What is sale deed? How is it different from sale agreement?

What is a sale deed?

A sale deed is a legal document that proves that a property has been transferred from the seller to the buyer. A sale deed acts as the main legal document, confirming the sale and the transfer of ownership of property from the seller to the buyer. The registration of a sale deed concludes the property purchase process.

See also: All about property registration laws in India

Details in sale deed 

A sale deed usually consists of the following information:

1. Details of the buyers and sellers (name, age and addresses).
2. Property description (total area, details of construction, the exact address and surroundings).
3. Sale amount including advance payment paid, as well as the mode of payment.
4. Time frame in which the property title will be actually passed on to the buyer.
5. Actual date of delivery of possession.
6. Indemnity clause (The seller promises to pay the buyer for any damages in case of disputes with regard to the ownership, resulting in monetary losses to the buyer).

See also: All about e stamping

Sale deed registration

According to the Indian Registration Act, 1908, any agreement for transfer of any interest in an immovable property of value more than Rs 100, is required to be registered.  So, if you have purchased any property under any agreement for sale, without it being followed by a proper sale deed, you do not get any right or interest in the property purported to be transferred under the agreement of sale.

This absolute rule is subject to an exception provided under Section 53A of the Transfer of Property Act. Section 53A provides that where the buyer has obtained possession of the property that is subject matter of the transfer, while fully complying with his part of the obligation under the agreement, the seller shall not be entitled to disturb the possession so granted to the buyer. It may be noted that Section 53A provides a shield to the proposed transferee against the transferor and debars the transferor from disturbing possession of the transferee, but it does not cure the title of the buyer to the property. The ownership of the property still remains with the seller.

So, in the cases where you have purchased any property under a sales agreement and got possession, the title of the property still remains with the developer, unless a sale deed subsequently has been executed and registered under the Indian Registration Act. Thus, it becomes clear that a title in an immovable property can only be transferred by a sale deed. In the absence of a duly stamped and registered sale deed, no right, title or interest in an immovable property, accrue to the buyer of the property.

Can a sale deed be cancelled?

A sale deed can be cancellation if the seller and the buyer have an agreement to this effect. Sections 31 to 33 of the Specific Relief Act, 1963, specify the conditions under which a sale deed can be cancelled. These conditions include:

• The deed should have been registered under the Indian Registration Act, 1908.
• The individual feels that the deed is voidable or has a doubt that such a deed will cause him injury, if left outstanding.

What is sale agreement?

Sale agreement is signed between the buyer and the seller once they reach a verbal agreement about property sale. A sale agreement mentions the terms, conditions and other crucial aspects of the future sale.

The Transfer of Property Act, 1882, which regulates matters dealing with the sale and transfer of house property, defines the contract for sale or an agreement for sale as under:

“A contract for the sale of immovable property, is a contract that a sale of such property shall take place on the terms settled between the parties” – Section 54. Section 54 further provides that “It does not, of itself, create any interest in or charge on such property.”

All sale agreements have to be documented and registered to have a legal validity.  Passing its order the Balram Singh versus Kelo Devi case on September 23, 2022, the Supreme Court has ruled that an unregistered agreement to sell is not admissible as evidence in a permanent injunction suit.

Agreement for sale versus sale deed

Sale deed	Agreement for sale
Sale deed is an actual transfer of property ownership	Sale agreement is a promise of a future transfer of property ownership
Sale deed includes information about both the parties (buyer & seller), their ages, addresses and other details	Sale agreement specifies the terms and conditions under which the property will be transferred
Sale deed gives the rights and interests in the property to the new owner.	Sale agreement gives a right for the purchaser to purchase the property in question on the satisfaction of certain conditions.
Buyer has to pay stamp duty and registration fee to execute a sale deed	Sale agreement precedes sale deed, signed and executed by the seller and buyer on a non-judicial stamp paper.

See also: All about carpet area

See also: All about mutation of property. Also read: Can stamp duty be refunded when a property deal is cancelled

Can a sale agreement be cancelled?

Yes, a sale agreement can be cancelled too, if one party has failed to honour the commitments made in the sale agreement. If the erring party is the seller, the buyer can demand cancellation and seek damages. Similarly, if the buyer flouts the rules mentioned in the sale agreement, the seller can seek cancellation of the agreement and demand damages.

Sale deed format

This DEED OF SALE is made and executed on this _______ day of ______________,

BETWEEN

Sri ____________________, son/wife/daughter of Sri/Late _______________, aged about _______ years, holding PAN _____________, by Caste ________, by Nationality Indian, residing at _____________________________________________,                                                                                                     hereinafter called the “SELLER” (which expression shall mean and include his legal heirs, successors, successors-in-interest, executors, administrators, legal representatives and assigns) of the ONE PART.

AND

Sri __________________________________, son of  _______________________,                                aged about _______ years, by Caste __________, by Nationality Indian,  holding PAN _____________, residing at _____________________________________________,                                                                                                        hereinafter called the “PURCHASER” (which expression shall mean and include his legal heirs, successors, successors-in-interest, executors, administrators, legal representatives and assigns) of the  OTHER PART.

