Sell Agreement: Definition, Damage, & Stamp Duty

The terms and circumstances of a potential sale deed are listed in an Agreement to Sell (ATS), together with the suggested consideration and other important elements. An agreement to sell opens the door to the actual sale of real estate and serves as the basis for a sales agreement.

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Describe a sales deed.

Between a buyer and a seller, a sale agreement is a formal legal document. All the conditions and other significant features of property ownership are covered in this document. According to Indian law, a selling deed is a requirement. According to the Transfer of Property Act, a sales deed is require. The act that governs transactions involving the purchase and selling of real estate specifies what constitutes a contract for sale or an agreement to sell as follows:

A contract for the sale of real estate is define 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, of itself, generate any interest in it or charge on such property,” Section 54 adds.

Other names for sales deeds include Bikrinama or Bainama paper in Hindi & Vikri Karara in Marathi.


The distinction between a sales deed and a purchase agreement

Sales Deed

Agreement to Sell

A sales agreement is a contract wherein the seller either transfers the ownership of property

ATS is an agreement where a seller agrees to transfer the property, subject to certain pre conditions and agreed covenants.

Sales Agreement has all the details related to price, name of both the parties, address

Agreement to sell has terms and conditions  under which property will be sold off

Nature of sales agreement is absolute

Nature of agreement to sell is conditional

Risk and rewards are transfer to the buyer in sales agreement

Risks and rewards are not transferred in agreement to sell

Paying stamp duty and registration charges is mandatory in sales agreement

There is no need to pay stamp duty and charges


Important Elements of a Sale Agreement

A legally binding agreement to sell is a document that offers security to the potential buyers. An ATS is not require to follow a specific format. However, in order to protect the interests of the parties, it is essential that ATS be enforceable & binding by law.

An ATS must have provisions that offer security to both the buyer and the seller. Details of the:- should be include in the ATS.

  • Parties: Full names and addresses for each party
  • The property should be describe in full, including all of its pertinent information.
  • provisions for the need for a clear, legitimate, and marketable title
  • Method of possession delivery
  • Payment details
  • If the title is flawed, the earnest money will be refund.
  • Forfeiture of the down payment.
  • remedies for sales that don’t go through (including specific performance & bearing of expense of proceedings)


Format: Agreement to Sell

Here is a sample format for a sale agreement to help you understand it better:

Sell Agreement: Definition, Damage, & Stamp Duty


Contract to Sell: Indemnity Provision

There is a chance that the property will be contest for factors such challenge title, prior arrears, default in tax payment, etc. An indemnity clause safeguards the buyer’s interests and offers protection from any potential future disputes of this nature. In an agreement to sell, an indemnity clause is written specifically to seek reimbursement from the seller in the event that the buyer suffers losses or incurs costs or obligations in the future as a result of violations made prior to the sale. It is advisable to take these situations into account in drafting the indemnity provision.


Damage/Penalty Clause in the Sale Agreement

To confirm his interest in purchasing the property, the buyer gives the seller a down payment on the purchase price. However, there are lots of situations where the seller decides against closing the deal. In this situation, it’s crucial to protect the interests of the buyer by making sure the seller faces a severe penalty for breaching the selling agreement.

Contrarily, 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. These clauses offer security and protection to the seller.


Agreement to Sell: Termination Option

The agreement to sell may be cancel for a variety of reasons, such as a title problem, charges or encumbrances already placed on the property, or financial restraints in the case of loan denial. The agreement to sell should include the right to terminate it, and doing so may have financial repercussions.


Agreement to Sell: Unpaid Dues

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 latter.


Agreement to Sell: Schedule for Sales Agreement completion

A clear schedule for the execution of the sale deed is essential since the agreement to sell occurs before the sale deed is sign. 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 exceed). On the other hand, if the seller exceeds the deadline. The seller should be fined and the buyer should be explicitly given the right to request a return of the advance payment in addition to damages.


Stamp Duty on a Sale Agreement

According to Section 17 of the Registration Act of 1908, all sales of real estate that are more than Rs 100 (Rupees One Hundred Only) 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 (Rupees Hundred Only).

The requirement to register a sale agreement is not mandatory in some states, including Delhi and Haryana. However, in Delhi, if the parties so choose, 90 percent (Ninety) of the stamp duty must be paid at the time the agreement to sell is register, and the remaining 10 percent (Ten) must be paid when the sales deed is execute. The parties to an ATS may execute the document by signing it in the presence of two witnesses & having it notarized on a stamp paper costing Rs. 50 (Rupees Fifty Only) in Delhi and Rs. 10 (Rupees Ten Only) in Haryana.

According to the Maharashtra Stamp Act, an agreement to sell real estate in the state of Maharashtra is treat on an equal footing with a deed of conveyance or sale and must pay the same stamp duty as real estate conveyance or sale deeds.


Conclusion: The distinction between a purchase agreement & a sales agreement

An agreement to sell must be sign before a sales deed. Since it serves as a written promise to carry out the transaction at a later time rather than an actual sales deed. It serves as a guide for completing a sales deed and aids in documenting the parties’ intentions to prevent disagreements in the future. The agreement to sell is the most vital part of a sale transaction, so it is essential that it be created by qualified professionals to maintain the highest level of security & protect the rights of both the buyer and seller.






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