RajaRajachozhan (retired ) 08 August 2020

Agreement to sell (sale agreement)

Respected Sirs,

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 3^rd 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.

thanking you

vsraj

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5 Replies

Shashi Dhara 08 August 2020

It is better to register the agreement to sale if not registered any thing happens beyond control then if any one approached civil court the the unregistered document is not exibhited , so they have to pay duty penalty which becomes heavy burden.

RajaRajachozhan (retired ) 08 August 2020

I havemissed another point with respect to the above queries: that is whether force major clause is to be included ( because of covid problem, natural calamities, war clouds hovering over etc. Kindly advise please ... rajarajachozhan.

kavksatyanarayana (subregistrar/supdt.(retired)) 08 August 2020

As per me, the clauses in your query may be added to the Agreement of Sale. the Agreement of Sale shall be registered before the Sub Registrar concerned.

Rishi Pal Singh Varma (Advocate) 09 August 2020

IN MOST OF THE CASES OF 'AGREEMENT OF SALE' IT IS ALWAYS BETTER TO DO THE REGISTRATION. BUT HERE IN THIS CASE ANOTHER POINT OR CLOUSE CAN BE ADDED THAT IF THE SELLER GOES TO REGISTER ANY ANOTHER 'AGREEMENT TO SALE' IT SHOULD BE REGISTERED AND NOT UNREGISTERED AGREEMENT SHOULD BE MADE.

niranjan (civil practice) 09 August 2020

It can be drafted as - , vendor no.2 will give in writing to vendor 1 to sell to person designated by him but vendor no.1 will have option to refuse to sell the property to the person designated by vendor no.2(in writing) and in that case the agreement will stand cancelled or alternatively vendor no.2 will have option to get the sale deed registered in his own name or take refund of earnest money with interest as per sb account.

sale agreement needs tobe registered as there are conflicting judgements as to whether suit for specific performance is maintainable based on unreegd.sale agreement. though sec.49 of Reg.Act provides for that.