When it comes to property transactions in India, a sales agreement plays a pivotal role. It is a legal document outlining the terms and conditions agreed upon by both the buyer and the seller. It acts as a safeguard, ensuring that involved parties understand their rights and responsibilities throughout the transaction. Think of it as the sturdy bridge that helps you navigate the sometimes turbulent waters of property deals.

What is a sales agreement and why do you need it?

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Let’s get down to the basics first

A sales agreement is a legally binding document that outlines the terms and conditions of a property sale. It includes details such as the parties involved, property description, sale price, payment terms, possession date and other relevant terms agreed upon by the buyer and the seller.

Let’s dig further into why a property sales agreement contract is extremely crucial:

  1. Legal protection: It provides legal protection to both the buyer and the seller by clearly defining their rights, obligations, and responsibilities
  2. Clarity: It ensures clarity regarding the terms of the sale, preventing misunderstandings or disputes in the future
  3. Enforceability: A properly drafted property sales agreement contract enables parties to seek legal remedies in case of a breach
  4. Documentation: It serves as an important piece of documentation for obtaining loans, claiming tax benefits and transferring property ownership

Process of completing a sales agreement

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It’s time to seal the deal

Typically, the process of completing a property sales agreement contract involves the following steps:

  1. Negotiation: This is the initial phase where both parties discuss and agree on essential terms. It includes items such as the sale price, payment schedule, and any special conditions
  2. Filling out the sales agreement form: Once negotiations are complete and terms are agreed upon, the parties fill out the sales agreement form. It includes details such as the property description, sale price, payment terms, possession date and any other relevant terms agreed upon by both parties
  3. Drafting: Once negotiations are complete, legal experts or real estate professionals draft the agreement. They incorporate all agreed-upon terms while ensuring legal compliance and clarity
  4. Review: Both parties thoroughly review the drafted agreement to ensure accuracy and mutual understanding of the terms mentioned
  5. Signing and registration: After both parties make the necessary revisions, they sign the agreement in the presence of witnesses. In some states in India, registering the agreement with the appropriate authority adds an extra layer of validity and legal protection

What is the difference between a sales agreement and a sales deed?

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Let’s clear the fog around these two terms

It’s not uncommon for people to confuse the difference between a property sales agreement and a sales deed. To save time and cost, let’s dive into what an agreement for sale and sale deed is.

While both an agreement for sale and a sales deed are related to property transactions, they serve different purposes:

  1. Sales agreement: It is a preliminary agreement that outlines the terms and conditions of the sale. Both parties sign it before the actual transfer of property ownership takes place
  2. Sales deed: A sales deed is also known as a conveyance deed. It is a legal document that transfers the ownership of the property from the seller to the buyer. It is executed after fulfilling all conditions mentioned in the property sales agreement

In essence, a property sales agreement contract sets the stage for the sale. A sales deed concludes the transaction by transferring ownership.

Also Read: Your Ultimate Guide to Buying Property in India

How long is a sale agreement valid?

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Unlocking timeframes

The validity of a property sales agreement contract in India typically depends on the terms mentioned within the agreement itself. It usually remains valid until the parties fulfil the conditions specified in the agreement or until they reach the agreed-upon completion date. If the parties fail to meet the conditions within the specified time frame, they may choose to extend the agreement or mutually terminate it.

However, it is important to note that a sales agreement contract is a preliminary document and does not confer ownership rights. The actual transfer of ownership occurs only upon execution of the sales deed after fulfilling all necessary conditions.

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