Make Sure You Include These Clauses in Sales Agreement
Dec 20, 2017 Home Trading Steps
Many times it happens in a property deal that at the last moment the seller just backs off from the contract. In such situation, the buyer gets in trouble. Hence it is always advised that the sales agreement should contain certain relevant clauses, in order to safeguard the buyer’s interests.
Read through to know such relevant clauses that should be mention in the sales agreement.
Termination of the deal: the sales agreement should have some clauses related to the termination of the deal without the buyer getting punished financially, if:
•The documents of the seller are not legally valid
•There is some legal defect in the property before the sale deed comes into effect such as the property should have a clear title.
•The home loan application of the buyer gets rejected, then the buyer should not be held responsible.
•The seller does not vacate the property during the execution of the sales deed then the buyer should have the right to cancel the deal
Penalty clause: usually there is a clause in the agreement that if the buyer backs out then the earnest money he paid to the seller will get forfeited by the seller. Similarly, there must be a penalty clause in the sale agreement that if the seller defaults then only the financial damage shall not be an adequate relief for the buyer. The buyer can even move to court if the seller cancels the contract and ask for a specific action from the legal system.
Indemnity clause: this clause holds very important and should be included in the agreement. It protects from any kind of loss or damage due to the breach of the contract by any of the parties. It might happen that seller’s legal successor might claim their right on the property, then this might create a problem. In Indemnity clause, the seller usually takes responsibility for himself or herself that if he or she defaults with the contract then the seller would pay-off for the damage and vice-versa. However, this clause should be draft very carefully, keeping in mind all the possible aspects.
Remaining dues: the agreement should clearly state that the seller should clear all the outstanding dues related to the property that includes, water and electricity bills, RWA charges, property tax amongst others.
Force majeure: if the property gets damages due to any kind of natural factor such as earthquake, flood or anything else then a clause needs to be in the agreement stating that the parties cannot blame the other part to complete the transaction.
Also, the buyer should remember that during the transaction process the seller has the complete right to sell the property to someone else till the seller has not got into any agreement. Hence it gets very important to draft the sales agreement at a very initial stage.
Read through to know such relevant clauses that should be mention in the sales agreement.
Termination of the deal: the sales agreement should have some clauses related to the termination of the deal without the buyer getting punished financially, if:
•The documents of the seller are not legally valid
•There is some legal defect in the property before the sale deed comes into effect such as the property should have a clear title.
•The home loan application of the buyer gets rejected, then the buyer should not be held responsible.
•The seller does not vacate the property during the execution of the sales deed then the buyer should have the right to cancel the deal
Penalty clause: usually there is a clause in the agreement that if the buyer backs out then the earnest money he paid to the seller will get forfeited by the seller. Similarly, there must be a penalty clause in the sale agreement that if the seller defaults then only the financial damage shall not be an adequate relief for the buyer. The buyer can even move to court if the seller cancels the contract and ask for a specific action from the legal system.
Indemnity clause: this clause holds very important and should be included in the agreement. It protects from any kind of loss or damage due to the breach of the contract by any of the parties. It might happen that seller’s legal successor might claim their right on the property, then this might create a problem. In Indemnity clause, the seller usually takes responsibility for himself or herself that if he or she defaults with the contract then the seller would pay-off for the damage and vice-versa. However, this clause should be draft very carefully, keeping in mind all the possible aspects.
Remaining dues: the agreement should clearly state that the seller should clear all the outstanding dues related to the property that includes, water and electricity bills, RWA charges, property tax amongst others.
Force majeure: if the property gets damages due to any kind of natural factor such as earthquake, flood or anything else then a clause needs to be in the agreement stating that the parties cannot blame the other part to complete the transaction.
Also, the buyer should remember that during the transaction process the seller has the complete right to sell the property to someone else till the seller has not got into any agreement. Hence it gets very important to draft the sales agreement at a very initial stage.
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