11. Drafting Process of Agreement(s)
For civilians Knowledge :
A. Gathering Information from Client(s) :
1. PRIMARY PREPARATION :
While serving consultancy to Client, the Advocate has to get all details from the client(s) to make sure what type of tile Deed and Draft to prepare.
2. HEADING OF TITLE DEED(s) :
To mention the Title Deed, before that the Advocate shall be aware from discussing with client(s), what type of transaction has been decided between the parties, on that basis he /she have to mention Title and from his / her personal experience shall come to know which type of title deed to be drafted.
Mostly these are the Title Deed Names - Memorandum of understanding (M.O.U), Development Agreement, Joint Venture Agreement, Sale Deed, Agreement To Sell, Power Of Attorney, Supplementary Agreement, Agreement To Assign And Transfer (A.T.A.T.), Deed Of Assignment (D.O.A.), Apartment Deed, Deed of Declaration, Possession receipt, Correction Deed, Partition deed, Easement agreement, Cancellation deed, Release deed, Mortgage Deed (and their various types of mortgage deed(s)), Re - conveyance of mortgage deed, Exchange Deed, Service contract, Conveyance deed, Gift Deed, Will , Codicil & Probate, Consent / Confirmation Deed, Lease deed, Leave & licence, Notice & reply to Notice etc. get it confirmed before drafting the deed.
3. PARTIES DETAILS :
In Case of Individual Person then :
Parties Full Name,Age,
Occupation,
Address,
Pan Card No
Adharcard numbers
In Case of Firm then :
Firm’s name ,Registered under which statute
Registered Office Address,
Firms Pancard No
Then Person Details who claims to be owner
4. PROPERTY DETAILS :
Full details of Property in case of Land Property :
City / Village,Survey No / Plot No. / Sector No/ Gat No/
Taluka
District
Municipal Corporation / Council/ Grampanchayat / Cantonment
AREA - …. Hector / …… Ares/ …….Sq.Mtrs/ ……… Sq. Ft.
Full details of Property in case of Unit (Flat / Shop / etc) Property :
City / Village, Survey No / Plot No. / Sector No/ Gat No,
Taluka,
District,
Municipal Corporation / Council/ Grampanchayat / Cantonment,
Building Name,
Phase,
Wing,
Floor,
Unit No.,
Tax Receipt No.,
Electricity Meter No,
Electricity Consumer No.,
Share Certificate No.,
Carpet Area,
Enclosed Balcony,
Attached Terrace,
Parking No (If Parking Available),
Parking – Covered / Open,
Parking Area ….. Sq. Mtr. / Sq. Ft.,
5. CONSIDRATION AMOUNT :
The Deal of the Property is locked at what amount shall be mentioned, with its payment terms, slabs and details of payment such as -
2. Cheque - Date - Amount - Bank Name - Branch - cheque no.
3. DD - Date - Amount - Bank Name - Branch - DD no.
4. Online - Date - Amount - UTR No - Transaction Id. No.
5. RTGS - Date - Amount - Bank Name - Branch - Cheque no.
6. TERMS & CONDITIONS :
Advocate have to understand the transaction between the parties, note down their terms and conditions whatever they have decided - in rough notebook, which will assist you while making fair draft and no need to contact the parties for same thing.
If needed Advocate has to guide them or provide them some instruction in the deal and mentioning some more inputs in terms & conditions, so that while in the transaction, if there is any loopholes which may create litigation in future can be avoided, which must be discussed earlier while getting information from both the parties, so that to reduce the further litigation & its cost between them.
Conveyancing is the vital part, where all fair transparent and clear deeds to be drafted to reduce the litigation part, but it also depends on the party whether really to bind on contract or breach of it which may also be a reason for litigation.
In this, both side parties mutually decide the deal and note down into the agreement point wise each and every activities to be executed to get the transaction successfully done. And the directives - if failure of performance on both or either side how to get redressed.