The  SELLER and the PURCHASER are hereinafter referred collectively as parties and individually as party.

WHEREAS the SELLER is the absolute owner, in possession and enjoyment of the piece and parcel of ______ land measuring about ____ decimal, lying and situated in R.S. Plot Number ____, corresponding L.R. Plot Number ____, Recorded in R.S. Khatian Number _____ and L.R. Khatian Number ____, at Mouza _____, J.L. Number _____, Touzi Number ______, under Police Station __________, Registration Sub-District _________, in the district of ________________, more fully and particularly described in the schedule here under written and hereafter referred to as the “SCHEDULE PROPERTY”.

ANDWHEREAS the SCHEDULE PROPERTY was the self acquired property of  __________, deceased father of the SELLER and he purchased the same from Sri __________________, son of _____________ of _________________________________, by virtue of a Sale Deed dated ________________, registered in the office of the _____________________________, in Book 1,  Volume No. ____, Pages ____ to _____, Being Number ___________ for the Year _____.

ANDWHEREAS the said _________ died in-estate on _________ leaving behind his only son namely, Sri _______________, the SELLER herein, as the only legal heir.

ANDWHEREAS the SELLER herein, as the only legal heirs of the deceased ____________, have become the absolute owner of the SCHEDULE PROPERTY since the death of his father _____________ on and he has been enjoying the same with absolute right, title and interest sice then and he has clear and marketable title to the SCHEDULE PROPERTY.

ANDWHEREAS the SELLER being in need of funds to meet his personal commitments and family expenses have decided to sell the SCHEDULE PROPERTY and the PURCHASER has agreed to purchase the same.

ANDWHEREAS the SELLER agreed to sell, convey and transfer the SCHEDULE PROPERTY to the PURCHASER for a total consideration of  Rs._________ (Rupees                        ___________________________) only and the PURCHASER herein agreed to purchase the same for the aforesaid consideration and to that effect the parties entered into an agreement on the _________________ .

NOW THIS DEED OF SALE WITNESSETH:

1. THAT in pursuance of the aforesaid agreement and in consideration of a sum of Rs._________ (Rupees ___________________________) only received by the SELLER in cash/cheque/bankdraft and upon receipt of the said entire consideration of Rs._________ (Rupees                        ___________________________) only (the SELLER doth hereby admit, acknowledge, acquit, release and discharge the PURCHASER from making further payment thereof) the SELLER doth hereby sells, conveys, transfers, and assigns unto and to the use of the PURCHASER the SCHEDULE PROPERTY together with the water ways, easements, advantages and appurtenances, and all estate, rights, title and interest of the SELLER to and upon the SCHEDULE PROPERTY TO HAVE AND TO HOLD the SCHEDULE PROPERTY hereby conveyed unto the PURCHASER absolutely and forever.
2. THAT THE SELLER DOTH HEREBY COVENANT WITH THE PURCHASER AS FOLLOWS:
   1. That the SCHEDULE PROPERTY shall be quietly and peacefully entered into and held and enjoyed by the PURCHASER without any interference, interruption, or disturbance from the SELLER or any person claiming through or under him.
   2. That the SELLER have absolute right, title and full power to sell, convey and transfer unto the PURCHASER by way of absolute sale and that the SELLER have not done anything or knowingly suffered anything whereby their right and power to sell and convey the SCHEDULE PROPERTY to the PURCHASER is diminished.

• That the property is not subjected to any encumbrances, mortgages, charges, lien, attachments, claim, demand, acquisition proceedings by Government or any kind whatsoever and should thereby and the SELLER shall discharge the same from and out of his own fund and keep the PURCHASER indemnified.

1. That the SELLER hereby declares with the PURCHASER that the SELLER have paid all the taxes, rates and other outgoings due to local bodies, revenue, urban and other authorities in respect of the SCHEDULE PROPERTY up to the date of execution of this sale deed and the PURCHASER shall bear and pay the same hereafter. If any arrears are found due for the earlier period, the same shall be discharged/borne by the SELLER.
2. That the SELLER have handed over the vacant possession of the SCHEDULE PROPERTY to the PURCHASER on ___________ and delivered the connected original title document in respect of the SCHEDULE PROPERTY hereby conveyed on the date of execution of these presents.
3. That the SELLER will at all times and at the cost of the PURCHASER execute, register or cause to be done, all such acts and deeds for perfecting the title to the PURCHASER in the property hereby sold and conveyed herein.

• That the SELLER do hereby covenants and assures that the PURCHASER is entitled to have mutation of his name in all public records, local body and also obtain all documents in the name of the PURCHASER and undertakes to execute any deed in this respect.

