AGREEMENT TO SELL — TENANTED COMMERCIAL PROPERTY

Made at __________ on __________

1. The parties

The Seller

• Name: __________
• Address: __________
• PAN: __________
• Selling as: __________
• Income-tax residence: __________

The Buyer

• Name: __________
• Address: __________
• PAN: __________
• Constitution: __________

The Tenant, for identification only and not as a party to this agreement:

• Name: __________

1.1 "the Seller" means every person named above as seller; where there is more than one, their promises under this agreement are joint and several. "the Buyer" means every person or entity named above as buyer. The Seller and the Buyer are together "the parties". The Tenant is not a party and is not bound by this agreement; the Tenant's rights and obligations come from the Lease referred to in Clause 5.

1.2 The Seller confirms that the persons named above as Seller are all of the owners of the Property and that no other person holds any share, right or interest in it. If any other person turns out to have an interest, the Seller will obtain that person's signature on this agreement and on the Sale Deed at the Seller's own cost, failing which the Seller is in default under Clause 11.

2. The Property

2.1 The Seller agrees to sell, and the Buyer agrees to buy, the property described in Schedule 1 ("the Property"), subject to the tenancy described in Schedule 2. Both Schedules are part of this agreement.

2.2 The Property is a __________, admeasuring __________, situated in __________, and is presently let out to the Tenant — it is not vacant and is not being sold as vacant.

2.3 The Sale Deed will be presented for registration at: __________.

2.4 The Seller warrants that the Chandigarh tenure position, where the Property is in Chandigarh, is exactly as stated in Schedule 1. Where the Property is in Chandigarh and Schedule 1 records no Estate Office leasehold particulars, that silence is itself the Seller's warranty that the Property is freehold under a conveyance deed, that no Estate Office No Objection Certificate or unearned increase is payable on this sale, and that no lock-in period restricts it. A Punjab property answers the revenue record particulars in Schedule 1 instead, and the two are not both completed for the same sale.

3. Title

3.1 The Seller derives title as follows:

__________

3.2 The Seller has given the Buyer copies of the documents referred to above and will produce the originals for inspection whenever the Buyer asks, as Section 55(1)(b) of the Transfer of Property Act, 1882 requires. The Buyer has made, or will make, its own enquiry into title before completion, in the same way a buyer would on any purchase of Punjab or Chandigarh property — a search of the jamabandi and mutation record for a Punjab property, or of the Estate Office or conveyance record for a Chandigarh property.

4. What this agreement is, and what it is not

4.1 This is an agreement to sell. It is a contract that a sale of the Property, subject to the Tenancy, shall take place on the terms written here. It does not transfer ownership of the Property to the Buyer. Section 54 of the Transfer of Property Act, 1882 provides that a contract for the sale of immovable property does not, of itself, create any interest in or charge on that property. Ownership passes only when the Sale Deed is executed and registered. Until then the Seller remains the owner and the landlord, and what the Buyer holds is a contractual right to have this agreement performed.

4.2 This agreement is not a power of attorney, not a will and not a possession letter, and is not to be used with any of them as a substitute for a registered Sale Deed. In Suraj Lamp and Industries Pvt Ltd v State of Haryana (2012) 1 SCC 656 the Supreme Court held that a transfer by way of an agreement to sell coupled with a general power of attorney and a will does not convey title. Only a registered Sale Deed does.

5. The existing tenancy — this sale is subject to it

5.1 The Lease. __________, dated __________. Its term: __________.

5.2 Rent and deposit. The current monthly rent is __________, __________. The Seller presently holds a security deposit of __________ from the Tenant.

5.3 Registration of the Lease. __________

5.4 The Seller's representation on the tenancy. __________ This representation must still be true on the date fixed for completion in Clause 10; if it stops being true before then, Clause 8.6 applies.

