Reviewing property sale documents like the Builder-Buyer Agreement (BBA) or Agreement to Sell (ATS) can be challenging for buyers, especially without legal expertise. Often, buyers overlook clauses buried in fine print, which may favour the builder or impose unexpected obligations. To help buyers navigate these agreements safely, here’s a guide to the key clauses every sale agreement should contain.
Key Components of a Property Sale Agreement
A property sale agreement clearly lays out the rights and obligations of both the buyer and the seller (builder). Essential details typically include:
- Complete property description: location, size, floor, configuration, and other specifics
- Agreed sale price and payment schedule
- Exact handover date or possession timeline
- Conditions that must be fulfilled before ownership transfer
- Penalties or remedies in case of delay or default
- Dispute resolution mechanism
- Signatures of all parties involved
These details ensure that both buyer and seller are on the same page, minimizing chances of legal disputes or confusion.
Must-Have Clauses in a Sale Agreement
1. Price and Payment Clause
This clause specifies the total cost of the property, along with any additional charges such as:
- Preferential Location Charges (PLC)
- Clubhouse or society amenities
- Maintenance fees
It also defines the payment schedule, including instalments, due dates, and any grace periods for delays caused by either party. Clear terms in this section prevent misunderstandings about payments.
2. Default / Penalty Clause
Penalty clauses protect both buyer and seller in case of contract breaches. Examples include:
- Non-refundable token money if the buyer withdraws without valid reasons
- Refund of token money if the builder delays possession repeatedly
This ensures that financial losses due to delays or defaults are fairly compensated.
3. Project Specification Clause
This clause outlines all property details to avoid ambiguity, including:
- RERA registration details
- Unit number, floor, and configuration
- Carpet area, super built-up area, and built-up area
- Furnishings, fixtures, and amenities provided
- Scope for internal modifications
It ensures that buyers know exactly what they are paying for and what is included in the property.
4. Termination and Indemnity Clause
This clause specifies conditions under which either party can terminate the agreement without penalty:
- If the property has legal or encumbrance issues
- If the builder fails to deliver as per agreed terms
An indemnity clause protects the seller if the buyer withdraws arbitrarily, allowing monetary compensation for losses incurred.
5. Outstanding Dues Clause
This ensures the property is free of pending charges before transfer, such as:
- Electricity, water, and property taxes
- Society maintenance fees
Buyers agree to pay the final price without withholding funds due to previous dues.
6. Force Majeure Clause
This clause covers unforeseen events beyond anyone’s control, such as:
- Natural disasters (earthquakes, floods)
- Governmental or regulatory changes
It protects both buyer and seller from penalties or breaches caused by such uncontrollable events.
Conclusion
A property sale agreement contains several detailed clauses designed to protect both parties. While this guide highlights the most important clauses, the actual agreement may include additional terms. Legal consultation is highly recommended to ensure the agreement is fair, complete, and legally binding.
Frequently Asked Questions
A property sale agreement should clearly outline the property details, sale price, payment schedule, possession date, and terms for default or termination. Legal assistance is strongly advised to ensure compliance with local laws.
There is no fixed nationwide limit, but generally, a sale agreement remains valid until the property is registered or the transaction is completed. Local laws or RERA guidelines may provide specific timelines.
Yes. A sale agreement is legally required before transferring ownership. It protects both the buyer and seller by documenting terms of payment, property details, and responsibilities.
