Sales Agreement: Process, Format and More 2024

You’ve finally set your sight on the house that you want to buy, you heave a sigh of relief. The hard part is over, but your legal formalities are not. It’s the one thing that separates you from being the legal or rightful owner of your new home so sadly, you’re not done just yet. Before you sign your name on any agreement to sell property or buy property, you must know what the sales agreements are all about. Let’s take a look at the prevalent guidelines and regulations for sales agreements in 2024.

Meaning of a Sales Agreement: What is a Sales Agreement?

• The property in question, which forms the core of the conveyance or transaction.
• The seller, who must be the previous owner and the one transferring the property.
• The buyer, who is the individual acquiring the title from the property's seller.
• The consideration, which refers to the amount paid or promised to be paid by the buyer to the seller. This amount can either be paid in full, promised to be paid at a later date, or a combination of both.
• The actual transfer of property ownership from the seller to the buyer.

Furthermore, the terms outlined in the Contract Act govern all contracts, which also necessitate that both the seller and the buyer meet certain qualifications. Specifically, they must:

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• Be of a legal age.
• Be of sound mental capacity.
• Not be prohibited by any court judgment or legal statute from entering into a contract.

For a sale contract to be considered valid and enforceable, it is crucial to provide accurate and comprehensive information about both the seller and the buyer, as well as the property being sold. Any inconsistencies or discrepancies in the identity or description of the property can potentially jeopardize the seller's ownership rights. In cases where the consideration is agreed to be paid in the future, whether in full or in part, the buyer can safeguard against potential future disputes or claims by obtaining a confirmation deed from the seller after fulfilling all necessary payments.

Why is Sales Agreement Important?

No matter who you are buying or getting the property from, a written seller agreement or contract to sell a house is the only way to legally establish the authenticity of the property’s ownership. Without this sales agreement contract you could end up in major trouble, this property sale agreement document ties you to the property that you’re purchasing.

Clauses That go Into an Agreement to Sell

These clauses are basic points that make the real estate sales contract a successful one. They will contain important factors such as –

• Description of the property and what’s included, such as What property—such as appliances and lighting fixtures
• The final cost of the property
• Payment method and date
• Contact details of the seller and the buyer
• Tax
• Maintenance (for apartment buildings)
• Indemnity clauses and more…

An agreement to sell has a lot of clauses that need to be covered. Each of these clauses is needed for it to be considered a valid and complete sales contract for houses. A sale agreement definition in its entirety in a physical document must include the following information:

• Names of the buyer and seller, their age, and residential addresses
• Date and place of execution of the agreement
• Competence of parties to enter into the agreement
• Rights and liabilities
• Details and documents of how the seller came to own the property
• Location and description of the property
• Amount, time and mode of payment
• Timelines for the rest of the processes and division of responsibilities
• Title deed
• Period of completion of a transaction
• Expenses to be met and who and who will meet the cost of the transfer

Clauses to Pay Extra Attention to in a Sales Agreement

Some property agreements might have clauses that you need to take a closer look at. These might not be in your favour so, watch out for-

• As is, where it is – you’ll get the property in the exact condition it’s in, and the seller will not make any repairs.
• No access to property – you won’t be allowed to see the property until full payment is made.
• Right of way – you might need to let other people use sections of your property e.g., if you live on the ground floor you need to let those living on the above floors have certain access.
• Lease- the buyer and the lessee should not be affected by the sale if the property you’re buying is leased out.
• Mortgage – look for details on who settles and loans and how.
• No Dues – To show that the seller has no existing dues against his property.
• Dispute Resolution and Jurisdiction Clauses- The seller should hand over all the title deeds of the property to the purchaser within 15 days of the date of the agreement. This is done for scrutiny of the title; the opinion of the seller and advocate will be final.
• Clause with regards to Title Verification -If the seller’s title to the property is not approved by the buyer, the seller has to refund any token money the buyer has paid him in accordance with the sale purchase agreement. This has to be done within 7 days, or the seller will have to pay an interest on this amount (12% per annum).

When it comes to buying a house that’s still being constructed look for-

• Delivery date – don’t agree to vague time frames, look for exact dates
• Tax payment – does the builder cover taxes in the final amount or do you have to pay them?
• Right to alter specifications – if the house is still under construction, the builder could alter it any time before the handover.

What is the Difference Between a Sales Deed and a Sales Agreement?

Wondering what the difference between a sale deed and a sale agreement is? You're not alone, a lot of the time buyers get confused between the two and end up making very costly mistakes. Let's break down the difference between the sale deed and the sale agreement so that this does not happen to you.

A Sale Agreement can be registered as a sales deed. A sales agreement as discussed contains certain terms that the seller and buyer have agreed to, when the sale will take place and how the transaction will occur. In other words, a sales agreement will contain everything that’s important for a sale to take place, a Sales Deed however is only executed when the property transfer happens. This document is what you need to show the transfer of ownership of the property from the seller to the buyer. If you want to know more about a Sales Deed Vs. Sale Agreement, then you can read about it in detail here.