5.5 This sale is expressly subject to the Tenancy, and the Buyer cannot claim vacant possession. The Buyer has inspected the Lease, or a copy of it, before signing this agreement, buys with full notice of the Tenant's occupation, and shall not be entitled to claim, demand or sue for vacant possession of the Property from the Seller, either at completion or at any time after it. The Seller's obligation at completion is to convey title subject to the Tenancy, not to deliver vacant physical possession, and nothing in this agreement or in the Sale Deed that follows it is to be read as a promise of vacant possession.

5.6 No possession passes to the Buyer under this agreement, and that is deliberate. Unlike a sale of vacant property, the Tenant's physical occupation of the Property continues without interruption throughout — before this agreement, on the date it is signed, and after completion, under the Buyer instead of the Seller. Because the Buyer never takes possession under this agreement, Section 17(1A) of the Registration Act, 1908 and Section 53A of the Transfer of Property Act, 1882 are not engaged by it, and Clause 12 explains what that means for stamping and registration.

5.7 How the Buyer becomes the Tenant's landlord. Section 109 of the Transfer of Property Act, 1882 provides, in substance, that where a lessor transfers the property leased, the transferee steps into the lessor's rights under the lease as against the lessee — and, if the lessee elects, into the lessor's liabilities too — as from the date the transferee becomes the owner, and that this happens without any separate assignment of the Lease and without needing the lessee's consent. That is the legal mechanism by which the Buyer becomes the Tenant's landlord on completion of the Sale Deed: it happens by operation of law, not because the Tenant signs anything. The Tenant's attornment to the Buyer is accordingly not what makes the Buyer the landlord — Clause 6 explains what it is for instead.

6. Completing the tenancy — the companion documents, rent and the deposit

6.1 By the date fixed for completion in Clause 10, the Seller undertakes to procure, at the Seller's own cost, a Tenant Estoppel Certificate signed by the Tenant — a short certificate confirming the lease particulars stated in Schedule 2 are correct, that the Lease is in full force with no unrecorded side letter or oral variation, that rent is paid to the date it states, and that the Tenant has no claim, set-off or dispute against the landlord. This lets the Buyer complete without being met, after the event, by a fact about the tenancy the Seller did not disclose.

6.2 By the same date, the Seller undertakes to facilitate a Tenant Attornment Letter, by which the Tenant acknowledges the Buyer as its landlord from completion and agrees to pay rent to the Buyer from that date. As Clause 5.7 explains, this letter is not what transfers the landlord's rights — Section 109 already does that — but it is the practical record that forecloses a dispute about whether the Tenant recognises the change, and it is what the Buyer will actually hand a bank or a future purchaser as proof that the tenancy is undisputed.

6.3 By the same date, the Seller undertakes to facilitate a Rent Assignment Letter to New Buyer — the Seller's written direction to the Tenant to pay rent falling due from completion to the Buyer instead of the Seller, incorporating the apportionment chosen in Clause 6.5 below for the month in which completion falls.

6.4 By the same date, the Seller undertakes to facilitate a Security Deposit Transfer Letter, recording how the security deposit identified in Clause 5.2 passes from the Seller to the Buyer. __________

6.5 Apportionment of rent for the month of completion. __________

6.6 None of the four documents referred to in Clauses 6.1 to 6.4 is drafted by this agreement — each is its own document, and this agreement only creates the Seller's obligation to procure or facilitate it. If any of them is not ready by the date fixed for completion, the Buyer may either extend that date in writing to allow it to be completed, or treat the Seller as in default under Clause 11, at the Buyer's election; the Buyer is not obliged to complete against a tenancy position that has not been put beyond doubt in this way.

7. Price and payment

7.1 The total price for the Property, sold subject to the Tenancy, ("the Price") is __________. This is the whole consideration; nothing further is payable by the Buyer to the Seller for the Property.

7.2 Earnest money (bayana). The Seller acknowledges __________ from the Buyer as earnest money, by __________. It is part payment of the Price and the Buyer's stake in the bargain.

