Contract Drafting

What is a Sale Deed?

A Sale Deed is a legal document which outlines the terms and conditions between the Seller and the Buyer, also known as the Purchaser of the immovable property.

While preparing the Sale Deed, the language and terms are negotiable by both the parties until it is signed, after which this sale deed becomes a legally binding document on both the parties. Accordingly, creating a comprehensive and effective Sale Deed is very important as it protects all parties involved in the transaction of Purchase of Immovable Property.

Whether RBI Reporting is required for purchase of property in India by NRI?

Reserve Bank of India (RBI) has given a general permission to NRIs to buy any residential or commercial property in India. They need not seek any specific permission from the AD bank nor required to send any communication or intimation in this regard to the RBI.

NRI can buy any number of residential or commercial properties in India. n case, the NRI is unable to come to India, the documents pertaining to the Purchase can be executed by any person, who is given a valid Power of Attorney.

NRI cannot purchase any agricultural land, plantation property or farm house in India. Hence, if a NRI wants to purchase a farmhouse, plantation property or farm house in India, he/ she will have to approach the RBI for a specific permission and the RBI will consider this on a case-to-case basis.

NRIs can make payment for acquisition of Immovable Property (Other than agricultural land/ plantation property / farm house) out of the funds received in India through normal banking channels by way of Inward Remittance from any place outside India or by debit to his NRE / FCNR (B) / NRO Account.

1. Parties of the Sale Deed: A Sale Deed must begin with the details of the parties involved with the transaction. It should bear the name, age and addresses of the parties (Buyer and Seller) involved in the transaction, in order to make it valid. Both parties must sign and execute the deed with bona fide intention.

2. Sales Consideration & Mode of Payment: The consideration or payment made by the Buyer to the Seller in exchange for the property buy out. The mode by which you will be paying the amount must be mentioned along with the consent of the Seller to accept it in the form.

3. Termination: A termination of agreement clause provides details of the circumstances under which parties can end their legal relationship and discontinue the fulfillment of their part of obligations.

4. Description of the Property Purchase: The Sale Deed must have a proper description of the property that the Buyer intends to buy. For instance, if you are buying an Immovable Property, the Sale Deed should have the total plot area, identification number, details of construction, the exact location and surroundings. The property schedule must be incorporated in the Sale Deed to define the accurate location of the property.

5. Passing of the Title: The Sale Deed should mention when the property title shall be passed to the Buyer. The Seller must be given a time limit for the title transfer. Once the title has been transferred, all related rights shall pass onto the Buyer.

6. Possession Delivery: A clause in the Sale Deed must bear the information that the possession of the property shall be transferred to the Buyer by the Seller after completion of the registration process. The Sale Deed should state the actual date of delivery of possession.

7. Indemnity Provision: This clause states that the Seller should clear all statutory charges such as electricity bill, property tax, water bills, maintenance charges and society charges and all other dues prior to the execution of this transaction.

8. Default Clause: Sale Deed should ideally bear a clause that if there is any default on the part of the Buyer or Seller then the defaulting party shall have to pay a penalty to the non-offending party so that the execution of the Sale Deed is not affected.

9. Earnest Money Deposit: When Buyers make an offer, they typically pay an earnest money deposit to demonstrate their seriousness about purchasing the property. The money, which is held in escrow until closing, should be mentioned in the Sale Deed.

What is a Sale Deed?

A Sale Deed is a legal document which outlines the terms and conditions between the buyer, also known as the Purchaser, and the Seller for an Immovable Property.

While preparing the Sale Deed, the language and terms are negotiable by both the parties until it is signed, after which this Sale Agreement becomes a legally binding document on both the parties. Accordingly, creating a comprehensive and effective Sale Deed is very important as it protects all parties involved in the transaction of Sale of Immovable Property.

Repatriation of Sale Proceeds

For repatriation of Sale proceeds from non-agricultural property, the following conditions should be met in case the property is purchased from inward remittance or Foreign Currency.

