What is an Agreement to Sell?

The section 4(3) of the sale of Goods Act defines it as, “where the transfer of the property in the
goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the
contract is called an agreement to sell.”

An agreement of sale constitutes the terms and conditions of sale of a property by the seller to
the buyer. These terms and conditions include the amount at which it is to be sold and the future
date of full payment. Being an important document in the sale transaction, it enables the process
of sale to go through without any hurdles. All the terms and conditions included in the agreement
of sale must be understood thoroughly by both the parties and obeyed throughout the sale
process till the time the sale deed is made. Agreement of sale is the base document on which the
sale deed is drafted.

The matters included in the agreement to sell are:

1. Purchase/sales proposal or agreement.

2. Mode of Payment (entire consideration amount).
3. Details and description of the property and its fixtures.
4. Amount and payment mode for the earnest money.
5. Details of Refund of earnest money in case of termination.
6. Provision for delivery of Documents on successful payment.
7. Provisions relating to Tax-related certificates.
8. Consideration memo/receipt for earnest money.

Thus, an agreement to sell is merely an arrangement that shows willingness of the parties to enter
into the transaction of buying or selling. However, it cannot be concluded as a sale deed because
no direct right or interest is created.

EXCHANGE DEED

As per provisions contains in Section 118 of Transfer of Property Act, when two persons
mutually transfer the ownership of one thing for the ownership of another, neither thing or both
the things being money only, such a transaction is called an exchange. This definition is not
restricted to immovable property only.

Thus, exchange implies, when two separate property owners mutually agreeto transfer the
ownership rights by exchanging the property. Further, exchange also mean exchange of lands
and barter of goods too.
If one of the items that has been transferred in money, then it is not an exchange but sale,
because sale should always be for a price. But money in one form can be exchanged for money
in another.

In case of exchange, the transfer of ownership of one thing is not the price paid or promised to
pay, but something else in lieu. For example: if a person transfers a land valued Rs.20,00,000/- to
another and in return, the other person transfers a shop valued Rs.18,00,000/- and pay
Rs.2,00,000/- in cash, it is an exchange.

This type of exchange transactions can be reduced into writing in the form of Property Exchange
Deed. This Exchange Deed document for transfer of property rights need to be registered with
the jurisdictional sub Registrar’s Office by paying prescribed stamp duty. While drafting the
exchange deed and its registration including the document execution, its presentation and
admission utmost care need to be taken, since this is a complex process.

What is a leave and license agreement?

Leave and License agreement is a formal binding contract which lays down the length and scope
of the License along with other terms of License. It is usually signed for a period of 11 months
and can be renewed once the term expires depending upon the mutual understanding of the
Licensor and Licensee.

A license is defined in section 52 of Indian Easements act 1882 where it states that the License is
granted for the specified purpose and duration and anything done which is not mentioned in the
agreement is termed as unlawful.

Elements of an ideal Leave and License Agreement:

a) Names and addresses of the parties – Full names and addresses of the parties is required to
be mentioned in the agreement. Both current and permanent address details of the tenant are
required.

b) Rent and Tenure of the agreement – The rent to be paid by the Licensee to the Licensor
along with the payment date and penalty details are mentioned under separate heads. The
duration of the License agreement is usually for 11 months but it can be renewed after the expiry
of the mentioned period.

c) Yearly increase in rent – There is usually a clause in the License agreement regarding the
yearly increase in the rent. It is usually between 5 to 10 % but it may vary depending on the
mutual understanding between the Licensor and Licensee.

d) Security amount– The Licensor usually requires the Licensee to pay few months’ security in
advance. If the security amount is going to be deducted due to non-payment of rent, then the
agreement must have a room for such provision.
e) Carrying out repairs and maintenance in the premises – The premises let out on License
have a clause regarding the permission to carry out any repairs or alteration. The costs of such
repairs can either be adjusted from the security deposit or reimbursed from the Licensee,
depending upon the understanding between the Licensor and Licensee.

Apart from that, the Licensor may also put a clause stating that the premises are to be maintained
in a proper manner and penalize the Licensee if any furnishing or fixture is found out of order.
The penalty could be credited from the security or it could be over and above the security
amount depending on the loss incurred.