B. Drafting of Deed / Agreement :
After getting above information’s, the Advocate has to draft the Deed as per appropriate way using legal pattern & terms. Forward the deed draft to the concern parties and gets it checked and reconfirmed the details. Take the Print and get it signed and thumb impression along with witness name, address & sign.C. Annexure Making :
After Deed drafting gets finalized, at earlier stage while discussing the points with parties that time parties usually provide all related documents for our references to mention in the Deed’s. That all related documents photocopy has to be annexed to the deed for references and authenticity of the ownership of owner(s)For E.g.:
Land - 7/12 Extract, Mutation Entry, Zone Certificate, Non Agriculture Order, etc.
Unit(s) - Commencement Certificate, Non Agriculture Order, Floor Plan, RERA Certificate, Specification of material used and amenities provided.
For Professionals
Every document relating to any property is generally drafted with none of the facts omitted or admitted, the legal language should be precise & accurate, Negative stamen should be avoided,
The patterns generally has to be followed in following way to get proper systematic information, earlier history and transaction of property.
1. NAME OF THE DEED :
The Deed should start with its name. It is desirable to give the name so that one may immediately come to the know what type of document it is. The name given to a document will not finally decide whether the document is as described by the name. It is the contents which decide the name and nature of the document. A document is rarely misdescribed unless there is some motive behind it.
2. THE DATE & PLACE OF EXECUTION OF DOCUMENT :
Date - It is common practice to put date on the document & place of execution.
There is no hard and fast rule much less any provision of law as how the document should be dated. In a deed or indenture the date is given first while in a deed poll (a legal deed made and executed by one party only) it is generally given in end.
Date is of great importance from different views, such as priority, registration, limitation etc. If any legal action is required to be taken in respect of a document, in some cases, limitation begins to run from the date of document. (Article 29, 35 108 of the Limitation Act,1963). Section 23 of The Registration Act,1908 provides that subject to the provisions of Section 24, 25 & 26 document other than a “Will” shall not be accepted for registration unless presented for that purpose to the proper officer within 4 months from the date of execution. It it is done the document will be barred for registration and even an admission of execution of other various document by the parties.
Place – The Mentioning of place where the document has been executed is important in cases where the place assumes importance as a matter of evidence for any collateral purpose or as a matter of jurisdiction of any court of law.
3. PARTIES :
Every Document has minimum 2 or more parties such as transferor(s) and Transferee(s) excluding a document which is Deed Poll such as Power of Attorney or A Will. Sometimes other persons are also made parties as confirming one.
A transferor or transferee can either be an individual or a group of individuals or a
joint Hindu Family or a corporate body or Partnership firm or an unincorporated body etc.
After mention date and place of the document, the names of the parties between whom the document is entered into are mentioned. In order to avoid the repetition of the name(s) of the transferor(s) and transferee(s).
4. RECITALS :
After the description of the Parties in the document then the recitals come.Recitals is the preliminary ground or introduction for the execution of the document. This clause provide a brief history of the fact & events leading to the execution of the document.
Recitals are of two types :
A. Narrative Recitals :
Tracing the title of the Owner to establish his right, title to execute the document.
In this Two Types
First – They Trace title of the Transferor with the property he intends to transfer.
Second – The Trace the event subsequent to the transferor acquiring the title or ownership to the property if he has created any interest in the property subsequently.
In this Two Types
First – They Trace title of the Transferor with the property he intends to transfer.
Second – The Trace the event subsequent to the transferor acquiring the title or ownership to the property if he has created any interest in the property subsequently.
B. Introductory Recitals :
Explains the Object or Motive behind executing the document . If any agreement contains any special terms requiring the transferor to do any act such as obtaining any permission from any person or authority to transfer the property for making the title marketable, such permission or consent should also be recited and also the payments made under & since the execution of the agreement should be recited.
IMPORTANCE OF RECITALS :
Recitals clarify the title of the owner and one need not refer to previous documents or papers except for the purpose of verification or investigationof the title.It discloses the motive in executing the document of transfer.
