What is a Sale Agreement?

Let us begin by understanding. As the name suggests, it is an initial agreement between the buyer and seller of the property. It is essentially a legal document that outlines the terms and conditions for a future sale of the property. Also called ‘agreement to sell’, this document serves as a promise where the seller agrees to sell the property, and the buyer agrees to buy it. But the actual transfer of ownership will happen later. Apart from real estate, sales agreements are also used for goods, services or both.

A sales agreement is important as it safeguards the interests of both parties. It offers legal protection to both the seller and the buyer. If one of them violates the terms and conditions, the other can take legal action based on the agreement. Though it describes details including responsibilities of each party, buyer and seller, it does not give ownership rights to the buyer and is just a commitment.

Key Features

  • A written agreement or legal document signed by both buyer and seller.
  • Typically, the first step in the property sale process.
  • It includes details like the property’s location, boundaries, and relevant identifiers.
  • Being an agreement, it should specify details like property value, payment schedule, possession date and legal terms and conditions.
  • It confirms the clarity of the property titles and facilitates the execution of the sale deed and registration.
  • Specifies the modalities of transferring original documents upon final payment.
  • A sales agreement is crucial to get refunds if the title is found as improper. It serves as proof of non-completion of the sale and can act as a remedy if legal problems arise.

Advantages and Disadvantages of Sale Agreement

A sales agreement plays an important role in any property transaction. It helps both the buyer and the seller stay on the same page before the actual sale takes place. However, like any legal document, it comes with its own set of pros and cons. While learning about agreement to sale and sale deed, having a grasp of how a sale agreement can help you and what to watch out for can help you make better decisions and avoid setbacks.