SCHEDULE  OF PROPERTY

All that piece and parcel of _____ land measuring about _____ decimal, lying and situated in R.S. Plot Number ____, corresponding L.R. plot Number ____, Recorded in R.S. Khatian Number ____ and L.R. Khatian Number ____, at Mouza _____, J.L. Number ____, Touzi Number _______, under Police Station ______, Registration Sub-District ______, in the district of ____________, butted and bounded by:

On the North   :

On the South   :

On the East     :

On the West    :

             IN WITNESS WHEREOF the SELLER and the PURCHASER have set their signatures on the day month and year first above written.

                                                            ______________________________           

                                                                                  SELLER

                                                            ______________________________

                                                                                PURCHASER

WITNESSES:

1.

2.

Sale agreement format 

THIS AGREEMENT for SALE executed on the…………………. day of………………. 2021

between (name of seller) son of …………,, resident of…………………., hereinafter called the “Vendor” of the one part and (name of buyer), son of …………, resident of…………………. hereinafter called the “Purchaser” of the other part.

WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule hereunder:

AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for the sum of Rs………………….. (Rupees in words) free of all encumbrances.

NOW THIS AGREEMENT OF SALE WITNESSES AS FOLLOWS:

1. The price of the property more fully set out in the Schedule is fixed at Rs…………………..(Rupees………………….) free of all encumbrances.
2. The purchaser has paid to the vendor this day the sum of Rs………………….(Rupees………………….) by way of earnest money for the due performance of the agreement, the receipt of which the vendor doth hereby admit and acknowledge.
3. The time for performance of the agreement shall be…………………. months from this date, and it is agreed that time fixed herein for performance shall be the essence of this contract.
4. The purchaser shall pay to the vendor the balance sale price of Rs…………. (Rupees…………………………………………………) before registration of the sale deed.
5. The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of the sale deed.
6. The vendor shall execute the sale deed in favour of the purchaser or his nominee or nominees as purchaser may require.
7. The vendor shall hand over all the title deeds of the property to the purchaser or his advocate nominated by him within………………. days from the date of this Agreement for scrutiny of title and the opinion of the vendor’s Advocate regarding title of the property shall be final and conclusive. The purchaser shall duly intimate the vendor about the approval of the title within……………. days after delivering the title deeds to him or his advocate.
8. If the vendor’s title to the property is not approved by the purchaser, the vendor shall refund to the purchaser the earnest money received by him under this Agreement and on failure of the vendor to refund the earnest money within…………………. days he shall be liable to repay the same with interest thereon at…………………. per cent per annum.
9. If the purchaser commits a breach of the Agreement, he shall forfeit the earnest amount of Rs…………………. (Rupees………………….) paid by him to the vendor.
10. If the vendor commits a breach of the Agreement, the vendor shall not only refund to the purchaser the sum of Rs…………….. (Rupees………………….) received by him as earnest money, but shall also pay to the purchaser an equal sum by way of liquidated damages.
11. Nothing contained in paras 9 and 10 supra shall prejudice the rights of the parties hereto, to specific performance of this Agreement of sale.

(Schedule of Property)

IN WITNESS WHEREOF the vendor and the purchaser have set their hands to the Agreement of sale on this the………………day of…………………. 2021 in the presence of the witnesses:

Witness: Vendor

Witness: Purchaser

Specimen Schedule of the Property

1. Municipal No/ward no/plot no/khasra no
2. Location: Street number, name
3. Place/Area: North, South, East,West
4. Sub-District Hqrs./Tehsil/Mandal:
5. Police Station
6. District/State
7. Measurement of all sides
8. Plinth area/floor area
9. Carpet area
10. Fixtures 
11. Permitted use of the land/building:

See also: All about GST on flat

Latest update

Co-owners liable to pay equal tax on income from house property if sale deed doesn’t mention share: Delhi ITAT

Joint owners of a property will be liable to pay equal amount of tax on the income made from house property if the registered sale deed does not clearly qualify their share in the said property, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) ruled in an order dated January 5, 2023.

Read full coverage here.

FAQs

What is agreement for sale?

An agreement for sale, is an agreement to sell a property in future. This agreement specifies the terms and conditions, under which the property in question will be transferred.

What is sale deed?

The sale deed is the main legal document by which a seller transfers his property right to the purchaser, who then acquires absolute ownership of the property.

What is the difference between agreement for sale and sale deed?

An agreement for sale is a promise in future, that the property will be transferred to the rightful owner while sale deed is the actual transfer of property ownership to the buyer.

{
“@context”: “https://schema.org”,
“@type”: “FAQPage”,
“mainEntity”: [
{
“@type”: “Question”,
“name”: “What is agreement for sale?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “An agreement for sale, is an agreement to sell a property in future. This agreement specifies the terms and conditions, under which the property in question will be transferred.”
}
}
, {
“@type”: “Question”,
“name”: “What is sale deed?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The sale deed is the main legal document by which a seller transfers his property right to the purchaser, who then acquires absolute ownership of the property.”
}
}
, {
“@type”: “Question”,
“name”: “What is the difference between agreement for sale and sale deed?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “An agreement for sale is a promise in future, that the property will be transferred to the rightful owner while sale deed is the actual transfer of property ownership to the buyer.”
}
}
]
}

Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com

Source link