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Michael (CEO)     19 January 2012

Agreement to sell

Thank you all for taking the time out to answer this question.

Case: I am trying to sell a property and found a buyer. However, he will be able to pay in full in about 4 months from now. He will be giving me 10% as the advance amount. 

The clause that I inserted in the agreement to sell document is as follows:

6. Time shall be essence of this Agreement. It is agreed between the Parties that in case the Second Party fails to pay the balance sale consideration on or before June 30, 2012, the First Party may rescind this Agreement and would also be entitled to forfeit the advance amount of Rs. xxx/- paid by the Second Party under this Agreement, without any protest and demur from Second Party. 

My question: 
If he fails to comply with these terms, what happens afterwards. Do I go to court? Can he fight for this money back? Can the advance amount used in this agreement be forfeit? Is the word "advance amount" correct terminology to use? Also, What is the worse thing that will happen in case the buyer does not pay in the allotted time frame? Can I just take the money and rip up the contract or does he have rights and can argue in court for the money back, despite the clause.


Thank you



Learning

 5 Replies

Dr J C Vashista (Advocate)     19 January 2012

If the buyer do not turn up and make balance of consideration amount, you shall have the option to extend time, and/or forfiet the earnest money paid to you and you are out of your "contractual obligation".

Rohit (Attorney)     19 January 2012

Hi,

The clause is fine however please put 1 more clause that incase the second party is unable to make the consideration amount as per the terms and conditions stipulated in this agreement to sale, first party shall send a notice by giving 15 days time period to make the payment and incase still unable to do so, you can terminate the agreement by forfeting X amount as an adminstration fees.

Rohit

Michael (CEO)     19 January 2012

Hi Rohit and All,

Thanks for your reply.  I read so many cases online in regards to buyers not paying on time and having to wait 3 years for payment.  Is it possible to explain the reason to adding this clause?  Will this safegaurd my investment?

Thank you

Rohit (Attorney)     19 January 2012

The thing is, by putting this one more clause, you will safeguard your interest and no one can say legally that you didnt give any chance to the buyer. So giving 14 days time period will be good for you only in long run.

We can see many things online ( merits/demerits) but legally, you can forfeit some amount and if the buyer is not paying, you have the right to cancel as per the terms and conditions.

Rohit

Michael (CEO)     19 January 2012

Is there any legal right the buyer has after, say 4 months?  I am going to get the full consideration in 5 months.  Is there any law specifically to agreement to sell saying that the buyer has 3 years to meet the consideration?  I do not mind putting more clauses in here to clarify this particular issue.

Thanks for your help


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