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The Earnest Money Agreement is a crucial document in Indian property transactions, serving as a preliminary contract between a buyer and seller. It is typically used when a buyer intends to purchase a property but needs time to arrange financing, conduct due diligence, or await other contingencies before completing the full purchase. The agreement demonstrates the buyer's good faith by providing a deposit (earnest money) and protects both parties during the transaction process. The document includes essential details such as property description, deposit amount, payment terms, conditions for return or forfeiture of the deposit, and timeline for the main transaction. Being governed by Indian contract law, the Earnest Money Agreement must comply with the Indian Contract Act, 1872, and other relevant property laws, making it a legally enforceable document that provides security and clarity in property transactions.

1. Parties: Identifies and provides full details of the buyer and seller, including names, addresses, and contact information

2. Background: Sets out the context of the transaction, including the seller's intention to sell and buyer's intention to purchase the property

3. Definitions: Defines key terms used throughout the agreement, including 'Earnest Money', 'Property', 'Completion Date', etc.

4. Property Details: Brief description of the property being sold, with reference to detailed description in Schedule

5. Earnest Money Amount: Specifies the amount of earnest money to be paid and what percentage it represents of the total purchase price

6. Payment Terms: Details of how and when the earnest money is to be paid, including method of payment and timeline

7. Escrow Arrangements: Specifies how the earnest money will be held and by whom until the transaction is completed

8. Conditions for Return: Circumstances under which the earnest money will be returned to the buyer

9. Conditions for Forfeiture: Circumstances under which the seller may retain the earnest money

10. Time Period: Duration for which the agreement is valid and timeline for completing the main transaction

11. Governing Law: Specifies that the agreement is governed by Indian law and relevant jurisdictional details