Reproduction from any previous document.
A Recital is alone helpful in ascertaining the intension of the parties and it can be used to interpret the main contents of the documents if there is any ambiguity in them.
In a document particularly when it becomes very old, may have someevidential value.
It may amount to estoppel under Section 115 of The Evidence Act, 1872 as well as section 43 of the Transfer of Property Act, 1882 is also based on thesame principle of estoppel. It cannot be an estoppel against a third party.
The narrative recitals should be as brief but clear to the sequence of events.
In recitals the word “Whereas” should be used in the beginning as and by way of a heading and the recitals should be numbered in figures or letters unless recitals are very few.
The narrative recitals should be as brief but clear to the sequence of events.
In recitals the word “Whereas” should be used in the beginning as and by way of a heading and the recitals should be numbered in figures or letters unless recitals are very few.
The object of the draftsman in framing the recitals must be present the facts in as readable a form as is consistent with accuracy.
The recitals should be as small in number as possible.
While reciting a document the contents of the documents need not be recited unless they have relevance to the operative part.
While reciting a document the contents of the documents need not be recited unless they have relevance to the operative part.
If the transferor is the absolute owner of the property his previous title need not be recited. But if lessee or a mortgagor or a trustee or any other person holding the limited estate or if his right to transfer is derived by inheritance or under will or by virtue of Order of the Court the recitals should commence from the last full owner of the property.
The Object is to bring about the motive leading to the execution of the documents should be kept in mind & irrelevant facts should be avoided.
The Object is to bring about the motive leading to the execution of the documents should be kept in mind & irrelevant facts should be avoided.
It should be such to make the title self-contained.
o If the recitals are clear and the operative part is ambiguous the recitals govern the construction.
o If the recitals are ambiguous & the operative part is clear , the operative part must prevail.
o If both the recitals & the operative part of a deed are clear & unambiguous but they are inconsistent with each other, the operative part is to be preferred.
5. TESTATUM :
The main document begins by the standard expression
“NOW THIS AGREEMENT/ DEED WITNESSETH THAT IN PURSUANCE OF THE PREMISES AND IN CONSIDRATION ”
This expression is known as Testatum.
In case of the agreement where there is no transfer of property is involved like a deed of pledge or hypothecation, the expression used is “NOW IT IS AGREED AND DECALRED BY AND BETWEEN THE PARTIES AS FOLLOWS”.
6. CONSIDERATION:
The Transfer of Property without consideration is wholly void unless the document falls within one or more exceptions as mentioned below:a. Gift out of love & affection
b. Promise to compensate for past services
c. Promise to pay time barred debt.
The transaction without stating the consideration paid or agreed to be paid may become void. The consideration may or may not actually paid on the execution of the deed of conveyance but the document must disclose that the transfer is for consideration.
Section 26 of the Indian Stamp Act provides that consideration and all other facts and circumstances affecting the chargeability of stamp duty be fully set forth.
The stamp duty is payable on market value and not necessarily on the amount of consideration it is charges mostly on higher the value between market value and consideration amount.
7. RECEIPT CLAUSE :
Under consideration clause, receipt clause is also mentioned. It is also the practice to incorporate a separate receipt clause. Details about the payment in which form it has to be paid or been paid.
By this clause receipt of money paid towards the consideration for the transfer by the purchaser to the seller, Mortgagee to mortgagor, Lessee to the lessor is given.
The clause run as –
Rs. ……………../- Paid vide Cheque No……….. dated …………. issued by ……….. Bank, ………………… branch in favour of Assignor(s).
“The Assignor(s) acknowledges the receipt of the aforesaid full paid consideration. “
8. OPERATIVE PART :
After mentioning the consideration & receipt clause, then Operative part comes in serial which usually is as follows “The Vendor doth hereby grant, convey etc. Unto the Purchaser”. In other words the operative part consists of words or expression of the nature of transfer intended to be made.
