Capture all terms in detail while drafting an Agreement to Sell
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.