Sale Agreement

An agreement to sell is a contract between two people in which one side agrees to sell the other thing at a later date. The transfer of ownership is done in exchange for part of a payment. Normally the sale agreement is done either when you purchase a new flat/villa/commercial space from a builder or from any individual for a resale property. You can use A registered instrument to transfer tangible immovable property above the value of Rs. 100.

Instead of an agreement to sell, Housing Boards and Development Authorities issue allotment letters.

Read the sale agreement carefully, before signing

It can take a lot of time to search for the right property. Finding your dream home can take many months or even years. After much negotiation, the agreement to sell must be signed with either the seller or builder. Once you have the agreement to sell (if you are buying a villa/flat from a builder, the builder will draft the agreement), make sure to read it before signing carefully.

After the agreement to sell is signed and stamped, the sale deed is prepared on the basis. The contract binds both parties. If one party fails to meet the commitments, the other party can cancel the contract. If you are not sure, read the documents carefully and don’t make any payments. Buyers often overlook important clauses that builders and sellers leave out of a sale agreement in their rush to complete paperwork. You should carefully read and comprehend each clause in sale agreements before you sign them. Otherwise, you could end up in a soup.

You should verify important information such as your name, address, father’s name., PAN and AAdhaar details. Also, confirm that the agreement lists the block number and flat number for the township.

Before signing an agreement review the following topics.

1.  Right to modify specifications: 

The company’s sales representative will show you a sample flat when you visit the construction site. A sample flat is a marketing tool that companies use to increase their sales. After the flats have been sold or the building is in possession, the builder destroys the models. Builders often include a clause that allows them to alter the layout plan of an apartment or flat showed to them. The final layout of your flat may look very different to the one you saw when you booked.

Sometimes the sample flat may appear larger than the actual one. If the agreement does not allow the builder to change the specifications, you will not bring the builder before a consumer court.

Smart Options

Remember to refer to the actual drawing as samples of flats are not intended. These are usually furnished with fixtures and furniture and may sometimes be slightly larger than an actual flat. The builder can’t change the plans once approved by the local Municipal Corporation or development authority. It would help if you insisted on the inclusion of the specific brand of fixtures in any agreement.

2. The area of the flat/house is measured in three ways: 

Super area, 

Built-up area, 

Carpet area.

 The super area also includes a proportionate amount of common facilities such as hallways, lobby, and staircases. 

The apartment’s total area, including its walls, is called the built-up area. The actual area of the apartment is called the carpet area.

 Builders should mention the carpet area in their agreement.

 However, they almost always mention the super-built-up area, usually 20-30% larger than the carpet area.

What can you do?

Ask for the floor area. Look at the plans to get an idea of how big the apartment will be. Verify that the agreement’s carpet area is consistent with the builder’s promises.

3. Additional charges: A newspaper advertisement states that a 2BHK flat is available only for 255,000 It will cost you around 30 lakh to book the flat, friends. Advertisements do not reflect the actual property price. The buyer might have to pay 20-35% more. Flats that face a park or garden are typically more expensive than regular flats. A significant amount is spent on gym membership, car parking, common utilities, and maintenance fees.

Your point of action–

. Remember that developers won’t give you any free services. Get the builder to sign a list with all the fees. If there is something to hide, most developers will be careful about sharing any information in writing.

4. Payment plan clause: the builder/seller makes the payment plan when you book. Check that the payment plan you have chosen is part of the agreement to sell. Also, ensure that all future payments and instalments to the builder are consistent with the plan. Before signing the agreement, you should read it with a magnifying glass!

You should check the date of payment to the builder, the amount to be paid, and the penalty clause. Builders usually include a penalty clause in the contract if you fail to pay the instalment on time. They charge 18% per annum. The agreement should mention if you are making an advance an advance to the builder.

What you can do

Keep in mind that a bank will only approve a loan for the amount you applied for. Before you buy, you should make an accurate estimate of your loan payment and margin agreement. Only purchase if you have the financial means to pay it. Visit the site to verify that the building’s construction stage is as per schedule before paying the instalment.

5. Tax payment: you must pay the registration fees and service tax. It is the builders responsibility to pay the property tax before handing over possession.

Your option 

Before signing any agreement with the builder you must resolve the issue. You must ensure the builder pays the taxes.

6. Is there an escalation clause

Avoid projects that have an escalation clause. In the builder-buyer contract, builders often include a cost-escalation clause. This clause states that the developer can raise the project’s cost if materials or other inputs become more expensive. This clause is usually a part of the application form of state housing boards. You don’t need to worry about them as the state government manages them.

Ask about the builder’s experience. Has he ever implemented an escalation clause? Is there a legitimate reason he would implement the clause? You can also choose a developer that does not include an “escalation” clause in the sale agreement.

7. What date will the project finish? Or when is the project due for completion?

Developers usually build projects phase-wise so they can meet their time commitment. This period usually lasts between 36 and 42 months from the date of construction. If the contract does not specify a starting date, you can email the developer for a written response. Developers will usually give an approximate timeframe within which they will transfer the property ownership to the buyer.

It is important that the builder clearly states the month and year of possession. The buyer’s best interest is to include a clause in the purchase agreement that mentions the date the developer will give over possession.

8. Inclusion of penalty clause in case of any delays

You can include the penalty the builder must pay for delaying payment. If the developer delays in giving possession to the buyer, he will pay the penalty. Please find out the amount of penalty he will have to pay. What penalty did he pay for past delays? Or did he find a way around it? In case of any delays in the project, talk Talk to the builder. You can also contact the media or consumer court if he doesn’t listen.

9. Assignment or transfer: This clause does not apply if you’re buying a flat for a residential purpose. This clause is important if you’re investing in a flat. Builders usually mention this clause to limit your ability to transfer your property to another person until forming of the housing society. It may prove not easy to sell your property before the formation of the housing society. To sell your property, you might need a societys no-objection certificate.

Your option

It is best to avoid transferring property to a third party before forming of the society. This is because it is easier for members to deal with properties already created and shares certificates issued. Legally, however, a builder can’t ask you to pay the penalty if the property is transferred to another person.