Top 10 Clauses Every Buyer Must Read in a Property Purchase Agreement

Buying a property isn’t just an emotional decision — it’s also a legal and financial commitment that can impact you for years. Most homebuyers focus on location, price and amenities, but the real protection of your rights lies inside the property purchase agreement. This document governs what you are entitled to receive, what the seller or builder is obligated to deliver, and how disputes will be handled if something goes wrong. Before signing, it’s essential to read key clauses carefully instead of relying only on verbal assurances. Understanding these clauses helps you avoid hidden charges, delays in possession, legal complications, and ownership issues later.

Below are the top 10 clauses every buyer must read in a property purchase agreement to make an informed and safe decision.

This clause clearly describes what exactly you are buying. It should mention the flat or plot number, total area (carpet/super built-up), parking details, boundaries, and whether the property is freehold or leasehold. A precise property description avoids confusion about the unit purchased and safeguards you from future disputes regarding size, layout, or possession of the wrong unit. Many buyers skip this section assuming it is routine, but this is one of the strongest identifiers of your ownership.

This clause explains how much you are paying and in what manner. It should mention the total price, booking amount, instalments, milestone-based payments, and late payment charges, if any. Well-written sale consideration terms prevent last-minute surprises such as extra charges, hidden fees, or sudden price escalations. It also clarifies whether taxes, maintenance deposits, and other statutory charges are included or payable separately, ensuring full financial clarity before signing.

Every buyer wants to know when they will actually get the keys. The possession date clause specifies the expected completion and handover date. It should also clearly state what happens if possession is delayed — compensation, penalty interest, or cancellation rights. This protects you from indefinite delays where you keep paying rent and EMIs while waiting. A strong possession clause places responsibility on the builder or seller to honour the committed timeline.

Not every deal goes smoothly. This clause gives you the right to cancel the agreement under justified situations — such as legal issues with title, major deviation from agreed specifications, or failure to obtain home loan due to seller-related issues. It prevents you from losing your booking amount unfairly and offers a structured exit route. A well-defined termination clause ensures that both parties understand under what conditions the agreement can legally end.

Before buying property, you must be sure that it is legally clean. The encumbrance clause or title assurance section confirms that the property is free from mortgages, legal disputes, unpaid dues, or third-party claims. This protects you from inheriting someone else’s legal problems after purchase. Without this clause, buyers may end up fighting long court battles due to old liabilities attached to the property.

The indemnity clause protects you if problems arise after purchase because of past actions of the seller or builder. If someone challenges the title, claims ownership, or disputes the sale, the seller must compensate you for losses. This clause ensures you are not left alone to handle legal consequences of something you did not cause. It is particularly crucial in resale properties or inherited assets.

Life is unpredictable — pandemics, natural disasters, government bans, or other uncontrollable events may delay construction or possession. The force majeure clause explains how such circumstances will be handled and which obligations will be relaxed temporarily. It balances protection for both buyer and seller by recognising events beyond human control while still safeguarding contractual rights as far as possible.

This clause defines what happens if either party fails to meet obligations. The default and penalty clause may apply to delayed payment by the buyer or construction delay by the developer. It mentions penalties, interest charges, refunds, or cancellation rights. Clear default terms prevent exploitation and ensure that neither party misuses delay or negligence to harm the other.

In case of disagreement, this clause explains how disputes will be resolved. A strong dispute resolution clause may specify mediation, arbitration, or court proceedings, along with jurisdiction. This avoids confusion about where to file a case and helps resolve conflicts faster and more affordably. It is especially important in interstate or multi-party real estate transactions.

Property purchase is not complete until it is legally registered. This clause clarifies who will bear expenses like stamp duty, registration fees, transfer charges, and documentation costs. Without clarity, buyers often end up paying unexpected large sums at the final stage. This clause ensures fair allocation of charges and transparency in closing the deal.

A property purchase is not just an emotional decision — it is a serious legal commitment. Reading the fine print in a property sale agreement or purchase agreement ensures that your money, rights, and ownership are fully protected. The clauses listed above clarify possession, payment, title, compensation, dispute handling, and risk sharing between buyer and seller. Understanding them gives you confidence, prevents legal trouble, and helps you complete your home-buying journey smoothly and safely.