7.3 Payment schedule. __________

7.4 Balance at completion. __________ of the Price is payable at completion, adjusted as Clause 6.4 provides if the security deposit is being credited rather than paid over separately. The Seller will hand over the original title documents and the Lease file against that payment.

7.5 No cash. Every payment under this agreement will be made by bank transfer, account payee cheque or demand draft into the Seller's own bank account. Section 269SS of the Income-tax Act, 1961 forbids taking Rs 20,000 or more in cash as an advance in relation to the transfer of immovable property, and Section 269ST forbids receiving Rs 2,00,000 or more in cash in respect of a single transaction; in each case the penalty is the entire amount received.

7.6 Tax withholding. Buyer will deduct and deposit tax at source under Section 194-IA of the Income-tax Act, 1961 where the transaction requires it, and will give the Seller Form 16B

7.7 The Seller will give the Buyer a signed receipt for every payment within three days of receiving it.

8. The Seller's representations

The Seller makes the following representations to the Buyer, each of which must still be true on the date fixed for completion.

8.1 The Seller is the absolute and lawful owner of the Property, has a clear and marketable title to it, and has full right, power and authority to sell it subject to the Tenancy and to receive the Price.

8.2 Other than the Tenancy disclosed in Schedule 2, the Property is free from every mortgage, charge, lien, other lease, licence, attachment, injunction, decree or other encumbrance, except anything disclosed to the Buyer in writing before today.

8.3 There is no suit, arbitration or other proceeding pending or, so far as the Seller knows, threatened, that concerns the Property, the Seller's title to it, or the Lease, and no proceeding under the Chandigarh Estate Rules, 2007 or before the Estate Officer, UT Chandigarh affects the Property.

8.4 The Seller has not entered into any other agreement to sell, option or booking in respect of the Property with anybody else, and no person other than the Tenant is in occupation of the Property or has any right to be.

8.5 All property tax, ground rent and other outgoings relating to the Property up to the date of completion are, or will be, paid by the Seller; nothing of that kind will be outstanding against the Property when the Buyer takes over as landlord.

8.6 If any representation in this Clause 8 or in Clause 5.4 turns out to be untrue, or stops being true before completion, the Seller will tell the Buyer at once. The Buyer may then require the Seller to put it right at the Seller's own cost within a reasonable time, treat the Seller as in default under Clause 11, or complete the purchase and recover the resulting loss from the Seller.

9. The Seller's obligations before completion

9.1 Produce for the Buyer's inspection, within fifteen days of today, the original title deeds, the original or a certified copy of the Lease, and every amendment, renewal or side letter to it.

9.2 Keep the Property and the Tenancy in the condition they are in today: not vary the Lease, waive rent, extend the term, or grant the Tenant any new right, without the Buyer's prior written consent.

9.3 Not negotiate with, or enter into any agreement with, any other person in respect of the Property while this agreement subsists.

9.4 Obtain, at the Seller's cost, every permission the sale of the Property subject to the Tenancy requires, including any Estate Office consent applicable under Clause 2.4.

9.5 Attend before the Sub-Registrar named in Clause 2.3, in person or through a properly authorised attorney, on the date fixed for completion, to admit execution and complete registration.

9.6 Deliver at completion every document referred to in Clause 6, the original Lease file, and whatever further paper the Buyer reasonably needs to be recorded as the Tenant's landlord and to have the Property recorded in the Buyer's name.

10. Completion — date and time

10.1 The Seller will execute the Sale Deed in favour of the Buyer, and present it for registration at the office named in Clause 2.3, on or before __________. The Buyer will, on that date, pay the balance under Clause 7.4.

10.2 Time is of the essence of this agreement. The parties have fixed the date in Clause 10.1 deliberately and both intend it to bind; they say so expressly because, without such a statement, the law presumes that time is not of the essence in a contract for the sale of immovable property.

10.3 That date may be extended only by a writing signed by both parties, including under Clause 6.6. Before treating the other side as in default, a party must serve a written notice under Clause 13 calling on the other to perform, and must allow fifteen days from delivery of that notice to do so.

