SALE AGREEMENT (Agreement to Sale)
Buying and selling of properties, fuel commercial activities, ensuring smooth cash flow in the economy.
The transfer of property to take place on a future date, subject to further terms and conditions is known as Agreement to Sell. An Agreement to Sell becomes a Sale on fulfillment of conditions or when the time elapses for the property to be transferred.
The Agreement of Sale in relation to Immovable Property is significantly greater, mainly because such sales are complicated affairs requiring numerous documents and legal procedures. Therefore, a need for a detailed understanding of the entire procedure and involvement of both the parties. Thus, for a sale of immovable property, the first step is to draft an agreement to sale.
An Agreement to Sell includes matters like:
- Proposal to purchase and agreement to sell
- Detailed description of the property
- Proviso requirement of good marketable titles and no encumbrances
- Payment details including earnest money
- Delivery of original documents on payment
- Drafting of sale deed and registration of the same if titles found good
- Method of delivery of property
- Refund of earnest money in case of improper titles
- Remedies for non-completion of sale on part of vendor including specific performance and bearing of expense of proceedings
- Also includes Forfeiture of earnest money, if purchaser fails to complete the sale
- Action if the property is affected by notice from government authorities.
- Production of tax related certificates
- Schedule description of the property
- Memo of consideration for earnest money received
- And also all other matters incidental to the proposed Sale
An Agreement to Sell thus shows the willingness of the parties to sell/buy a property in sale and culminates the creation of an actual sale.
In case the case of Movable properties, it includes tangible goods not being land, buildings and other immovable properties. For instance, machinery, tools, vehicles, raw materials, consumer goods, etc. In India, sale of goods is regulated by the Sale of Goods Act, 1930.
The Sale of Goods Act, 1930, clarifies the difference between Sale and Agreement to Sell. It says that the contract of sale goods is one where a seller transfers or agrees to transfer the property in goods to the buyer for a price. Such a contract may be absolute or conditional.
Immediate transfer of described property If the property described get transferred through a contract immediately, its called a Sale.
Agreement to sale is merely the intention of sale, it does not confer rights of the property to the buyer, legal transfer is completed only on submission of registered sale deed.