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  • Can property be purchased without making an agreement?

    Doubtful about a property purchase without any formal agreement with the seller? Check out the advice provided on this confusing property deal, whether or not it would be possible and if it is legally acceptable.

    I came across one purchaser who is ready to buy a prime property worth crores of rupees but put a rider to the seller that you would not need to pay an advance and go for direct registration on a fixed date as the deal would be done through the bank transactions. Normally, every seller would expect an agreed amount as advance, and express conditions will be written for it which is mutually agreed upon, and then the balance paid at the time of registration.

    Can we believe this kind of rigid condition by the buyer to get into any property deal?
  • Answers

    5 Answers found.
  • In property deals, many times the money involved will be relatively high in comparison to our other dealings. People may not have ready amount. They may have to mobilise, pool and/or avail loans for this. Moreover there will be many other things to go into detail and various papers and documents to be made ready before the actual sale deal. All these need time. Hence, to bind both parties to complete the deal an agreement is made saying a tentative period to complete the sale and the terms of payment. An advance is given by the buyer and accepted by the seller to make the agreement financially binding.
    If both parties are satisfied and mutually agree the sale deal can be finalised and registered any time during the agreement period. However the agreement and advance is a safeguard for both sides so that the other side does not backtrack from the deal unilaterally or one sided. In that case the seller may forfeit the advance amount as per the terms in the agreement. The buyer can ask back the advance and if not given can proceed legally against the seller.
    However, when the amount involved is not very high and the buyer has ready amount and knows about the property well, and has some special interest and fancy for that property, he may want to complete the deal as early as possible. In that context he may not like to delay by writing an agreement , but proceed with the sale direct.
    But in the case referred in this question, it is not clear why such hurry. The buyer, in the absence of agreement can refuse the deal or may want a lesser price too. Moreover, High amount deals may also come under scrutiny of various agencies like tax department etc.
    Hence seller has to thoroughly enquire and satisfy about the buyer and satisfy why an agreement which does not involve high cost is avoided by the buyer. There can be last minute glitches also.
    My suggestion is to make an agreement and to speed up the sale if convinced about the genuinity comprehensively.

  • It is prudent not to do any property-related work without an agreement. Therefore, the agreement of the property should be such that it gives authority to transfer it to someone else's name. Any person buying a property is a very important decision because for this he invests some of his excess capital, there should not be any kind of negligence in this deal. Many times the power is sold by the owner of the property through the power of attorney, in which case the investigation should be done to make sure that the right property is being sold.

    It is prudent that you buy the right property through a proper and complete process so that in the future you will not have to face any kind of legal problem in future. The title of the property becomes very important in the property agreement as it gives the right to sell it to the existing customer and the new customer gets the right to deal with the property through it. For this situation, the property title must be clear and eligible to deal.

    We know that a middle-class person or any other person invests their hard-earned money while buying a property, so it is important that before buying a property, some things are taken care of very carefully so that there is no chance of cheating on you. Before taking any property, make sure that the property is not part of any kind of dispute or judicial matter. Because many times people transfer such property without an agreement to you which becomes a problem in the future.

  • There is no rule that we have to make an agreement before purchasing a property. We can go for direct registration also. When we require a lead time to mobilise the funds required for the registration we may give some advance amount and make an agreement in which we will say the time required for registration and how the amount will be paid etc
    But if the seller and the buyer are having confidence in each other and if they don't require a long time for making the payment and getting the property registered. they may not go for an agreement also. They can directly go for registration. It all depends on the faith and the confidence one is having in the other.
    But it is always advisable to make a paper in which we can mention all the terms and conditions. When will we go for registration? What is the total value of the sale? Who are the owners? The documents showing the ownership and link documents should also be verified. We may or may not give advance, the same may be mentioned in the document. This document should be signed by the buyer, seller and witnesses. This is the safe bet,
    My wife and her siblings have their parents property in a village. They sold it to a local landlord. They paid full money and they occupied the property. One year back this deal was over. But no registration or no agreement so far. Only oral agreement and yesterday almost after a year they signed an agreement. Because they are family friends and know each other very well, they never insisted for registration.

    always confident

  • Selling or purchasing a property should be taken in a legal way. However, if both parties have confidence in each other they can go in this situation as mentioned in the post but it is safer for both of them to abide by legal process, else it may create problems for both or either party because money matters a lot.

    - First, they have to prepare agreement to sell which contains all details about property,terms & conditions and price agreed upon.

     - The title deed records the actual transfer of ownership of the property. It needs to be registered at the sub registrar's office.

    - Khasra & khatoni certificates provide proof that the property has an entry in the tehsil records.

    - The receipts of property tax states that the seller had paid all the taxes and none have been left as due.

    -  An encumbrance certificate manifests that the sold property is free from all encumbrances or loans.

    - An occupancy certificate is issued  by the municipal corporation that the building  was constructed according to a sanctioned plan.

    -  it is safe to procure the bank statements about the property that it has no due loan.

    - Let it be confirmed from different people whether or not the property is disputed. E.g. if the ownership of the property belongs to one or several people.

    - It is also seen that a property is sold to more than one buyer.

  • A timely agreement and advance if any, is a safeguard for both the parties and traditionally people follow that method of finalising a deal before going for the formal registration to reflect it in the Govt records otherwise there would be frauds and unnecessary litigations related to curb dealings not followed by a quick registration. An agreement precisely describes the conditions and terms of the sale between the seller and the buyer and becomes a major document in case of any dispute which might arise in the matter later.

    It is to be noted that when we go for the registration of the property then also we have to submit a detailed agreement cum sale deed document where everything related to location of the property to the modalities of payment made will be narrated and that document itself is a very important document as it will be stamped and registered in the local registrar office and then transfer of the property in one's name or mutations thereon can follow smoothly in future.

    It is possible to do all the things together on the registration day itself but the seller should note that he must receive the value of his property through bank transaction by that time. Generally in registrar office they ask a question to the seller whether he had received the sum as mentioned in the stamped deed and it is expected that seller would answer that in affirmative only otherwise the registrar can refuse to register it. To safeguard the interests of the parties involved in the deal there are certain precautions used by the registrar office and they check the deed and related matters in details leaving no way for any misunderstanding in the deal to be registered.

    Knowledge is power.

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