Ready to use legal template
Drafted by experienced lawyers
Compliant with Indian law
Ready to use legal template
Drafted by lawyers
Compliant with Indian law
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Learn more about Real Estate Purchase Agreement in India
An agreement is a legal contract between the seller and the buyer for a home’s sale, which governs the mutual promises made by each party. It is a formal document that evidences a property’s sale and purchase . A Sales Agreement is a legal document and a written promise to transfer that property for consideration. It records the terms and conditions of such transfer and payment and mentions the penalty for non-transfer or non-payment of the property. Prospective purchasers can submit this paper to a seller as an offer, and the seller can then negotiate conditions before signing and approving the agreement. In addition, under the Indian Registration Act, 1908, registration is required for the transfer of any interest in any real estate worth one rupee or more.
Table of contents
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What is a Real Estate Purchase Agreement?
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Is Real Estate Purchase Agreement important in India?
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What are the different types of property?
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How to enter into Real Estate Purchase Agreement in India?
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What is included in the Real Estate purchase Agreement?
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What documents are required for a House’s Sale in India?
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What are the stages of a property transaction?
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Why hire a lawyer when buying a property?
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What is Due Diligence when buying a property?
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Why does the sale of a house require a settlement?
What is a Real Estate Purchase Agreement?
A Real Estate Purchase Contract sets forth the agreed-upon terms a buyer and seller agree to enter into a real estate transaction. The completion and signing of a purchase contract effectively place the buyer and seller “under contract”. As such, it is a binding legal agreement that outlines the key details of the home sale transaction and may also be referred to as a real estate sales contract, home purchase agreement, or real estate purchase agreement. In effect, when an offer to purchase is made for a new home, a buyer will propose terms of sale and specify important financial details such as the offer price. The seller will then have the opportunity to accept, reject or negotiate the terms of the offer.
Following any ongoing negotiations that may occur in the form of counteroffers, both parties will sign the purchase agreement when they are satisfied with the agreement’s terms. At that time, the property that is for sale and all parties to the agreement will be determined to be “under contract”. Therefore, this contract signals the intent of all parties to enter into a home sale transaction and explains what conditions must be met for the sale to close and the property to be transferred to the new buyer.
Is Real estate Purchase Agreement important in India?
The Bill of Sale is a very significant document in the purchase of any property. It is a written agreement for the property rights’ transfer from one person to another using a deed. As such, this document authorizes the buyer of property to use it for life. In other words, you can say that the deed gives the buyer a legitimate right to use the property. The most essential thing is that you cannot claim a right to the property without the deed.
What are the different types of property?
Real Estate investment is one of the most proven ways to generate wealth all over the world. The advantage of investing your money in a property is that you don’t have to wait for the right time to reap the benefits, as you always have the option of renting it out. Here is a list of different types of real estate:
Residential Real Estate
Firstly, apartments, single-family homes, multi-family homes, villas, townships, and condominiums all fall into this category. Each of these options presents different prospects from an investment standpoint. For example, the prices of well-built villas and detached homes increase over time due to the land’s increasing value and the building’s longevity.
Commercial Real Estate
Secondly, shopping malls, restaurants, schools, hospitals, and office spaces are all examples of commercial properties that we are probably familiar with. Investing in these properties’ costs more than residential properties, but the chances of generating profits are also better. However, if you are a first-time investor, it can be difficult to choose the right property to invest in. And, to stay safe, you should seek advice from a real estate investor.
Industrial Real Estate
Thirdly, buildings and factories used for manufacturing goods and storage are called industrial properties. They are usually located far from the city to avoid citizens being affected by their pollutants. Investing in these properties can be a tricky business because it is difficult to estimate capital investment.
Investing in Land
Fourthly, it is one of the cheapest and safest real estate properties in India. When you buy land for investment purposes, you don’t have to worry about theft, damage, and maintenance. But at the same time, generating passive income from land investments requires creative ideas, which may not necessarily work. However, it’s still a good idea to invest in it because it could be very profitable in the future. However, there is also a downside, which is that the loans will be charged at higher interest rates than a home loan. In addition, you will not save any taxes on the repayment of the principal amount.
How to enter into a Real Estate Purchase Agreement in India?
There is no prescribed procedure to follow to enter into a property sale agreement. The ownership documents showing the seller’s ownership of the property must be thoroughly reviewed by a lawyer. Once the agreement has been drafted by an attorney, it must be specifically and carefully read by both parties to the agreement. Any necessary changes must be made to the draft and once the agreement is finalized, it will be signed by both parties with the necessary witnesses. The house sale agreement is legally binding when it is printed on court stamp paper and signed by both parties. The stamp paper’s value depends on the particular state, where it is executed. Subsequently, each party must keep a signed copy of the Real Estate Sale Agreement.
What is included in the Real Estate Purchase Agreement?
In order to be validly formed, the Sales Contract must respect certain formalities. Thus, it must include all the necessary terms and conditions. Here are some significant conditions that must be included in an agreement for the house’s sale between individuals:
➤ Relevant personal data of the parties such as full name, residential address, and age of the parties to the agreement |
➤ Property’s description |
➤ Terms of payment, the method of payment, the amount to be paid by the buyer to the seller, and the period in which the payment is to be made |
➤ Conditions relating to council tax, water and electricity charges, and other taxes due |
➤ Indemnity clause to claim compensation from the seller for any future damages |
➤ Details of the penalty to be imposed if the Seller or Buyer fails to perform its obligations under the Contract |
➤ The right to close the deal |
➤ Common clauses such as the contract’s termination, governing law, arbitration clause |
➤ Agreement’s execution’s date |