The query is about THE AGREEMENT TO SELL (or some refer to this as SALE AGREEMENT.)
The features are: Sale of the house for a consideration of Rs. Xx. Vendor 1 is the Seller and Vendor 2 is the buyer. Vendor 2 is to pay the full consideration money to Vendor 1. Prior to the execution of the Sale deed, Agreement to sell (Sale agreement) is to be signed by both parties alongwith a sum of Rs.1 lakh being paid as advance money for purchase of the property. The time allowed for execution of the Sale Deed from the Sale agreement is 3 months. The Sale Agreement is in the Draft stage.
The qns are:
- Vendor 2 desires inclusion of a clause that on payment of full consideration money ( BY Vendor 2 – the buyer) the property has to be registered in :
His name (vendor 2) or
In the name of the person he ( Vendor 2) designates or choses.
According to me it is bad in law to register the property in the name of the 3rd person who is not a party to the Sale agreement and also who is not paying any money towards consideration.
- Penalty Clause as per the draft Sale agreement:
If vendor 2 fails to fulfil his part of the agreement to pay the full consideration money (minus the advance money) within the stipulated time, he will lose 50% of the advance paid;
If vendor 1, having received the full consideration money, fails or refuses to execute/register the Sale Agreement in the name of the Vendor 2 or in the name of the person that he designates (within the time period allowed as per the Sale Agreement), Vendor 2 has the right to sue Vendor 1 through Court of law and entitled to all remedies and relief for the sufferings he has undergone ( Vendor 2 will ensure registration of the property through Court order and financial relief for the damages suffered)
According to me i) the above provision is bad in law to have the clause as mentioned above;
ii) penalty in case Vendor 1 failing to fulfil his part as per the Agreement to Sell (refusing to sell) has to be included. As a matter of equity, it can be like:
“if Vendor 1 refuses to sell the property, having entered into sale agreement, he shall refund the advance money with interest and an appropriate penalty amount.
Whether the Agreement to Sell should be Registered?
The above query is exhaustive. The experts may kindly guide on the points mooted above.