Agreement to Buy or Sell a Real Estate Asset

Buy or Sell a Real Estate Asset: The terms and circumstances of a potential sale deed are listed in an Agreement to sell (“ATS”), along with the suggested consideration and other important factors. ATS establishes the groundwork for a sale deed and prepares the way for the actual sale of an immovable property.

The contract for sale, sometimes known as an ATS, is defined as follows by the Transfer of Property Act, 1882, which governs matters pertaining to the sale and transfer of property:

A contract for the sale of real estate is defined in Section 54 as a promise that the sale of the property will occur in accordance with the terms agreed upon by the parties. “It does not create an ownership inside or claim on these property by itself, according to Section 54.

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Difference between a Sale Deed and an ATS

In a sale deed, the seller transfers title of the property, whereas in an ATS, the seller agrees to transfer the property subject to a number of provisos and agreed-upon covenants.

A sale transaction is recognized to have taken place when a property is sold by the seller to the buyer for a specified amount and transferred from seller to buyer. When a seller promises to sell a property to a potential buyer at a later date or once the relevant conditions are met, this is considered an ATS;

Unlike an ATS, which is conditional and gives the buyer no title, a sale is of an absolute nature;

Risk and reward are passed to the buyer in a sale deed together with the transfer of the property. The risk and profits are not transferred in the case of an ATS because the seller still owns the property, and the mandatory tax and stamp duty/registration fee are assessed at the time of the sale rather than the ATS.

Important Components of an ATS

The ATS is a contractual contract that offers security to the potential parties. An ATS is not required to follow a specific format. However, it is crucial that ATS be enforceable and legally binding in order to safeguard parties’ interests.

An ATS must have provisions that offer security to both the buyer and the seller. Information about the parties, a description of the property, requirements for clear and valid marketable title, payment information, the method of delivery of possession, a refund of the earnest money in the event that the title is defective, remedies for non-completion of the sale (including specific performance and bearing the cost of proceedings), and forfeiture of the earnest money should all be included in the ATS. The following are examples of desirable clauses for an ATS:

Compensation Clause

There is a chance that the property will be contested for factors such challenged title, prior debts, default in tax payment, etc. An amendment safeguards the buyer’s interests and offers protection from any potential future disputes of this nature. An ATS’s indemnity clause is included specifically to allow the buyer to pursue reimbursement from the seller. For any losses or future costs associated with non-compliances prior to the sale. Prior to crafting the indemnity provision, it is wise to consider such instances.

Damage/Penalty Provision

To confirm his interest in purchasing the property, the buyer gives the seller a down payment on the purchase price. However, there are many instances where the seller declines to make the sale. In this case, it’s crucial to protect the buyer’s interests by making sure the seller faces a severe punishment for violating the ATS.

Inversely, there are many situations where the buyer continuously pushes back the date of the sale deed’s execution. As a result, it is advise to penalize the buyer in cases where this unnecessary delay results in the sale deed’s execution being delay. The existence of such a clause gives the seller assurance and protection.

Possibility of Ending the ATS

The ATS may be withdrawn for a variety of reasons, including as a title defect, charges or liabilities already place on the property, or financial limits in the case of loan denial. The power to terminate the agreement should be a crucial component of the ATS and may have costly repercussions.

Remaining Balances

It is recommend that the seller’s obligation to pay off all past-due debts be made explicit. The aforementioned clause safeguards the interests of the buyer by preventing the seller from shifting unpaid debt to the purchaser.

Dates for the Sale Deed’s Execution

A clear schedule for the execution of the sale deed is essential since ATS must be complete before the sale deed can be execute. It is crucial to safeguard the seller’s interest by including clauses that allow the seller. To keep any advance payments made by the buyer (in case the timeline is exceeded). On the other hand, if the seller exceeds the deadline. The seller should be fine and the buyer should be explicitly given the opportunity to request a return of the advance as well as damages.

Entire History

An ATS should go into detail about the entire history/chain of the property. Which certifies the clear title and gives the buyer a chance to conduct their own research and confirm the ownership.

Important Restrictions on Property Sales

In an ATS, the buyer agrees to pay the transfer costs and the seller undertakes to transfer the property free from any liens. The parties should sign the document and date it in the existence of 2 witnesses.

ATS and Stamp Duty

According to Section 17 of the Registration Act of 1908. All sales of real estate that are more than Rs 100 in value must be register. Since no movable property can be bought for just Rs 100. This practically means that all sales of movable property must be register.

It is not necessary to register an ATS in some states, such Delhi and Haryana. However, in Delhi, the parties must pay 90% of the stamp duty at the time the ATS is register and the remaining 10% must be pay. When the Sale Deed is sign if they so want. The parties to an ATS may execute the document by signing. It in the presence of two witnesses and having it notarize on a stamp paper costing Rs. 50 in Delhi and Rs. 10 in Haryana.

According to the Maharashtra Stamp Act, an ATS for real estate in the state of Maharashtra is treat on an equal footing. A deed of transfer or sale and must pay the same stamp duty as real estate transfer or sale deeds.


An ATS must be sign before a sale deed. It serves as a written commitment to carry out the agreement. At a later time rather than an actual sale.

It serves as a guide for completing a sale deed and aids. In documenting the parties’ intentions to prevent disagreements in the future.

An ATS is the most important component of a sale transaction. Thus it is crucial that it be design by knowledgeable professionals to ensure. The highest level of security and safeguard the interests of both the buyer and seller.







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