Monday, 24 March 2014


Identifying a suitable property is the first step taken towards the purchase of a property.After completing the same,documentation is the next and very important aspect.The agreement to sell is governed by the provisions of the India Contract Act (1872) and the Transfer of Property Act (1882).

Mode of stamp duty
Previously,documents were prepared on the stamp paper issued by the Government Department.After the‘Telgi Scam’,usage of the stamp papers were prohibited in Karnataka.Now,a white paper or Rs 2 document sheet which is issued by the department of Registration is preferred.Regarding stamp duty, it has to be made either by way of Pay a pay order /Demand Draft or Banker’s Cheque in favour of the concerned Sub-Registrar.The Registration charges, either by way of a DD or cash, has to be submitted to the concerned Sub-Registrar.The details of the stamp duty and registration charges will be entered by the Sub-Registrar on the reverse side of the sale deed.

The beginning
The documents consist of several distinct parts.The name and description of the documents is the first, in the documents.This gives a general indication about the nature of the document.However,contents are the most important factor to decide the nature of the document.The date and place of the execution of the document is the beginning of the document.The date of the documents may differ from the date of registration.The documents can be presented for registration within four months from the date of execution. However, the date and place of execution is important for the purpose of determining the limitation and jurisdiction.

The name of the parties to the contract, their age, father’s name,in case of a married woman her husband’s name, and place of their residence should be mentioned. All the owners, as one of the parties to the contract,should take abundant care at the time of executing such documents.The party to the contract may act for himself/itself or on his/their behalf, may be represented by other capacity.In such case,the party should clearly mention on what capacity he/they are being represented,which is also one of the very important aspects in the documents.

All the relevant facts in a logical and chronological order should be narrated. The rights and obligations of the parties must be stated.The intention of the party should also be clearly mentioned in the document.

The ‘Preamble’
The Preamble reveals the history of the property, nature of the transaction and the intention of the party.The previous history of the property can be established, by an advocate, from the Preamble.

Operative portion
The operative portion of the document states the nature of transaction, as to whether it is an absolute transfer or an agreement to transfer the right, title and interest, the consideration paid,mode of payment of such consideration and balance payable,if any.The duration of the completion of transaction should be mentioned clearly.The covenants of the vendor,pertaining to clear and marketable titles, is an important aspect for the transfer.

Default clause
In case of a default in the payment or non-performance of the other party, remedy to be taken, has to be clarified in the document itself.

In case of delayed payment,what is the percentage of interest payable or damages payable to the other party or the modes to terminate the agreement in case of breach, should be stated clearly.

In case of non-performance,specific performance clause should also be included in the document. The arbitration clause is advisable to be incorporated in the agreement.

Possession is the most important ingredient of the transaction.The time of delivery of possession should be clearly and specifically mentioned.It may be noted that the seller need not give the possession of the property to the purchaser on the execution of the agreement or on part payment.Possession has to be given on completion of the sale process and receipt of the full consideration amount after execution of the conveyance deed. The agreement should also refer to the mode of possession of the property and whether it is vacant or not.When the property is let out,the seller has to arrange for a rental agreement between the existing tenant and the purchaser of the property.

Location and description should contain the total measurement, the municipal number, street, road, with complete and proper boundaries and properties surrounding the property agreed to be sold.It should also include the area, floors, type of constructions and materials used among others.The details should be exhaustive so as to identify the property clearly as Section 21 and 22 of the Indian Registration Act makes it mandatory to disclose the details.

At the end, the document should contain and undertaking that the executants is signing the documents before the witnesses.The witness who sign in the document, may or may not know the contents of the agreement. Whereas, in the case of consenting witnesses, who have a certain interest in the property, would know the contents of the documents. The non-testamentary document should be drafted by an Advocate or licensed documents writer and they should sign on the same.

Preservation of the original document is the most important aspect as it is an evidence of ascertaining the ownership of a particular person and incase of his death, for their legal heirs.If the original document is misplaced or unavailable, it would seriously affect the title of the property.It may be presumed that the property documents are pledged with some financial institutions by way of deposit of title deeds. It is advisable to laminate the documents and preserve them in safe custody.

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