1) I am ready to purchase(buyer) already buildup old house in Ballari city in Karnataka 2) The amount finalized to 31 lacs 3) advance amount paid Rs. 7 Lacs and ready to pay another 3 lakhs as requested by the seller through RTGS 4) We are taking 6 months time as agreed by both parties. 5) what condition to be put in registered agreement (Penalty Clauses) to safe guard from backout by seller as i am also selling my another property in Ghaziabad, Uttar Pradesh based on this property only 6) also please mention the Law provisions if the buyer still backout or breach of registered agreement in register office
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the agreement should contain clause that time is essence of contract
2) that purchaser shall make full payment at time of execution of registered sale deed
3) in event seller refuses to execute registered sale deed then he shall refund Rs 10 lakhs paid by buyer . in addition pay liquidated damages of Rs 5 lakhs or so for failure to execute registered sale deed
4) you can also file suit for specific performance to compel seller to execute sale deed in your favour
1. Execute "Agreement to Sale", with strategic terms & conditions relating to staggered payments and final possession. Also incorporate that price decided shall remain final for minimum 12 months and further that Seller shall not sell the property to anybody else for atleast 12 months. This will bind him.. Also input that in the event the Seller backs out of sale terms & conditions THEN seller shall refund entire advance amounts alongwith 2% interest per month basis.
2. Contract Act defines Breach of Agreement and Indian Penal Code defines "Breach of Trust".
Agreement to sell will execute in which default clause will include that payment will made in such period and on last installment and sale deed will execute on this date.
In case of default by seller to execute sale deed, builder has the option of to either enforce sale of property through court or refund with interest and escalation cost.
Dear Sir,
You may purchase the property subject to fulfillment of following conditions. For more details visit the link.
Please see whether the following are satisfied:
This is a type of document that typically outlines the chain of ownership of the respective property. It provides full right to the owner to claim the absolute ownership over the property. While buying the property, check if it belongs to the respective seller. Check the deed thoroughly, and if have no knowledge about it you can seek help of a property agent. If the title of the property isn't in the name of the seller, then legally the property shouldn't be purchased unless the consent from the real owner.
Every developer at the start of the construction has to get the approval from local planning authorities. The developer has to submit the required documents for the sanctioned plan approval. So when you hunt for a residential apartment, do check if the developer agrees to present the sanctioned plan, if not then the construction is termed as illegal.
This is yet another essential document the developer of the property has to submit to the buyer. Municipal authorities issue the Completion Certificate (CC) after the completion of the project. Occupancy Certificate (OC) is issued by the local government agency after the inspection and states safe for the residents. These documents are an important part of the home loan and should be in your checklist.
4.Tax Receipt
The property owner has to present you with the legal tax pay receipt failing to which the government is authorised to impose a penalty of certain percent every month on the property buyer. So do make sure to check if the existing property owner has completed the tax regime.
It is a document issues by the sub-registrar to check if there is any encumbrance on the property like mortgage, charges, etc. The sub-registrar issues the certificate with complete details about the legal dues pertaining to the property. It is important for the property buyer to check whether the property is under mortgage or loan.
6.Mother Deed
This document is needed when you buy a resale property. This is the parent document tracing the ownership right from the start. There are situations where the owner may do some fraud activity by undertaking the ownership of the property illegally, which will certainly effect your investment.
This is an important document when buying a property. It is required to know if the seller has complete right over the property and selling it. You can even check with the real owner to have a check over the enforcing of power of attorney to the seller.
8.Mutation Document:
This document contains all the details about the property including the name of the owner, property size, location, and other important information. It is issued by the municipal authority in the name of the present owner.
Dear Sir,
Coming to the penalty clause if the vendor backout in executing the sale deed in your favor then you can claim same amount of advance amount paid to him as penalty. For example if you pay Rs.10L as advance and on his failure you must put a clause that similar amount shall be penalty. That is he must your advance amount plus penalty of similar amount in addition of your advance amount. I think you are clear.
Dear Sir,
List of precautions you should take before purchasing property
There is an old English proverb, "Precaution is better than cure", which would be most appropriate when buying an immovable property.
Although there are several laws in place that protect a purchaser of property, self-help is the best help and one must do due diligence before buying property.
Although the below mentioned list of precautions to be taken are not exhaustive, some of the important aspects one must look at are briefly as follows, though they may vary case to case:
Clear title to a property is one of the most important factors to be considered before purchase. There are various means to investigate the title such as:
(i) by studying the documents of title to ensure that the owner has proper ownership to the property. The documents of title should be studied very carefully as any shortfall may lead to a defective title.
(ii) taking inspection of the original title deeds.
(iii) taking search of the land records and the records of the Sub-Registrar.
(iv) taking search of the records of the society where the property is in a society.
(v) issuing public notice in newspapers calling for claims in respect of the property.
Sanctioned plans and commencement certificate by the concerned authority should be inspected, especially for buildings under construction.
If the building is not built in accordance with sanctioned plans, the completion certificate will not be granted. For buildings that are complete, occupation certificate/completion certificate should be verified.
Power of Attorney
Many a times property is sold through a person holding power of attorney (POA) on behalf of the owner. This POA should be closely scrutinised to ensure that it is properly executed.
