As promised in my previous article “buying agriculture land in Telangana”, today I am coming up with important clauses to be included in the sale agreement.
The sale agreement is the most important and initial step in buying agriculture land. We must include all the terms and conditions in the sale agreement which are agreed between seller and buyer. Don’t forget to include the payment terms and the number of days required to complete the transaction. Essentially the sale agreement defines the steps to be completed in order to transfer the land ownership.
Survey agriculture land and pay only for the land within the boundaries
Soon after entering into the sale agreement, conduct land survey to identify the boundaries. The survey is required to calculate the final amount to be paid to the seller. It is always recommended to get the survey done by Government surveyor. Usually, Govt survey takes time, so most of the people go for the private survey. But there is no legal sanctity for private survey and can’t be referenced to resolve the disputes. It only helps you to know the total land in seller’s current possession.
Recently we had bad experience regarding this point where the Seller had 10 Acres in his pattadar passbook but he is having only 9 Acres in his possession. Seller would like to proceed with the sale only if we pay for entire 10 acres otherwise he wants to call off the sale agreement and return the token amount. In such cases, we can’t force the seller to register the land which is in his possession and pay only for 9 acres. It is always good to have this clause in your sale agreement.
That the vendors will make the survey of the land within the boundaries on
which already stone kadies are erected to the four sides of the Schedule
property, if any difference arose in the measurement of the Schedule Property
i.e. after survey if it is found that the land is less then from the mentioned above
in the schedule property that the difference area amount will be reduced from
the sale consideration and the balance will be paid by the vendee before
number of days required to complete the transaction
Always try to mention a higher number of days (90 days) required to complete the transaction in your sale agreement. I am recommending this because we never know that we may have to wait for the agreed terms to be completed. In our case, the seller has agreed to excavate the rocks and transport away from the filed and we had to wait for the completion of Government survey as the land boundaries are not clear and there is a government land beside the property.
Though you mention the higher number of days to complete the transaction in the sales agreement, always try to close the deal as quickly as possible. Because once the sale news got spread over, there will be people who try to persuade the seller with the little higher amount (as they already know your quote) than what you have agreed. If the seller is greedy and not ethical, he may force you to cancel the sale agreement or create fabricated disputes to persuade you to cancel the sale agreement by your self.
So, the second important clause should be the number of days to complete the transaction.
Penalty Clause if Vendor back out from Deal
As explained in the previous point, even after you enter into sale agreement there will be people who try to persuade the seller by offering little higher amount. If the seller is greedy he may want to cancel the sale agreement. In order to discourage the seller from such nonethical practices and to protect the buyer, we should always have a penalty clause. If the seller back out from sale agreement he has to pay 2X or 3X of the token amount to compensate the liquidation losses or other expenses.
It the Vendor commits breach of the agreement,
he shall be liable to refund earnest
money, received by him and a sum of Rs. ………. by way of liquidated damages and other expenses.
Indemnity clause to protect from legal disputes
This is a very important clause to protect the buyer from expenses incurred due to legal disputes or litigations or any claims from legal heirs of the seller. Seller has to bear the expenses and hand over the land for peaceful possession of the buyer.
That the vendor do hereby undertakes to indemnify the purchasers against any
loss damage, costs, and expenses which the purchasers may be put to or sustain
or suffer by a reason any defect in title, litigation or loss of part or whole of the
Right to Cancel the Sale Agreement
Buyer should have right to cancel the sale agreement without any penalty if any disputes found on the title or the documents provided are found to be illegal or seller fails to provide any necessary documents like link documents or if the seller fails to vacate the land by the time of registration.
Whereas the vendee hereby declared that if any litigations or complications are arise from any third party the vendor is whole and sole responsible, if the vendee is not satisfied with the title the vendor shall return all consideration and charges to the vendee.
No dues or Loans on Agriculture Land
Make sure to add the following clause to get protected from any pending dues or loans on the scheduled property.
That the vendor undertakes to pay/clear arrears of land revenue Cess all taxes,
electricity charges and arrears if any water charges and arrears if any and other
sums payable etc., on the schedule property till the date of accomplishment of
sale transaction and execution and registration of sale deed in favour of the
purchasers jointly or severally or their nominees.