An agreement to sell starts off with negotiations on the price, terms and conditions of sale. Once agreed on by buyer and seller, the ‘sale agreement’ is drawn up. The agreement terms are mainly defined by the type of agreement to sell that is needed (e.g. a standard buy and sell agreement between company owners, sale of shares agreement or any other transfer of property/asset agreement). It then includes other buyer and seller terms, agreed-on price, conditions of sale etc.
Legally-binding contract between buyer and seller before a sale:
The agreement to sell is a legally-binding contract – signed off – between the buyer and seller parties. The terms of the agreement do not come into effect until the sale takes place. However, the shares, interests, assets or property cannot change hands under any other terms, or between any other parties than those contracted, as seller and buyer, by the ‘agreement to sell’ document.
The sale agreement precedes the issuing of a sale deed to the new owner, on transference of the monies to be paid, as per the terms of the agreement. This protects both buyer and seller, as the ‘sale’ can be contested in terms of the agreement if either party does not honour their obligations. The obligations on the part of the buyer include full payment. The obligations on the part of the seller include any required disclosures and an agreement to total price paid at issuance of the sale deed.
Sale agreement to Sale: This happens…
- On payment of 100% of the agreed-on payment due, and
- When the sale deed is issued.
The issuance of the sale deed is a formal, legally binding transfer of ownership that states that the terms of the sale agreement have all been met, and the agreement to sell is now a sale.
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