Sales Agreement for Commercial Property

A property purchase agreement, or a Sales agreement, for residential property or commercial property is considered critical. A sale agreement of property of any kind serves the same purpose as commercial property or residential property purchase. The documents required for the sale and purchase of commercial property include –

• Sales Agreement
• Sales Deed
• Mother Deed
• Building Approval Plan
• Khata Certificate and Khata Extract
• Encumbrance Certificate (EC)
• Betterment charges receipt
• Tax Receipts (up to date)
• Stamp Duty

As you can see, the agreement for the sale of immovable property formats such as a home or office space is not much different from movable ones, as we do need receipts and pay taxes for any purchase/sales.

Process of Executing a Sale Agreement in 2024

A sales agreement is a standard agreement for the sale of real estate, so the process will remain the same in all the states but for a few minor differences. This process is a guide and will take you through what you need to keep in mind while executing a sales agreement.

• A sales deed needs to be executed on requisite stamp paper. In Karnataka, the stamp duty for a sales agreement is 0.1% of the deal. The maximum amount payable is Rs.20,000 for residential PROPERTY and Rs.50,000 for commercial.
• The stamp duty is to be paid for by the buyer at the SRO (Sub-Registrar’s office) through a DD or Bankers Cheque drawn in favour of the Sub-Registrar. The document will then be franked with the official’s signature and a seal.
• If there are no changes in the sales deed and sales agreement, then you will not have to pay any additional stamp duty when you register your Sales Deed.
• A sales agreement does not have to be registered, but it can be done if the buyer and seller both agree that it needs to be made.
• While signing the agreement it is best to use black ink and your full signature. The signatures of the buyer and seller are required at the bottom of each page and on the last page where it is marked.
• If there are changes to be made you need to use a whitener and then make the correction. Then you need to sign across any changes that have been made.
• If there are joint buyers or sellers, then all the people involved need to sign the documents as mentioned in point 5.

How Does a Sale Agreement Help You?

As a buyer there are plenty of details you need to look into, such as checking documents, getting your finances in order and making time during your work week to get all this done. We make this process easier and stress-free. You get regular updates and you are kept in the loop, this is all done at your convenience.

You won’t have to stand in long queues and deal with the hassle of getting your sales deal registered. You won’t have to worry about covering critical information in your sales deeds or missing out/errors in your document as our lawyers will do it all. This complete assistance makes the process of buying a home faster, simpler and tension-free.

As you can see, this simple sales agreement is a key document to buy and sell both residential and commercial properties. Without this document, a legal and official sale can’t take place.

Sales Agreement Format

If you’re making a sales agreement there is a particular sales agreement format that you need to follow. It is important that your agreement follows the same flow and contains all the same points. simple example for an agreement to sell, you can use the one below if it is for an apartment, for an independent house you will need a different sales agreement sample, or you can modify this one with the correct property type. Remember, this is just a sale agreement format for resale flat, you will still need to get it checked by a professional to be fully protected from any liability, they can spot mistakes that can help you save time and energy. Take a look at the house sale agreement format:

THIS AGREEMENT made at ………………….. this ………….. day of …………. 2024 between , son of ………………………… resident of …………………… hereinafter referred to as the Vendor of the ONE PART and B, son of ………………. resident of ……………….. hereinafter referred to as the Purchaser of the OTHER PART.

WHEREAS the Vendor is absolutely seized and possessed of the land bearing Plot No………………………. situated at ………………………………… and hereinafter referred to as the said land and more particularly described in the Schedule 1 hereunder written;

AND WHEREAS the Vendor proposes to develop the said land and for that purpose obtained the permission of the Competent Authority under section ……….. of the Urban Land (Ceiling and Regulation) Act vide his Order No ……………………. dated …………………..;

AND WHEREAS the Vendor has submitted the building plans to the ……………….. Municipal Corporation, which have been approved by the ……………….. Municipal Corporation vide letter No ………………………. dated …………. subject to certain conditions laid down in the said letter;

AND WHEREAS the Vendor has started the construction of the buildings as per the building plans approved by the ……………….. Municipal Corporation enclosed herewith at Annexure 1;

AND WHEREAS the Vendor has agreed to sell one apartment on the …………… floor in the building No…………….. being constructed and having the specifications mentioned in the Schedule 11 hereunder written at a price of Rs ………………. (Rupees …………………………… subject to the terms and conditions hereinafter appearing.

