Agreement for Sale or Final Payment: What Constitutes Property Transfer?

Know Your Rights: When a Sale Agreement is Breached

The process of selling a property is long and complicated, and many things can go wrong. One of them is when there is a breach of the sale agreement and either the buyer or seller backs out without warning. Should such a situation arise, it is important to be aware of your rights and the legal actions that you can take.

Read on for our expert tips on how to turn the situation to your advantage. 

Common legal remedies for both sellers and buyers

When there is a breach of contract, the aggrieved party can immediately take a few legal steps to mitigate the impact.

  • The sale agreement can be cancelled by following the cancellation terms stipulated in the agreement
  • The defaulting party can be taken to court, and the aggrieved party can file a suit for the performance of the contract 
  • The affected party can also file a suit for damages and ask the defaulter to pay suitable compensation

Buyers should invest quality time in drawing up well-drafted, balanced sale agreements as the speedy resolution of issues in the process of the sale will depend on them. A sale agreement must have certain generic clauses that protect both the buyer as well as the seller and outline compensatory methods when there is a breach. 

Ideally, in the case of a buyer, the agreement should specify that they have the right to cancel the agreement if 

  • There is a legal issue with the property
  • The seller has provided illegal documents
  • The buyer’s home loan is rejected 
  • In the case of a resale property, the previous owners do not vacate on time

Crucial clauses that a sale agreement must have

Indemnity clause

Including an indemnity clause is also crucial to protect buyers from any legal disputes and give them access to adequate compensation. An indemnity clause is mostly included when there is a resale property involved. The clause specifies that the seller must complete all the necessary paperwork, pay off home loans and taxes, and utilities like electricity, maintenance, and water bills. 

Property layout and size

Every property is built keeping structural norms and laws in mind. The agreement must have a clause recalling these legal norms and specifying that the builder is not allowed to change the property’s layout or size as per individual preferences. 

Preferential location charges 

Buyers are willing to fork out preferential location charges (PLC) to secure a good view or a home that has plenty of natural light. The agreement must lay out these extra charges and specify that the builder will reserve a particular unit that the buyer prefers. 


The standard clause says that the seller will forfeit the advance deposit paid by the buyer if they back out of the deal. However, in many cases, the deposit amount is not enough to cover the losses that the buyer suffers on many levels. The buyer must then take precautions to insert a clause that specifies a certain amount as adequate compensation that the seller is liable to pay.

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