Why you need an agreement to sell

 Why you need an agreement to sell

As a buyer, don’t forget to draft an ‘agreement to sell’ to protect yourself from future legal hassles

One of the first steps to give legal strength to a verbal agreement between you, as a buyer, and the seller of the property is the agreement to sell.

What is an agreement to sell?

This document contains clauses for the future transfer of the property that the seller and buyer mutually agree on.  So, if you are buying the home from the seller and you both have verbally agreed on certain terms such as the date of the transaction, amount of earnest money to be paid, refund of the amount if the sale does not take place, legal safety of the buyer if the property is under dispute in future, etc., it has to be clearly stated in the agreement to sell.

As a buyer, here’s a list of clauses to include in the Agreement to Sell:

Streamlining government records

As a future homeowner, it is your responsibility to add a clause that puts the seller under the obligation to furnish all government records to ensure that you are the rightful owner of the property on completion of the sale.

Deal completion timeline

The agreement to sell should clearly mention the timeline (date) within which the sale will be concluded.

Refund of deposit amount

Here, if the sale of the property does not take place within the stipulated time, the sale stands cancelled, and the seller is obligated to return the amount to the buyer.

Protection against legal problems

The agreement to sell should have an indemnity clause where the seller indemnifies or protects the buyer against all types of damages and loses that may crop up due to defects or discrepancies in the legal formalities.

Exclusivity clause

If there has been a verbal agreement between the buyer and the seller that the property chosen by you, the buyer, will be kept exclusively for you and will not be sold to any other buyer, and the seller actually sells it to a third party, you will not be able to fight for your rights since it is not documented.  Hence, it is important to add the exclusivity clause in the agreement to sell.

Property Verification

You must ensure the agreement to sell also has the due diligence clause whereby the seller is obligated to provide all the relevant information, legal documents, and support to the buyer to verify the authenticity of the property on sale.

Free from encumbrance

This clause should mention that the seller of the property has made all the payments regarding the property including the power and water tariff, property tax, maintenance fee, etc., until the date of the sale.