabilities of the parties.
• Brief narration with particulars of documents as to how the seller got the property.
• Exact location and description of the property.
• Agreed consideration amount.
• Mode of payment.
• Time of payment.
• Time lines for various acts to be done and the responsibilities for the same.
• Mode of production and inspection of title deeds.
• Period of completion of the transaction.
• Conditions and obligations to be complied with.
• Expenses to be met.
• Cost of transfer and who will meet it.
• Penalty clauses in case of default.
• Care for the property.
• Forfeiture clauses in case of default.
• Conditions for delivery of possession and outgoings.
• Declarations by the vendor that the property is not subject to any government acquisition etc.
• Names, signatures and addresses of witnesses.

The provisions of such an agreement consists of the procedure to be followed leading to the execution of the conveyance or sale deed. Agreement to sell is a very important document. It records the understanding reached between the parties, which is binding on both. After making preliminary enquiries, the parties negotiate the price as well as them other terms and conditions, which form part of the agreement to sell. An agreement to sell protects the interests of both parties.