Skip to main content

Home Seller Risks and Responsibility

 

Home Seller Risks and responsibility

In a sale process, two primary parties are involved: Seller and Buyer. Both these parties have certain rights and responsibilities in order to complete the transaction successfully. The agreement to sell and sale deed is executed on the doctrine of 'Good Faith'. Let's take a look at the key responsibilities and risks of buyers and sellers:

 

Home Sellers Responsibilities

  • Duty of disclosure: The seller is bound to disclose to the buyer any material defect (in the property or in the seller's title thereto), of which the seller is aware and the buyer is not; and which the buyer could not, with ordinary care, discover. There is no duty to disclose such defects of which buyer has actual or constructive notice, but a mistake with respect to a fact material to the property will make the agreement void. Material defect must be such that if the buyer knew it, his decision to purchase the property would have been fundamentally affected. Such defects may also hamper the enjoyment of the property.
  • Responsibility towards buyer's queries: If the buyer raises reasonable questions with respect to the property with or without inspection of the property documents, the seller is bound to answer the same to the best of his knowledge and belief.
  • Agreement to sell: The seller needs to enter into an 'Agreement to Sell' with the buyer when selling a property. The purpose of the 'Agreement to Sell' is to provide a record of the terms agreed upon by both the contracting parties (buyer and seller) for the sale/purchase of a property and to create the right for the buyer to obtain a sale deed for the property purchased. The 'Agreement to Sell' is NOT a document through which the transfer of the title will be carried out. It is a document that precedes a sale deed and thus, does not require to be registered.
  • Looking after property before conveyance: Even after the 'Agreement to Sell' has been entered into with the buyer, the seller is still responsible to take care of the property and cannot be negligent towards the property until the sale deed is executed.
  • Execution of conveyance / sale deed: The sale deed has to be executed by both the seller and the buyer in the presence of separate witness for both parties. Sale deed of immovable property is required to be registered within the time stipulated under the law in the designated office of the Registrar. The registration of sale deed provides clear right to subsequent sale. Therefore upon receiving the total payment from the buyer, the seller must execute proper conveyance of the property and facilitate registration at the stipulated time and place.
  • Possession of the property: Once the formalities from the side of the buyer are completed, it is the duty of the seller to give the buyer possession of the property, notwithstanding a condition in the sale deed that if no possession is given, the buyer may get it himself. Possession has to be given when the property passes to the buyer, which would generally be at the time of the execution of the sale deed; though it may vary depending on terms of the sale deed.
    Normally it is understood that the seller can retain possession till the buyer pays the money. However it has been held that the transferor is not entitled to retain possession even where the purchase money has not been paid fully. If a seller takes a plea that the remaining money has not been paid, the purchaser must show that he is willing to pay the rest of the consideration. The court can ask for proof of this intention on part of the purchaser. 
    If the property is in the possession of the seller, he should vacate it and hand over the vacant possession to the buyer. If the property is in occupation of any other person, then, as far as possible, the seller must get it vacated and give vacant possession to the buyer - more so in case of agriculture land or even where the land is in occupation of a trespasser, unless the buyer has purchased the property with existing encumbrance.
  • Payment of public charges: The seller is bound to pay all public charges (i.e., financial or other liabilities such as tax liabilities to the statutory authorities, government revenue and municipal taxes) and rent accrued and due in respect of the property up to the date of the sale or up to the date of possession, if the parties so agree. The seller is also under obligation to discharge all existing encumbrances on the property or to pay the interest on all such encumbrances due up to the date o sale, except where the property is sold subject to the encumbrances.
  • Delivery of property free from encumbrances: Conveyance of a clear and a good title and delivery of property free from encumbrances is the duty of the seller.

Besides responsibilities, there are various risks associated with a property deal � both for the buyer and the seller. It is advisable to analyze the risks involved before you buy or sell property.

 

Home Sellers Risks

  • Inappropriate valuation of the property: It is quite possible for the seller to wrongly assess the value of his/her property. This value is mainly arrived at by using various sources such as comments from friends, overall property market trends and information from the marketplace. The seller generally wishes to receive the maximum amount through the sale of his/her property, which could become obstacle in achieving a possible sale. The seller should bear in mind that an average buyer is only interested in paying what he/she considers to be reasonable price. Thus, the seller should demand property price according to the market trends.
  • Selling through too many real estate agents: It is advisable to select few agents as the buyers tend to think negatively about a property that is being handled by multiple agents. The seller should consider the agents based on their specialization and market reputation. Further, notify the same property price to all agents to avoid possible manipulation by prospective buyers.
  • Tough access to property: There is also risk of losing potential buyer due to the difficulties posed in the access to the property. A seller should arrange for access to the property to be made as easy as possible.
  • Dubious buyers: There is risk involved in selling the property to a buyer with dubious credentials. It is, therefore, necessary to verify the background and standing of the buyer before getting into a transaction.
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

SBI bonds FAQ

  Maximum retail subscription and over – subscription There is a lot of excitement around these bonds, so I won't be surprised if they get over-subscribed on the first day itself. So, I thought Sameer asked a very good question about over-subscription. Here is that discussion. Here are some other questions that you may find useful. Can I trade the SBI bonds on NSE after it lists? Yes, these can be traded after listing. Where can I get the application forms, and can I buy the bonds online? You can get the application from notified branches, and then fill it up there and submit it. To the best of my knowledge, there is no way to invest in them online, but if anyone knows otherwise then please leave a message, and let us know. Can NRIs apply for these bonds? NRIs can't apply for these bonds as they fall under one of the ineligible categories. Can you take a loan by keeping the SBI bonds as security? The terms of the issue in the prospectus state that the bank shall no...

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...

Guide to pension plans in the form of Insurance

  Pension plans ensure that you are financially secure during your golden years. Take a look at the important aspects that you must keep in mind while opting for one...      Gone are the days when a leading criterion for choosing an employer was the type of pension plan that came with your salary package. Today, more important issues like matching of skill sets to job requirements, scope for personal and financial growth, etc. have come to the forefront. However, this has left individuals with the responsibility of financially planning for their golden years. And it's all for the best as there are a variety of pension plans available in the market to suit different individuals and their specific needs. WHAT ARE PENSION PLANS?     In a pension plan, you are required to pay premiums for a certain number of years and once you reach the retirement age, the insurer returns a lump sum amount that can be then used to purchase an annuity or stream of income for the rest of your life....

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now