The terms and circumstances of a potential sale deed are listed in an Agreement to sell ("ATS"), along with the suggested consideration and other important factors. ATS establishes the groundwork for a sale deed and prepares the way for the actual sale of an immovable property.
The contract for sale, sometimes known as an ATS, is defined as follows by the Transfer of Property Act, 1882, which governs matters pertaining to the sale and transfer of property:
A contract for the sale of real estate is defined in Section 54 as a promise that the sale of the property will occur in accordance with the terms agreed upon by the parties. “It does not create an ownership inside or claim on these property by itself, according to Section 54.
Difference between a Sale Deed and an ATS
In a sale deed, the seller transfers title of the property, whereas in an ATS, the seller agrees to transfer the property subject to a number of provisos and agreed-upon covenants.
A sale transaction is recognized to have taken place when a property is sold by the seller to the buyer for a specified amount and transferred from seller to buyer. When a seller promises to sell a property to a potential buyer at a later date or once the relevant conditions are met, this is considered an ATS;
Unlike an ATS, which is conditional and gives the buyer no title, a sale is of an absolute nature;
Risk and reward are passed to the buyer in a sale deed together with the transfer of the property. The risk and profits are not transferred in the case of an ATS because the seller still owns the property, and the mandatory tax and stamp duty/registration fee are assessed at the time of the sale rather than the ATS.
Important Components of an ATS
The ATS is a contractual contract that offers security to the potential parties. An ATS is not required to follow a specific format. However, it is crucial that ATS be enforceable and legally binding in order to safeguard parties' interests.
An ATS must have provisions that offer security to both the buyer and the seller. Information about the parties, a description of the property, requirements for clear and valid marketable title, payment information, the method of delivery of possession, a refund of the earnest money in the event that the title is defective, remedies for non-completion of the sale (including specific performance and bearing the cost of proceedings), and forfeiture of the earnest money should all be included in the ATS. The following are examples of desirable clauses for an ATS:
Compensation Clause
There is a chance that the property will be contested for factors such challenged title, prior debts, default in tax payment, etc. An amendment safeguards the buyer's interests and offers protection from any potential future disputes of this nature. An ATS's indemnity clause is included specifically to allow the buyer to pursue reimbursement from the seller for any losses or future costs associated with non-compliances prior to the sale. Prior to crafting the indemnity provision, it is wise to consider such instances.
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