AND WHEREAS the Purchaser has inspected the documents relating to the land, the order of the Competent Authority, site plans approved by the ……………….. Municipal Corporation and is satisfied with the Vendor’s title to the said property and the site plans of the proposed buildings;

AND WHEREAS the title of the Vendor to the said property has been certified to be clear, marketable and free from encumbrances by M/s. …………………………… Solicitors and Advocates………………. and a copy of the said title certificate is hereto annexed at Annexure-II ;

AND WHEREAS the Vendor has agreed to sell and the Purchaser has agreed to purchase the Apartment No……………..on the…………. floor in the building No……………….. hereinafter referred to as the said Apartment on the following terms and conditions.

NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:

(1) The Vendor shall construct the said building on the said plot of land, more particularly described in the Schedule 1, in accordance with the plans, designs and specifications approved by the ……………….. Municipal Corporation and which have been seen and approved by the Purchaser and kept by the Vendor at the office of M/s. …………………. Architects at ……………………. for inspection. The Vendor shall be entitled to make such variations and modifications as he may consider necessary or as may be required by the ……………….. Municipal Corporation of the Government of …………….. or any local authority.

(2) The Vendor agrees to sell and the Purchaser agrees to purchase the Apartment No…………………….. on ……….. floor in the building No ……………. of Carpet Area admeasuring …………. sq. metres as delineated on the plan thereof hereto annexed and marked Annexure Ill and thereon shown surrounded by green coloured boundary line at or for a sum of Rs ……….. (Rupees ……………………. ). The Purchaser agrees that out of the said amount of Rs ………………. to be paid by him to the Vendor, a sum of Rs………… has been paid by the Purchaser to the Vendor on the execution of these presents (the payment and receipt the Vendor doth hereby admit and acknowledge) and the balance will be paid by instalment as follows:

4. Rs …………………….. being the final balance on the delivery of

the apartment by the Vendor to the purchaser.

the amounts payable under these presents are not paid within the time stipulated, the Purchaser will be liable to pay interest at the rate of 18% per annum from the due date of payment to the date of payment.

(3) The Vendor shall deliver the possession of the apartment to the Purchaser on or before ………………. day of ……………, 2000. The vendor shall obtain the completion and occupation certificate in respect I the said apartment from the ……………….. Municipal Corporation. The purchaser shall take possession of the apartment within one week of ) a receipt of the notice of the Vendor to the Purchaser that the said apartment is ready for use and occupation and that the completion certificate and occupation certificate has been obtained from the ……………….. Municipal Corporation;

Provided that the Vendor shall be entitled to reasonable extension time for delivery of possession of the Apartment on the aforesaid ate, if the completion of the said building is delayed on account of non-availability of steel, cement, other building material, water or electric supply or on account of the war, civil commotion or act of God or any notice, order, rule, notification of the Government, ……………….. Municipal Corporation and/or other public or competent authority or on account of non-issue of building completion or occupation certificate – water or electricity connection or on account of any order of any Court affecting the construction work of the building. The Vendor will deliver the possession of the apartment to the Purchaser only if the Purchaser has paid all the amounts payable by him under this Agreement to the Vendor and if he has duly observed and performed all obligations and stipulations contained in this Agreement and on his part to be observed and performed.

(4) The Purchaser hereby declares and undertakes that he shall have no claim, save and except in respect of the said Apartment hereby agreed to be purchased by him and the Vendor shall continue to be entitled to the property in all the structures on the said land, open spaces, parking places, lobbies, staircases, lifts, terrace, etc. until all the apartments are transferred to the purchasers and the Declaration of Deeds of Apartment is executed and the condominium is formed as provided in the ………….. Apartment Ownership Act.

NoBroker is here to make buying or even renting a house as easy as possible. Visit our site to find out how we can assist you. From finding a house to helping with the entire legal process, NoBroker has what you need. The best part is that buying a house with us becomes seamless and stress-free. For more legal services like Sale Agreement drafting click below.

FAQ's

Ans. A sales agreement is an important legal document that contains all the agreed-upon terms between the buyer and seller for the sale of the property.

Ans. No matter who you are buying or getting the property from, a written agreement is the only way to legally establish the authenticity of the property’s ownership. Without this document you could end up in major trouble, this document ties you to the property that you’re purchasing.

Ans. A Sale Agreement can be registered as a sales deed. A sales agreement contains certain terms that the seller and buyer have agreed to, including when the sale will take place and how the transaction will occur. In other words, a sales agreement will contain everything that’s important for a sale to take place, a Sales Deed however is only executed when the property transfer happens.

Ans. A sales agreement is a standard agreement for the sale of real estate, so the process will remain the same through all the states but for a few minor differences.

Ans. Finding a trustworthy lawyer, making the time to go meet them, etc can all be a time-consuming and stressful process while looking for an expert to help you with an agreement for the sale of the property. NoBroker has an expert team of legal experts that can help you with your sales agreement and more. Each sales agreement is custom created, there is no one size fits all method followed when creating something as critical as a sales agreement. Our lawyers will draft an agreement based on your case and your specific requirements.