11. Default and remedies

11.1 If the Buyer, having had the benefit of the fifteen-day notice under Clause 10.3, still fails to complete without lawful excuse, the Seller may forfeit the earnest money paid under Clause 7.2 as reasonable pre-estimated compensation for the breach, and may resell the Property. Any forfeiture is subject to Section 74 of the Indian Contract Act, 1872 and to the principle in Kailash Nath Associates v DDA (2015) 4 SCC 250, that what may be retained is reasonable compensation for the loss actually suffered and not a penalty; forfeiture is the Seller's remedy in place of, and not in addition to, a claim for further damages for the same default.

11.2 If the Seller, having had the same notice, fails to complete or fails to procure the documents referred to in Clause 6 without lawful excuse, the Buyer may require the Seller to refund the earnest money together with an equal amount as agreed compensation, or may seek specific performance of this agreement, including performance of the undertakings in Clause 6, under Section 10 of the Specific Relief Act, 1963.

12. Stamping and registration

12.1 This agreement is stamped, and may be registered, as an ordinary agreement to sell in Punjab or in Chandigarh — see the stamping and registration notes carried with this document. Because no possession passes to the Buyer under Clause 5.6, this instrument is not exposed to the higher, possession-linked stamping treatment that a vacant-possession agreement to sell can attract.

12.2 The stamp on this agreement must be bought on or before the date in Clause 10.1, in the name of one of the parties, for the amount the office named in Clause 2.3 confirms.

13. Notices, disputes and general

13.1 A notice under this agreement is validly given if delivered by hand with acknowledgment, or sent by registered or speed post, to the address stated for that party in Clause 1, or such other address as that party notifies in writing.

13.2 Any dispute arising out of this agreement will be subject to: The civil courts at the place where the Property is situated.

13.3 This agreement, with its two Schedules, is the entire agreement between the Seller and the Buyer about the sale of the Property, and supersedes every earlier discussion or writing between them about it. No variation binds unless it is in writing and signed by both parties.

13.4 If any clause of this agreement is held invalid or unenforceable, the rest continues in force. The headings are for convenience only. A clause that depends on a fact stated elsewhere in this agreement — the Second Seller, the Chandigarh tenure particulars, the Lease's registration particulars, or the tenancy compliance position — appears only where that fact is present, and a cross-reference to it is to be read as inapplicable where it does not appear.

SCHEDULE 1 — THE PROPERTY

Description

__________

Type: __________

Area: __________

State or union territory: __________

Sub-Registrar's office having jurisdiction: __________

SCHEDULE 2 — THE TENANCY

Tenant: __________

The Lease: __________, dated __________

Term: __________

Current monthly rent: __________, __________

Security deposit held: __________

Registration of the Lease: __________

Compliance position: __________

SIGNATURES

Signed at __________ on __________ by the parties, each of whom has read and understood this agreement.

SELLER

Signature: ______________________________

Name: __________

PAN: __________

BUYER

Signature: ______________________________

Name: __________

PAN: __________

WITNESS 1 — for a Chandigarh registration this witness must qualify under paragraph 127 of the Punjab Registration Manual and be known to the Sub-Registrar.

Signature: ______________________________

Name: __________

Address: __________

WITNESS 2

Signature: ______________________________

Name: __________

Address: __________

Before you sign: buy the stamp on or before the date above, in the name of one of the parties. Every party and every witness should sign each page, not only this one, and initial every correction. Attach copies of the PAN of both sides, the Seller's title deed, the Lease and its registration receipt if registered, and the latest rent receipt showing the Tenant's payments are current. Keep the stamped original with the Buyer, together with the bank transfer proof for every payment and, once ready, the Tenant Estoppel Certificate, the Tenant Attornment Letter, the Rent Assignment Letter and the Security Deposit Transfer Letter referred to in Clause 6 — those four papers are what a court or a future buyer will look at first to confirm the tenancy was properly handed over.