Buying a home is an exciting event in your life; but you have to think of several things before, during, and after finalizing the property. One of the critical things to consider while purchasing flats in Kochi is the home purchase agreement that you will enter into with the seller.
What is a Home Purchase Agreement?
This agreement sets out the terms and conditions of a real estate transaction, and is legally enforceable. It is thus an important part of real estate investment strategies in Kochi. This document is the basis for purchasing a property, and it must be properly drafted so that there is no ambiguity, and the transaction is transparent. These are the 5 clauses that must be included in the contract:
The Indemnity Clause
This clause is a safeguard against loss for both seller and buyer, and this clause should be carefully drafted. Property transactions often involve multiple parties and can give rise to legal complexities. This clause considers all possible outcomes that have the potential for harm and includes them in the agreement like:
- Loss categories
- Liability cap
- Liability extent
The Penalty Clause
This clause helps to hold both buyer and seller accountable. Property transactions involve large sums of money, so there must be some provisions in place in case any party backs out. These are the provisions included usually:
- Agreement termination – a clear penalty structure must be established for both parties in case the transaction is called off after payment of booking amount.
- Timely payments – the agreement must include penalties for buyers who don’t pay on time
- Project delays – if the developer doesn’t stick to the project deadlines, they should be penalized
- Adhering to plans – developers must flow the approved floor plans closely, and any deviations should be penalized
- Quality – the agreement defines penalties in case the construction doesn’t meet quality standards.
3. Right to Call Off Agreement
This clause protects property buyers, in the event they have to withdraw from the transaction, without incurring penalties in the following situations:
- Non-approval of bank loan
- Non-delivery of requisite legal or statutory property records by seller
- Non-provision of legal documentation by the seller while executing the contract
This helps buyers protect themselves against potential financial pressure and ensure secure and smooth transactions.
4. Outstanding Dues
In case the seller of the property had availed of a loan, the buyer must ensure that all outstanding dues with regard to the property will be cleared prior to the registration. This is critical as it can help ensure financial stability for all parties. Paying unpaid dues can help both parties have a cordial relationship and smooth transaction.
5. Unique Clause
Home buyers must include a special provision outlining specific situations and stating the repercussions for the buyer and seller in each situation. It could be something about when the deposit money is due, when each instalment is due, etc.
Conclusion
Creating an equitable and transparent environment that assigns responsibility and protects interests of all parties involved in the transaction is essential for amicable and smooth property dealings.
Kochi is rapidly growing and poised to be a major metropolis in the near future. The infrastructure development activities and boost for business and IT are fuelling this growth, meaning that the future opportunities for development in Kochi are extremely high.
This makes it the right time to invest in real estate in Kochi.
Varma Homes has the ideal solution for you: premium 2 and 3 BHK apartments in the best residential areas in Kochi. As a reputed builder known for transparent dealings, you can be sure that you will have smooth transactions with Varma Homes. Varma Homes has been delivering high quality residential projects to homebuyers in Kerala for years. Check out their buildings in the top residential areas of Kochi.
FAQs
Q1:What is an Indemnity Clause in a home purchase agreement?
The indemnity clause protects both the buyer and seller from potential losses related to property transactions. It specifies the types of losses covered, the extent of liability, and the maximum liability cap.
Q2:What should a good Indemnity Clause cover in a real estate agreement?
A comprehensive indemnity clause covers potential financial losses, details any liability limits, and clearly states the conditions under which indemnities apply.
Q3:What is the purpose of an Indemnity Clause in property agreements?
It serves to legally protect both parties from financial loss due to unforeseen property-related issues, ensuring all potential risks are addressed upfront.
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