IMPORTANT POINT TO BE INCLUDED IN SALE AGREEMENT, If Other party fails to honour the deal
Sale agreement
A sale agreement or agreement to sell is a contract between a buyer and the seller. Hence, it is critical for buyers or sellers to give due attention to all the clauses while making or accepting offers. You must know your rights if the other party fails to honour the deal.
From the seller’s point of view
Before moving forward, it is important to take a step back and revisit the agreement to sell and check the clause regarding the failure on the part of the buyer to make the payment; timeline to pay balance money; and legal notice to the buyer for cancellation of the agreement and damages. Check if there any clause stating that the buyer can revoke the agreement if he fails to get the home loan. One should remember that if it is a registered agreement, a deed of cancellation will have to be executed by the parties concerned before it can be sold to the third party. On the other hand, if the buyer insists on cancellation of a registered agreement, you can file a suit for specific performance to make the balance payment.
From the buyer’s point of view
The same set of rules apply to a buyer. A buyer too has to refer to the agreement to sell and look for the relevant clauses. What is the clause in the contract with regards to seller backing down from the deal or is there any clause that states a seller can cancel the deal if certain conditions were not met? Can you issue a legal notice to the seller for cancellation of the agreement and seek damages?
The Specific Performance
Codified by Specific Relief Act, 1877, specific performance means enforcement of exact terms of the contract. In real estate terms, it means when either party wants to complete the sale under the agreed terms and conditions in the sale agreement and can plead injunction by seeking a court order to complete the deal. However, the judgment is the solely based on the discretion of the court.
Seeking damages
To sum it up, a buyer or seller may seek monetary damages for breach-of-contract when the other party refuses to complete the transaction. If a seller defaults, he must return all deposits, in addition to additional acceptable expenses, to the buyer. From a buyer’s point of view, it is advisable to get the sale agreement registered.
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