Tips for first time home buyers

Now, that you have planned to buy a new home, its time to learn on how to get a good deal. Yes! This post is all about on how to get terms and conditions right.

Before starting with the topic here is a caveat to be followed:

Buyers should always sign a sale agreement carefully and only after due diligence into the property and its titles.

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When it comes to sale and purchase of the immovable property, parties often sign an agreement called as ATS or agreement to sell, prior to signing a sale deed, which sets out the principle terms and condition of the contract. These terms and conditions include various provisions like advance sale consideration, total sale consideration, time period within which contract has to be executed and registered, obligations to be performed by the parties before the transfer takes place, to name a few. It is a crucial document in sale transaction as it enables the process of sales to go through without any hiccups.  Therefore, terms and conditions mentioned in ATS document should be read carefully by both the parties and obeyed throughout the sale process. According to the Transfer of Property Act, 1882, ATS is a document meant for sale of immovable property, but it doesn’t mean that the transfer has taken place between both the parties.  An ATS gives the parties right to compel the other party to implement a sales deed with respect to the property or to recover damages for breach of contract if the sale deed is not executed.

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In some cases, the seller may not sell property to buyer even if ATS has been signed by both the parties, in such cases the purchases can claim over the property and the property will become disputable ane neither the previous buyer nor the existing buyer would be able to enjoy the property.

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As per Indian law, the ATS is a crucial document and its tidbits have been clarified in various ways. In one such case, decided by the Supreme Court, in 2004, the seller A executed an ATS with the plantiff B, for sale of certain immoveable property. On execution of the ATS, A received certain money as part of consideration, but failed to implement the obligations on his part under ATS. He failed to deliver title deeds and to clear the property from disturbances. Consequently B issued legal notices, but all in vain. Soon, after B came to know that A had agreed to enter into sale transaction for the property with another buyer C. Therefore, B filed the suit with the trial court. The main bone of contention was the bona fide buyer was in question, without any notice. The trial court ruled it in favour of A in favour of C because B failed to make balance payment at time of purchase of the property. Also, B had failed to prove C had notice of ATS. Aggrieved by this decision, B appealed the same case in the high court which then reversed the findings of junior court. It concluded that C has known the fact that ATS has been signed by B and  a fresh ATS has been executed between A and C only to defeat claim of B.

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Aggrieved by this decision of high court C and A took help of the Supreme Court. The apex court upheld the decision of high court and ruled in favour of B and concluded that C is not a right purchaser of the property since he had a little knowledge about the previous ATS agreement implemented between A and B. The courts decisions made it clear that the first purchasers would not be entitled to relief if party C had not known about ATS signed between A and B or with the first purchaser.

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Any person not making proper enquiries about this regard prior to agreement of sale is liable for the consequences. In simple words, any person who doesn’t make proper inquiries about such things is deemed to have knowledge about the prior agreement and is liable for any such matters thereof.

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This kind of situation arises often at times of sale and purchase transaction of immovable property when the seller in order to get more price amount for his property, sells it to another buyer, thus ignoring original purchaser, even though he had earlier entered into an agreement with the bonafide buyer. As per general belief the purchaser’s right can be exercised on the execution of sale deed, the right of purchaser is often ignored despite his being being block to the purchase of sold property. ATS is a document to save purchaser or you can call it a temporary seal which can be challenged by the court.

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The purchasers, should in return be aware of such facts and undertake due diligence regarding any prior third party rights with respect to the property created by the seller which may hamper the purchasers right to the property.

Terms and Conditions to dive into

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ATS gives the parties right to compel each other to execute a sales deed in respect to immovable property, or to recover the damages for breach of contract if sales deed hasn’t been executed.

All the terms and condition included in ATS must be understood thoroughly by both the parties and obeyed throughout the sales process

Buyer must have due diligence with respect to third party rights over the property



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