Buying a house involves a great deal of money, thereby it becomes important to have the right paperwork.

Every real estate transaction involves a contract of sale to be signed between two parties, which could be complex. But understanding these complex documents is extremely important as the contract will be prepared by the builder, and you as the buyer will be committing to every detail mentioned.

Unfortunately, the agreements are too long to be read and understood carefully before signing. We stress on the need to read each and every detail mentioned in the contract, however we also understand the paucity of time that one faces in practicality. Here we have come up with a few pointers that you must include in your checklist to know what your rights and duties as a buyer of real estate are. But before we begin, one must always remember the two ground rules of signing an agreement which are,

"Ask questions about anything you don't get"

"It's easy to sign, but hard to break a contract"

In India, the 'Property Sale Agreement' comes under the Indian Contract Act 1872, the Registration Act 1908, and the Transfer of Property Act 1882. Let's have a look at the requirements that every real estate contract needs to fulfil to be valid:

• A valid home purchase agreement must be in writing
• The contract must contain an offer and an acceptance
• The purpose of the agreement must be legal
• There must be an exchange of things of value
• All parties signing must be legally competent

An "Agreement to sell or Sale Agreement" has certain essential elements. Let's have a look at what all is included,

• Property address with the legal description
• A guarantee from the seller that he or she will provide clear title to the home, through an abstract of title, certificate of title, or a title insurance policy
• Purchase price offered
• Amount of down payment
• The agreement clearly states the names of the buyer and the seller, the size of the property, its direction, carpet area, etc
• The type of property is also listed in the contract, i.e. if it's a freehold, leasehold or mortgaged property.
• A mortgage contingency provision, which allows you to be released from your offer if you're unable to obtain a loan
• The time duration for which the offer will be open to acceptance (usually 48 hours)
• The date of the sale to be finalized ("closed")
• The date by which the buyer will be able to move in (take possession)
• Who will hold the earnest or deposit money (usually an escrow or title agent) and who will be the closing agent and/or escrow or title agent for the closing
• Items to be included in the sale, such as carpeting, lighting fixtures, appliances
• Items not included in the sale
• A provision stating that the seller is responsible for paying utility bills, property taxes, insurance, and other house-related expenses through the closing date
• An inspection-contingency clause, which allows the buyer, to have the home inspected
• A provision requiring the seller to pay a penalty for every day beyond the date of occupancy that the house is not available for the buyer to move into (often called a "liquidated damages clause")
• The risk of casualty loss or damage to the property shall be borne by the seller until the transfer of title

Some elements that should not be included in an agreement are as follows,

• Developer should not include a clause to make any changes to the building layouts without the consent of the home buyer.
• Developer should not include a clause to alter the size of the flat.
• Developer shall not include any clause that does not give the right to decide your share to the promoter.
• Developer cannot link your project with another to use the money collected from you for a different project.

Having said that let's now look at some of the clauses that the home buyer should review,

Penalty clause:

A penalty clause works in favour of a buyer when a seller goes back on his word because he finds a buyer who can pay him more. The buyer can move court if the seller annuls the contract.

Indemnity clause:

This clause is inserted as a precaution against any damage or loss. This clause in Sale Agreement indemnifies the buyer against any legal dispute / legal defect in the property.

It is where the seller takes the onus upon himself that if he fails to honour the contract, he would compensate the buyer and vice-versa. The indemnity clause protects the parties against any loss or costs which may be suffered by a party arising from breach of the other party or any third party.

Force majeure:

In case the property gets damaged due to a natural calamity such as an earthquake, tsunami or flooding, a line should be incorporated that the parties cannot compel the other party to complete the transaction.

Right to call off the deal:

The buyer should reserve the right to call off the deal under certain circumstances without being penalized financially. Some of these circumstances are as follows,

• If seller fails to provide legal/statutory property documents required by the buyer.
• If the buyer finds out any legal defect in property before execution of sale deed.
• If the buyer's home loan is rejected by bank due to some legal/statutory issue in property/property documents.
• If the seller fails to provide all original documents at the time of execution of sale deed.
• If the seller fails to provide vacant possession of property at the time of execution of sale deed.Outstanding dues:

It is critical to mention in Sale Agreement that the seller will clear all the dues accrued in respect of the property prior to the date of registration.

We have enlisted some major points that one must closely look at before signing the agreement, however we also strongly recommend that you read the entire document carefully and in-depth.