Cap­ture all terms in de­tail while draft­ing an Agree­ment to Sell

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An agree­ment to sell is en­tered into by the seller and the pro­posed/ in­tended buyer of a prop­erty to record the terms and con­di­tions re­gard­ing the sale of a prop­erty. Aclear record­ing of all thetermsand­con­di­tion­sis­nec­es­sary­toavoidanyam­bi­gu­ity/ con­fu­sion re­gard­ing the con­tract.

Af­ter the ex­e­cu­tion of agree­ment­tosell, the last step to­wards the com­ple­tion of such agree­ment to sell is the ex­e­cu­tion of a sale deed by the seller to the pro­posed/ in­tended buyer. It is only on the ex­e­cu­tion of the sale deed that the ac­tual trans­fer of own­er­ship of prop­erty takes place i.e. trans­fer of own­er­shipfrom­seller to buyer. How­ever, there have been sev­eral in­stances wherein af­ter the ex­e­cu­tion of agree­ment to sell, the seller backed­out­ofthe pro­posed sale pur­chase trans­ac­tion and there­fore, the sale deed was­no­tex­e­cute­din favour of the pro­posed/ in­tended buyer. This draws our at­ten­tion to the rights of such­pro­posed/ in­tend­ed­buyer un­der the agree­ment to sell and the rem­edy avail­able to him re­gard­ing the same.

The courts of law have on nu­mer­ousoc­ca­sion­sheldthatan agree­ment to sell does not cre­ate any rights or ti­tle over the prop­erty in favour of the pro­posed/ in­tend­ed­buyer. Ana­gree­mentto sell is merely a doc­u­ment cre­atin­garight­toob­tainan­oth­er­doc­u­ment of sale on ful­fill­ment of termsand­con­di­tion­sasspec­i­fied in the agree­ment to sell. It does not, of it­self, cre­ateany­in­ter­estin or charge on such prop­erty. On strength of such agree­ment the pro­posed/ in­tended buyer does not­be­comethe­ownerofthe­p­rop­erty. The own­er­ship re­mains with the seller. It will get trans­ferred to the pro­posed/ in­tended buyeron­ly­on­the­ex­e­cu­tionofthe sale deed by the seller. How­ever, from an agree­ment to sell, the pro­posed/ in­tended buyer gets the right to ob­tain a sale deed in his favour. If the seller re­fuses to com­ply, the pro­posed/ in­tended buyer is en­ti­tled to en­force that obli­ga­tion by fil­ing a suit of spe­cific per­for­mance as per the pro­vi­sions of the Spe­cific Re­lief Act, 1877.

It is per­ti­nent to men­tion here that to en­force the spe­cific per­for­mance of a con­tract to sell/ agree­ment­tosell against aseller, it is es­sen­tial that the pro­posed/ in­tend­ed­buy­er­must­be­wil­l­ingto per­form his part of the con­tract. In sim­ple words, a pro­posed/ in­tend­ed­buy­er­may­seek­spe­cific per­for­mance of an agree­ment to sell by the seller only if such pro­posed/ in­tended buyer is ready and­will­ing to ful­fill all theobli­ga­tions un­der­taken by him in such an agree­ment to sell.

It is im­por­tant to un­der­stand that the spe­cific per­for­mance­ofa con­trac­tis the­ac­tualex­e­cu­tionof a con­tract ac­cord­ing to its stip­u­la­tions and terms. In such cases, the court may di­rect the party in de­fault to dothev­ery­thing­which he con­tracted to do. The stip­u­la­tions and terms of the con­tract have, there­fore, to be­cer­tain and par­ties must have con­sen­sus in the un­der­stand­ing of the stip­u­lated termsand­con­di­tions. How­ever, if the stip­u­la­tion and the termsand­con­di­tion­so­fana­gree­ment are un­cer­tain and the par­ties havead­if­fer­ent un­der­stand­ing of the termsand­con­di­tion­sof the agree­ment, then there canbe no spe­cific per­for­mance of an agree­ment.

Thus, it is very im­por­tant that while draft­ing an agree­ment to sell for the sale pur­chase of a prop­erty all the terms and­con­di­tions are cap­tured in de­tail and with clar­ity so that one may be specif­i­cally en­forced by the court­soflaw, in­caseany­d­if­fer­ences/ dis­putes arise be­tween the par­ties. Fur­ther, it must also be kept in mind that un­der cer­tain state laws an agree­ment to sell is re­quired to be nec­es­sar­ily reg­is­tered. Thus, in such states the buy­erneed­storeg­is­terthea­gree­ment to sell, so that, if re­quired, hemaygetit­specif­i­cal­lyen­forced by the court of law.

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