Sale Agreement with Builder

Respected Lawyers,

I have 50 Cents of residential land in Chennai. One of the builders asking me to provide my land for his promoational purpose (to construct a multistory apartment) with the land available very near to my property. Basically i am not interested to go with him Joint Venture development agreement. So i asked him take my property with let  out basis. For let purpose i quoted some xX amount / cent and he is agree for that. At the same time, builder is position now to settle the entire amount at one shot and get the sale deed for this property. He is planning to give the entire amount for my property as quoted in 3 installments (at the time sale agreement, after 6 months & after 6 months) by issuing post dated cheques. I agree with the payments schedule also and i said part by part you can get the sale deed of my property. But he is willing to take this part by part sale deed based on the installments. He wants me to execute a General Irrevockable power of autorney / Sale deed agreement on his name for his promotion activities. Also he planned to offer his other property (already constructed flats which is available a kilometer distance for my property) to me as a security.

I had the follwoing doubts. Plese suggest me for my favour.

1. Shall i go ahead with the builder for Sale agreement? If so could you plese suggest what are all the points to be important and updated in this agreement.

2. Shall i go ahead with the collateral agreement? if so could please differentiate the different between sale agreement and collateral agreement?

3. Shall i sign the possession receipt for the 1st installment payment?

4. If he is ok to offer his other property as security, what needs to be done on this security to own myself if there is any breach of sale / collateral agreement? Do i need to get sale deed / power of autorny (Irrevockable / Revockable) on this security property?

5. For example a scenario, If the 1st installment paid properly by the builder, for the 2nd payment, he is delaying or not performing as per the agreement, Shall i liquidate the security property? If so what needs to be done?

6. For the above scenario, shall i recover my own land by executing sale deed to builder for the amount i received in the 1st installment (equivalent area of my property)?

Could you please suggest me to go further? Thanks in advance.

Thanks.... Nithish

Yes you can go for agreement of sale.  You put a condition in the AOS that if builder failed to pay the entire amount within the agreed period ( mention the payment details) the AOS stands cancelled and the amount given by buidler to the owner wont be refunded.

Dont sign the possesson receipt till the full payment is made.

If he failed to pay the installments you will have to file a suit to liquidate the property which would be given as security.

You can exeucte the sale deed of the land for the amount you received in the Ist instalment.

Thank you sir for your valuable reply and proper suggesion.

Still i have some questions to clarify. Could you pleas help me on this also.

Answer provided above: If he failed to pay the installments you will have to file a suit to liquidate the property which would be given as security.

1. I need to pay some fees to file a suite right? If so what percentage of amount needs to be paid to file a suite to liquidate the property?

2. Can the builder start construction only with our Sale Agreement? or Any other documents I need to provide / support / sign going forward if the builder asks for his construction purpose. Is there any document i should not sign at any cost going forward?

3. If the builder asked us to execute GPA (General Power of Autorney) on his name to do the various activities (getting plan approval, to apply for necessary approvals - Electiricity, Sewerage, etc) to promote my property, then what needs to be done. Please suggest on this.

4. I feel this sale agreement which we are going to execute with the builder should not be registered. It can be prepared in Rs:20 stamp paper. Is It correct?

5. Is there any time duration for this sale agreement? People are saying the sale agreement should be for 3 months or 6 months only not more than that?

6. Builder is providing a MOA (Memorandum of Agreement), in which he is referring his property that would be giving to us as security purpose not in the sale agreement. Is it correct? OR Do we need to ask him to put this security property details also in Sale Agreement?

7. I feel there is a big fla / dispute / wrong things in the below mentioned clause. please explain me on this.

The said Schedule B properties (builder's property given to me as security) shall be a continuing security till the entire cheque amount which is payable under the first instalment is paid. On receipt of the payment based on the first instalment on the due dates, then the party of the second part (Me) shall release their charge over the said Schedule B  (builder's property given to me as security) properties on the said date in favour of the party of the first part (builder) and thereafter the party of the second part (Me) have no right to enforce as against the Schedule B (builder's property given to me as security) properties notwithstanding the fact that subsequent instalments are payable which are adequately secured by other properties by virtue of  separate agreements.

Thanks a lot for your valuable reply on this. It was very helpful to me till this time. Please guide me going forward also in this matter.

Thanks .... Nithish