In case of transfer of property by way of sale the correct expression to be used in the operative part is ‘transfer by way of Sale’.
Section 5 of the Transfer of Property Act uses the word ‘Convey’ by providing that transfer of Property means an act by which one person conveys the property to another person.
The words “Transfer” and “Convey” has same meaning but they are terms of wider connotation. As per Law of Property Act 1925 “Conveyance” to include a mortgage, Charge, Lease, Assent, Vesting declaration, Vesting Instrument, Disclaimer, release and every other assurance of property or of an interest therein by an instrument except will.
The Transfer of Property Act does not use the word “Convey” anywhere except in section 5 & Section 55(1) (d). In section 5 it is used in general sense of ‘ Transfer ’ & not in the restricted sense of ‘Sale’. In section 55(1)(d) the word ‘Conveyance “ clearly indicates sale.
But in general practice also the word ‘Convey’ has acquired the meaning of ‘Sale’ and a deed of conveyance generally means a deed of sale.
9. DESCRIPTION OF PROPERTY :
After Operative Part, the Description of Property intended to be transferred and which is called “Parcel”. The word parcel signifies the description of the Property.
The practice of giving the full description of the property is also not desirable as the reading of the document becomes it is confusing. It would be proper to mention only the short summary of the property such as Village, Survey No. etc. Such as “All that Piece and parcel of land situated at Village ……. Bearing Survey No…… and more particularly described in schedule hereunder.
The usual phraseology used is as follows :
“All that piece or parcel of the land or ground with the messuages hereditaments and premises
10. ALL ESTATE CLAUSE :
The words representing all the appurtenances to the property intended to be transferred such as building or buildings, structures, and all other things standing on the property is called all estate clause and it is so called because it purports to convey all the estate, right, title interest, claim & demand of all the conveying parties in the premises.Land Property mentioned in Schedule –
SCHEDULE -DESCRIPTION OF THE SAID LAND
All that piece and parcel of land admeasuring about ….. R out of Gat No. ……, at Village ……, Taluka ………, District ……., within the limits of ………….. Municipal Corporation/ Council / Nagar Panchayat/ Parishad / Cantonment / Gram Panchayat and which is bounded as follows :
On towards East : By
On towards South : By
On towards West : By
On towards North : By
Together with easement, appurtenances, ingress, egress, pathways, accesses, things attached thereon, other ancillary and incidental rights thereto.
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Together with easement, appurtenances, ingress, egress, pathways, accesses, things attached thereon, other ancillary and incidental rights thereto in the amenities.
11. HABENDUM :
This portion of deed which defines the estate which the purchaser takes such as an absolute owner or otherwise.
Habendum clause runs as – “To have and to Hold all and singular the land and premises hereby conveyed or expressed or intended so to be with the rights, members and appurtenances unto and to the use of the purchaser (& in case there are more than one purchaser then the words added are “as tenants in common “ or “joint tenants” as the case may be ) for every and absolutely” .
12. EXCEPTIONS & RESERVATIONS :
If anything is to be excluded or excepted from the land & premises granted, or if the grantor or transferor wants to reserve to himself some rights in respect of the land & premises then this clause is added.
Exception must be a part of the thing granted, means something excepted out of the thing granted & must, therefore, be in existence at the time of granting. Such as a house or some part of land comprised of property granted.
Reservation must be of some new thing arising out of the thing granted, means it is a grant of a new thing out of the thing granted. Some right created for the first time over or in connection with the thing granted. Such as a right of way on land.
13. TERMS & CONDITIONS :
Terms and conditions subject to which the property is transferred. Generally the clause is regarding the condition of payments of liabilities such as Taxes, any interest, penalties, billings, Duties, fees levied on the said property shall be paid by whom ( Seller / purchaser) at which stage.