1. The property was acquired in compliance with FEMA or Foreign Exchange Laws as applicable at the time of purchase.

2. The amount of repatriation cannot exceed

(a) The amount paid for the purchase of property in Foreign Currency received through normal banking channel; or

(b) The amount paid for the purchase of property in Foreign Currency out of fund held in Foreign Currency Non-Resident Account FCNR (B); or

(c) The equivalent of foreign currency held in NRE (Non Resident External) accounts as on date of payment, of the amount paid. Provided the payment for the purchase of the property was made from NRE account.

3. Repatriation of Sale proceeds of more than 2 residential properties is not allowed.

Terms commonly included in a Sale Deed:

1. Parties of the Sale Deed: A Sale Deed must begin with the details of the parties involved with the transaction. It should bear the name, age and addresses of the parties (Buyer and Seller) involved in the transaction, in order to make it valid. Both parties must sign and execute the deed with bona fide intention.
2. Sales Consideration & Mode of Payment: The consideration or payment made by the Buyer to the Seller in exchange for the property Sold out. The mode by which you will be paying the amount must be mentioned along with the consent of the Seller to accept it in the form.
3. Termination: A termination of agreement clause provides details of the circumstances under which parties can end their legal relationship and discontinue the fulfillment of their part of obligations.
4. Description of the Sales Property: The Sales Deed must have a proper description of the property you intend to buy. For instance, if you are buying a property, the Sales Deed should have the total plot area, identification number, details of construction, the exact location and surroundings. The property schedule must be incorporated in the Sale Deed to define the accurate location of the property.
5. Passing of the Title: The Sale Deed should mention when the property title shall be passed to the buyer. The seller must be given a time limit for the title transfer. Once the title has been transferred, all related rights shall pass onto the buyer.
6. Possession Delivery: A clause in the Sale Deed must bear the information that the possession of the property shall be transferred to the Buyer by the Seller after completion of the registration process. The Sale Deed should state the actual date of delivery of possession.
7. Indemnity Provision: This clause states that the Seller should clear all statutory charges such as electricity bill, property tax, water bills, maintenance charges and society charges and all other dues prior to the Sales Deed execution.
8. Default Clause: Sales deed should ideally bear a clause that if there is any default on the part of the Buyer or Seller then the party defaulting shall have to pay a penalty to the non-offending party so that the execution of the Sale Deed is not affected.
9. Earnest Money Deposit: When Buyers make an offer, they typically pay an earnest money deposit to demonstrate their seriousness about purchasing the property. The money, which is held in escrow until closing, should be mentioned in the Sale Deed.

What is a Lease Agreement?

A Lease Agreement is a legal document which outlines the terms and conditions between the property owner, also known as the landlord or lessor, and the lessee or tenant for a commercial and/or residential property.

While preparing the Lease Agreement, the language and terms are negotiable by both the parties until it is signed, after which this Lease Agreement becomes a legally binding document on both the parties. Accordingly, creating a comprehensive and effective lease agreement is very important as it protects all parties involved throughout the lease.

1. Names of the parties to the Lease Agreement.

2. Rent amount and Mode of Rent Payment: The consideration or payment made by the lessee to the lessor in exchange for the property leased out. This is usually on monthly basis.

3. Repairs and Maintenance: Party responsible for repairs and maintenance of the property – lessor or lessee.

4. Utilities: Which utilities are included in the rent, and which utilities the tenant is responsible for.

5. Terms of Use: The purpose for which the property is to be used and terms and conditions regarding the use of property.

6. Deposits: The amount of deposit required (if any), the purpose of each deposit, and conditions for return or adjustment of deposit at the end of the lease period.

7. Insurance: Whether the lessee is required to ensure the property – this is most often used in commercial rental agreements.

8. Duration: Lease duration, its validity and provision for its renewal, along with the terms and conditions for renewal of lease deed.

9. Termination: A termination of agreement clause provides details of the circumstances under which parties can end their legal relationship and discontinue the fulfillment of their part of obligations.

10. Description of the Property: Property details, including area, location, address, structure, furniture and furnishings, if provided are mentioned in the lease deed.

Lease Agreement End Dates

Leases generally have two possible end dates — either fixed term or automatic renewal. Fixed-term end dates provide a specific time frame in which the lease is active. At the end of the lease, both parties must agree to renew and either include an addendum to the lease extending its length or write up a new lease. An automatic renewal continues indefinitely unless either the lessor or the lessee provides notice dissolving the lease.