23/11/2018
Here is what you need to watch out for when checking purchase documents:
1. Personal details
The agreement must capture the seller’s complete details. This includes father’s name, address, PAN number and bank account information. It must also provide exact details of the property’s location and municipal, tehsil (administrative division) or collector’s land record number. The agreement ought to be witnessed by two people, each from the buyer’s and seller’s side.
2. Title documents
“The seller must confirm the authenticity of the title documents and ownership transfer in the agreement,” explains Puri. “He must also state clearly that the transfer and handing over of possession, is happening in a legal and fully-attested manner. The agreement must reflect the fact that all dues related to the property, have been cleared up to the date of transfer.” Further, the agreement must fully indemnify the buyer from any disputes related to title and possession of the property.
3. Date of possession
“The date of possession of a flat is important to the purchaser, for the purpose of transfer of the flat from the builder. It is the date on which the purchaser is to get possession of the premises and binds the developer to hand over possession by the date set out in the agreement. If possession is not given by such date, the purchaser has a right to sue,” informs Anirudh Hariani, solicitor of Hariani and Company.
The ‘time of essence’ clause in an agreement lays down the contractual deadlines for the parties to perform their due obligations.
4. Payment schedule
“The clause which sets out the payment schedule, lays down the total amount to be paid and the time frame within which it is to be paid,” details Hariani. “In cases where the payment is made in instalments, the payment schedule specifies details of each instalment. This helps avoids any ambiguities which may arise in the future,” points out Hariani. The agreement must provide complete payment details by the buyer, including that of the mortgage, if any.
See also: Before paying, ensure seller isn’t lying about existing loans on property
5. Termination
The termination clause defines the consequences imposed on the parties in case of deviation from the code of conduct expected to be adhered by them. The agreement may contain either a ‘termination by convenience’ clause where either party can end the agreement.
6. Dispute resolution
The dispute resolution clause sets out the mechanism by which the parties can resolve their disputes. This is alternative to settling the matter through litigation. Besides this, other processes used to settle commercial contracts include adjudication and mediation.
7. Amenities
The amenities clause helps the purchaser know the additional benefits he will be entitled to and mentions the supplementary amount towards maintenance charges. In case of any default on the amenities sought to be provided, the purchaser may consider it as a breach of contract.
8. Penalty
A penalty clause should be incorporated in the purchase agreement, clearly specifying milestones and the penalties in case of failure from both, seller and buyer.
Finally, registering a legal purchase agreement, is of benefit to the buyer, since it offers protection from legal complications at any stage of ownership or eventual resale. No change can be made once the purchase agreement is drafted and registered. If any change needs to be made, the consent of the buyer must be obtained and an addendum will be made in the agreement.