It is mentioned as “ subject to payment of all rents, rates, assessments, taxes and duties now chargeable or hereafter, to become payable upon the same to the Municipal Corporation/ Council/ Cantonment/ Nagar Parishad / Grampanchayat or to the Government or any other public body or local authority in respect thereof”.
14. COVENANTS :
Covenant is an agreement by deed. When the covenant is used the word agree or promise is redundant is used is Covenant is an agreement by deed.Concern to Transfer by way of Sale or Mortgage by the full Owner of the Property there are four Covenant for Title :
1. Covenants for Title,
2. Covenants against Encumbrances,
3. Covenant for Peaceful Possession,
4. Covenant for further Assurance.
As we under Transfer of Property Act refers to only one covenant i.e.Covenant for Title.
15. TESTIMONIUM :
In Testimonium the additional provisions may be –1. A covenant to produce document.
2. If the purchase price is not fully paid, then a covenant by the purchaser to pay the balance price in the manner agreed upon.
3. If there are any special terms or conditions they can also appear after the covenants.
Testimonium clause as follows: When both parties (Vendor & Purchase)
“In witness whereof the parties have put their respective thumb & or signature on the day and year first hereinabove written. “
16. SCHEDULE OF PROPERTY :
The schedule containing the full description of the property is mentioned. Generally in the previous document references are preferred.17. SIGNATURE OR EXECUTION :
Each & every document has to be executed by the parties. The signature can be jotted down at the end of the document. If parties are firm(s) then the firm’s name has to be mentioned and then the name of the Individual owner and his status in the said firm under what authority he is signing the Agreement/ Instrument/ Document.
INDIVIDUAL |
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(Signature
& Left Thumb Impressed)
MR.
ALBERT ROBERT D’SOZA |
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FIRMS |
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PROPRIETOR |
PARTNERSHIP |
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(Signature & Left Thumb
Impressed)
M/s. Gandhi Enterprises Through its Proprietor Mr. X. Y. Z |
(Signature & Left Thumb
Impressed)
M/s. Gandhi Enterprises Through its Partner(s) Mr. X. Y. Z |
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HINDU UNDIVIDED FAMILY |
ASSOCIATION OF PERSON |
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(Signature & Left Thumb
Impressed)
Gandhi & Sons H.U.F. Through its Karta Mr. X. Y. Z |
(Signature & Left Thumb
Impressed)
M/s. Gandhi Enterprises Through its Member(s) Mr. X. Y. Z |
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COMPANY |
TRUST |
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(Signature & Left Thumb
Impressed)
Gandhi Pvt. Ltd. Through its Director(s) Mr. X. Y. Z |
(Signature & Left Thumb
Impressed)
Gandhi Pvt. Ltd. Through its Trustee(s) /
Beneficiary(s) Mr. X. Y. Z |
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Generally the executant has to execute the document before the witnesses to avoid the future disputes or allegations.
As per Transfer of Property Act amended clause in 1926 & Indian Succession Act, 1925it is not necessary to witnesses to present at the time of executing the document by the executant.
Thumb Impression is the mark of the left thumb with ink, there is no rule as such only left but in practice it is preferred left hand as it is used less in activities where the finger prints are clear as compared to right thumb. If left thumb is defective or injured then right thumb is impressed.
18. ATTESTATION :
Under Section 3 of The Transfer of Property Act – Attestation in relation to an instrument to mean attestation by two or more witnesses. Some documents has been exempted from attesting the witnesses under the Act but still in general practice mostly attestation of witness is taken.
Generally in practice the attestation of witnesses should be present while executant executing the document to avoid the future disputes or allegations.
Attestation must be made after the party to the document has put his signature; attestation before such execution by the party is no attestation at all.
A registration officer cannot be regarded as an attesting witness.
The advocate or solicitor will not be considered as a witness. If an advocate or solicitor wants to attest and also to make endorsement to the effect that he has explained or interpreted the document to the executant or to identify his signature or otherwise. He should sign only in those capacities separately.