The Bombay Stamp Act, 1958 was amended a few years ago whereby heavy stamp duty is attracted on a POA in case the POA for sale of immovable property is executed to a person not closely related to the executant. Thus in most cases a POA is executed to a close relative as defined under the Act.
This aspect should also be considered. For example, if the land is leasehold and the residue tenure of lease is short and if there is no provision for renewal on old rent, additional ground rent may be payable by the purchaser on renewal of the lease. It is also possible that there may be no renewal clause at all.
NOC and Dues
Although no-objection of a society is not required for sale as per the new model bye-laws, it is preferable to obtain such a noobjection as well as a no dues letter from the society if the premises are in a society.
In case the building is not conveyed to the society by the builder, then noobjection of the builder should be obtained. It should be verified that the seller has paid all his dues such as property tax, service-tax, VAT and other outgoings to the society or the builder, as the case may be.
One may investigate whether there are any proceedings against the seller under section 281 of the Income-tax Act, 1961. Further if the seller is a nonresident of India, TDS may be deductible from the consideration paid unless certificate for non-deduction or lower deduction is obtained from the concerned Income-tax officer.
Permitted user and Restrictions
This aspect should be verified as well. For example, one should see whether the property is residential or commercial as per the Development Control Regulations. Other factors such as heritage rules, set-back for road widening may apply to certain buildings, which should also be considered.
Documentation
Proper documentation should be put in place for purchase of the property. The sale document should be properly stamped and registered and the original title deeds should be taken by the purchaser from the seller.
The burden on the buyer is set to increase with the recent hike in the Ready Reckoner (RR) rates. The Maharashtra government is on its way to increase the ready reckoner rates for properties between 5% and 30%, depending on the size and location in Mumbai and the rest of Maharashtra.
The Ready Reckoner is used to calculate the market value of flats for stamp duty and registration charges, which are major sources of revenue for the government after sales tax and value-added tax.
According to Adv. Vinod Sampat, this will also impact property transactions making them costlier. He says, "Redevelopment projects will be more affected and this will also impact capital gains tax for developers. The developer will pass the burden of the price hike to the buyer.
The stamp duty and registration charges are also calculated on the basis of these rates. As a result, the buyer will have to shell out more when he makes a property purchase." In the current situation, where the market activity is sluggish, this move is bound to affect sentiment.
The Brihanmumbai Municipal Corporation (BMC) has plans to improve the city for the New Year. Several projects have been planned for the New Year.
A new cleanliness drive called 'Swachh Mumbai Prabodhan Abhiyan' will be implemented for cleaning the slum areas. There are plans to improve roads and developer more open spaces for the citizens.
The Corporation is planning green initiatives wherein all the municipal offices will go 'paperless' and create consensus among citizens for implementing capital-value based property tax system.
A water purification centre will also be set up so that the 455 million litres of water coming from the new Middle Vaitarana dam is supplied to the city. The Corporation has become proactive to complaints through sms.
You can keep a penalty amount as compensation for the same along with interest on paid consideration. But you need to approach court in order to get the performance of that condition If not followed by seller.
1. See the payment terms, time of performance, already paid amount and all clauses can be strictly drafted you can engage an advocate for same.
2. In case he backs out after the agreement and payment you can file a suit of specific performance of contract under specific relief act.
1. Have you made the payment of 7 lacs without entering into an agreement to sell? This should never be done.
2. A flawless agreement to sell should be got drafted from a lawyer which should contain a clause for damages which the seller shall be liable to pay if he backs out, apart from the remedy to sue him for specific performance of contract.
Please contact local property lawyer for more precise guidance.
An agreement of sale constitutes the terms and conditions of sale of a property by the seller to the buyer. These terms and conditions include the amount at which it is to be sold and the future date of full payment.
There are a set of terms and conditions to be mentioned in the agreement of sale.
It also specifies the date by which the transaction will be completed. In laymen terms, Sale agreement is a road map how the property transaction will be completed.
There are lot of things which are to be taken care in the agreement.
Penalty clause:
At the time of signing Sale Agreement, Buyer pay X amount as token money. Standard clause is put in agreement that if buyer will back out from the deal then entire token amount will be forfeited by seller. I would suggest to add another line in this clause that in case seller will back out from deal then Seller will return the token amount paid by buyer along with equivalent amount as penalty. If this clause is not put then seller will keep searching for new buyer who can pay extra. He will call off the deal, if he gets new buyer at higher rate before execution of Sale Deed.
Right to Call off the deal
As a buyer you should reserve the right to call off the deal under certain circumstances without being penalized financially. Some of these circumstances are as follows
(a) If Seller fails to provide legal/statuatory property documents required by the Buyer.
(b) If the Buyer find out any legal defect in property before execution of sale deed
(c) If Buyer’s home loan is rejected by bank due to some legal/statutory issue in property/property documents
(d) If the seller fail to provide all original documents at the time of execution of sale deed. You may check my post on List of Documents required for Property Purchase
(e) If the seller fail to provide vacant possession of property at the time of execution of sale deed.
Outstanding Dues
It is critical to mention in Sale Agreement that Seller will clear all the dues accrued in respect of the property prior to the date of registration.
1. You can add condition of refund with interest and compensation if seller blackout from deal before registration.
2. If buyer blackout from deal and to prevent this situation a condition for forfiet the advance can be added in agreement.
