Are you looking to buy your dream house or just checking the market for the current prices to sell your home for the right price? Just checking the price at which transactions occur may not always be enough. There is a lot that goes behind the curtains. One way to get a look backstage into the nuances and nitty-gritty of a transaction is to take a look at the registered agreement or sale deed.
If you see a transaction you want to dive deeper into, you can request a copy of the agreement from Zapkey! But what should you look for in that lengthy and often complicated legal document? Do not worry; we got you covered! Keep reading to know what clauses and details you should be aware of while perusing an agreement for a sale or sale deed.
We should note that property is a state subject. Hence the format of an agreement may have some differences based on state and local body laws. However, the constitution of the agreement document should, for the most part, remain the same.
Before we get into the details of the documents, let’s understand the different types of legal documents that record a legal transaction between two parties. These can be any one of the following:
Sale Agreement or Agreement to Sale
A sale agreement is a legally binding document that contains all the terms and conditions between the buyer and seller of a property. This document comes before the execution of the actual transaction.
Where an Agreement to Sale describes how the transaction will take place, a Sale Deed confirms the execution of the said transaction and declares the transfer of the property’s ownership. This confirmation is what you need to prove the ownership of the property. In most cases, a Sale Agreement may be registered as a Sale Deed after the completion of the transaction to confirm the successful sale and transfer of the property. A Transfer Deed may serve a similar purpose in some cases.
Apart from this, the clauses in both documents should be more or less the same. Here are some key points to look for when reading an agreement for sale:
1. Parties Involved in the Transaction:
The agreement for sale will list the parties involved in the transaction. The list may include the buyer(s), the seller(s), or any other parties involved in the transaction, such as a development company or a housing society.
2. Chain of Title:
The agreement for sale also provides details on the chain of titles of the property. It helps outline the history of the ownership of the property and any encumbrances or charges on the property. In case of a resale transaction (preowned property up for sale), it will also mention the formation of the society and the owner’s share in the land.
In case of a primary transaction (new property up for sale by the developer or promoter), it will highlight any approvals taken during construction and if the developer has taken any loans against the property. This clause will also describe the type of development, whether the land is being developed by the developer alone or under a joint venture, or as a rehabilitation of an existing project or slum.
3. Land Holding Type and Restrictions:
The agreement for sale will describe the type of land holding – Freehold or Leasehold. In Leasehold lands, the ownership of the land lies with a different party, and transfer of the property may be restricted. The agreement for sale will specify such restrictions if any. In Freehold lands, the ownership of the land lies with the owner. This section will also mention any additional restrictions on the transfer of property.
4. Proposed Date of Possession and Payment Schedule:
In the case of an under-construction project, the agreement for sale will specify the estimated date of possession and the schedule of payment to be released during the construction phase by the purchaser.
It will also mention the consideration amount for the property. Any additional charges in addition to the consideration amount, such as society formation charges, clubhouse membership fees, one-time charges, development charges, etc., will also be mentioned here.
5. Schedule of Property:
The agreement for sale will describe the property in three schedules. The ‘First Schedule’ describes the larger portion of land on which the building is constructed. The second schedule describes the part of the land on which the building is constructed. The third schedule describes the apartment or flat, including the unit number, floor, wing/tower, area, or other additional allotments.
6. Common Areas and Amenities:
The agreement for sale will provide details on the common areas and amenities that come with the property, including specifications such as the type of tiles, windows, doors, and paints used in construction.
External and internal amenities may include but are not limited to the clubhouse, security, common spaces, parking, open areas, garden, swimming pool, etc.
The agreement for sale may also have annexures, which are additional attachments that provide more information about the transaction. Some common annexures may include floor plans, approvals, receipts, society registration certificate, identity proof of the parties, and a summary of the transactions.
In conclusion, reading the agreement for sale is a critical step in the property purchasing process. By taking the time to review the Agreement for Sale, you can get a better understanding of the property, the transaction, and the parties involved. You can then compare this information with your situation to identify what the fair price for your home should be.