Agreement to Sell

Get your Agreement drafted by our Experienced team of Lawyers! An Agreement to Sell lays down all the terms and conditions of the transaction on paper. It helps protect the buyer as well as seller from unnecessary trouble.

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Agreement to Sell

The motive of this kind of agreement is that the seller has agreed to sell his/her movable/immovable property to the buyer which is free from all encumbrances and in return the buyer agrees to pay some consideration to the seller along with the mutually agreed terms and conditions.

 

“Agreement to sell” is governed by the Indian Contract Act, 1872, Transfer of Property Act, 1882 and Sales of Goods Act, 1930. An “Agreement to sell” is a legal document binding upon the parties for the transactions of movable and immovable properties

Essentials of an agreement to sell

  1. Form of expression must be clear: The language must be clear and should be read by both the parties and be acceptable before law
  2. Presence of two parties: There must be two parties in an agreement to sell, one is the seller and the other is the buyer.
  3. Competency of parties: It is essential that both the parties must be of sound mind and shall make the agreement without any coercion and undue influence. The parties must not be suffering from any kind of mental illness and not be intoxicated.
  4. Proper consideration: Generally, the price for a sale should be definite and realistic to be considered as reasonable. Sale is different to exchange, gift, lease or donation and should only include money as a price to sell. Consideration in an agreement includes price (monetary) which a buyer pays to the seller as promised or decided between them.
  5. Transfer of ownership from seller to buyer: The seller must transfer the ownership and title of the property in the name of the buyer.

Categories under Agreement to sell

An agreement to sell falls under two different heads:

  1. Agreement to sell movable properties
  2. Agreement to sell immovable properties

Agreement to Sell Movable Properties

An agreement to sell is a contract where the transfer of the property of goods is to take place at a future time or subject to some condition thereafter to be fulfilled. The agreement to sell becomes sale when time elapses or the conditions are fulfilled subject to which the property in question is to transfer.

 

Goods means every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

Agreement to Sell Immovable Properties

According to the Transfer of Property Act 1882, “Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Agreement to sell is binding upon both the parties and is a road map of how the property transaction will be concluded. The agreement shall clearly state the detailed description of the property.

 

Immovable Property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. Transfer of Property Act 1882 clarifies that immovable property does not include standing timber, growing crops or grass.

Particulars in an Agreement

  • Terms and conditions of saleof a property
  • Description of property
  • Personal details of all the owners of property along with their signatures
  • Selling amount
  • Future date of full payment

Process of transfer of ownership of immovable property

The transfer of an immovable property through relinquishment, sale, or gift deed in the “name” of the recipient must be completed by following:

  • Recording of such transfer in the municipal records through mutation.
  • Stamp duty as per the applicable state laws. It also depends upon the circle rate which may differ in cities of a same state.
  • Registration charges as per the applicable state laws depending upon the percentage of the transaction value which is different in every state.

Rights and liabilities of seller & buyer

According to Section 54 of the Transfer of Property Act, 1882 the seller & buyer have following rights and liabilities.

 

  Rights Liabilities
Seller
  • To Rent and profits of the property till its ownership passes to the buyer
  • To interest on unpaid purchase consideration, where the ownership has passed to the buyer before the whole payment
  • To disclose material defect in the property which the buyer cannot discover under ordinary check
  • To produce all documents of title to the buyer on his request
  • To answer to the best of his information all relevant questions put forward by the buyer
  • To execute a proper conveyance on payment of amount due in such respect by the buyer
  • To pay all public charges accrued up to the date of sale, and to discharge all encumbrances on the property
Buyer
  • To the benefit of increase in the value of the property and to the rent and profits
  • To interest on the amount paid as part of purchase consideration when the transaction is cancelled by the seller or by any activity of the seller
  • To disclose any fact of which he has reason to believe that the seller is not aware and which materially increases the value of seller’s interest
  • To pay the whole purchase consideration to the seller as he directs
  • To bear any loss arising from destruction or decrease in value of property not caused by the seller
  • To pay all public charges from the date of handover

What's Included

  • Consultation with our Expert
  • 1st Draft of the Agreement
  • Final Draft of Agreement after revisions

Documents Required

  • Identity proof of the buyer (PAN Card preferred)
  • Address proof of the buyer (Aadhaar Card preferred)
  • Identity proof of the seller (PAN Card preferred)
  • Address proof of the seller (Aadhaar Card preferred)
  • Details of the Property
  • Any other information as may be required

FAQ's

Is an ‘Agreement to Sell’ required to be registered?

No, it is not compulsory to get an agreement to sell registered. As per the amendments made in the Registration Act, 1908, any agreement related to the sale of immovable property of value more than Rs 100/- needs to be registered.

What are the duties of seller and buyer?

A seller is bound by the duty to deliver the property to the buyer whereas a buyer is conferred upon the duty to accept it by paying the appropriate consideration.

What is the main difference between “agreement to sell” and “sale deed”?

An agreement to sell specifies the terms and conditions for the sale of the property and also gives an idea that the property will get sold and transferred in future while the sale deed is the actual document to transfer the property in the “name” of the buyer.

What do you mean by “goods”?

Section 2(7) of the Sale of Goods Act, 1930 says “goods” means every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

What is the difference between ‘contract of sale of goods’ and ‘Agreement to Sell’?

A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price which may be executed between one part-owner and another. An agreement to sell is a contract where the transfer of property is to take place at a future date prior to which some conditions are required to be fulfilled. 

What is the difference between sale and agreement to sell?

In a contract of sale, when there is an actual sale of goods then it is called sale. When there is intention to sell the goods at a future date prior to which some conditions are required to be fulfilled then it is called agreement to sell.

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