Agreement to sale and memorandum of understanding .

Querist : Anonymous (Querist) 22 September 2020 This query is : Resolved
Investing in an apartment for which construction has to begin or has not yet started .In current situation only land has been purchased the builder which holds title in the company's name and title clear .Clearances and approvals are due .Investing in the same for a period of one year or until construction completes and the builder would assist in selling out the unit .Hence have been suggested to do a agreement to sale on a 100rs stamp and do a notorised MoU stating terms that upfront payment has been done and registration would be done after an year after construction completes .1. Is there any other legal document to be made to safe gaurd the money paid upfront and ensure builder executes the sale deed in future after construction is done or refund the amount in case the construction gets halted due to complications .2.Do these documents make good evidence in a case if god forbid anything goes not as planned for money safety .

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This discussion explores the legal documentation required when investing in an apartment before construction begins. It focuses on using an Agreement to Sale and a notarised Memorandum of Understanding (MoU) to safeguard upfront payments and ensure the builder completes the sale or provides a refund if construction is halted. Advice is given to consult a lawyer and be aware of the risks involved in such investments, including potential limitations in dispute resolution through consumer forums.

Dr J C Vashista (Expert) 23 September 2020
It is highly risky preposition to invest in a non-existing property for which you will have to be very cautious Mr./ Ms. Anonymous.

Rajendra K Goyal (Expert) 23 September 2020
Agreement for sale is entered, means the property is booked for resale / commercial. In case of dispute you can not move to Consumer forum as a consumer. Consumer forum is a cheaper and faster mode of dispute resolution.

Before proceeding, get all the terms be vetted by your lawyer.

Generally, in case of delayed construction, the compensation proposed in such agreement is less than 1% per annum of the amount, this would be great loss.

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