Sale deed is an instrument in writing which transfers the ownership of the property or properties in exchange for a price paid/consideration. This is a document that requires to be registered compulsorily.
By: Prachi Kulkarni, 2nd Year, LLB, Government Law College, Mumbai.
What is a sale deed ?
The Transfer of Property Act contains provisions relating to transferring of property and the process therein. One of the most important legal documents required to be executed between the seller and the purchaser to complete the transaction at the time of purchasing a property is the sale deed.
A sale deed indicates that the title of ownership has been transferred from the seller in favour of the buyer; or in simpler words, the ownership has been changed from the seller to the buyer.
So, a Sale Deed is essentially a document that there’s proof of such a transfer. Not only does it describe the property in detail, but it also outlines the rights and obligations of each party. A sale deed is a proof that the seller has transferred the absolute right of the property to the buyer.
Difference between agreement for sale and sale deed
A sale deed refers to a contract to actually sell the property to the buyer. Unlike this an agreement for sale is a future contract, it is a promise to sell the property at a certain future date.
Sale deed includes information about both the parties (buyer & seller), their ages, addresses and other details, whereas the agreement for sale has the terms and conditions of the agreement. Sale agreement gives a right for the purchaser to purchase the property in question on the satisfaction of certain condition but a sale deed gives the person right to the property itself. Buyer has to pay stamp duty and registration fee to execute a sale deed unlike an agreement to sale wherein nothing as such is required.
Information required for a sale deed
- Details of the buyers and sellers (name, age and addresses)
- Property description (total area, details of construction, the exact address and surroundings)
- Sale amount including advance payment paid as well as the mode of payment
- Time frame when the property title will be actually passed to the buyer.
- Actual date of delivery of possession.
- 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)
Documents Required for Sale Deed Registration
- Draft of Sale Deed
- Power of Attorney, if any
- Building Plan sanctioned by the Statutory Authority
- Allotment Letter from the Builder/Co-Operative Society/Housing Board
- All title documents of the property owner
- A Copy of all registered previous agreements (in case of resale property)
- Latest tax paid receipts
- Latest electricity bill & receipt for the said property (in case of resale property)
- NOC from Apartment Association (in case of resale property)
How to register a Sale deed ?
As per section 55 of the Transfer of Property Act , both the seller and buyer need to make certain disclosures and representations concerning the immovable property in the Sale Deed. Further, as per section 55 (1), the disclosures and representations that a seller needs to make are as follows:
- Full Disclosure to the buyer about the following:
- Material Defect in the Property.
- Defect in Seller’s Title.
- Third Party Claims.
- Disputes about which the Buyer is Unaware.
- Defects which the Buyer cannot Discover with Prudence or Ordinary Care.
- To produce all the documents required by the buyer regarding the seller’s title for examination.
- Willingness to answer all the questions raised by the buyer regarding the property.
- Execution of the proper Conveyance or Sale Deed after the Payment of Amount.
- To take utmost care of the property and documents till the date of delivery of the property.
- Offering possession of the property in the manner accepted by the buyer.
- Payment and clearances of all the government charges and rent accrued regarding the property till the date of delivery of possession.
- Nil Encumbrance or Lien over the Property.
Important Points while drafting a sale deed
1. Original Deed
This is the most important aspect of drafting a document. Applicable laws change from time to time. Hence, it is a safe bet to leave it to experts, unless you have sufficient expertise yourself.
2. Parties to Contract
The title may be either ‘Sale Deed’ or ‘Deed of Sale’. It is different from the agreement to sell where the individual terms and conditions of the sale are mentioned. Details of the parties should be mentioned including full name, addresses, age and occupation if possible.
3. Previous Agreement to Sell
A proper mention must be made to the detailed agreement to sell drafted between the parties where the seller agreed to sell and the buyer agreed to buy. It also contains all the important terms and condition based on which the deed of sale is drafted.
4. Description of Property
The key aspect of the sale deed is the property. Every bit of detail of the same should be recorded in the sale deed starting from the extent of the property, the survey number, the address, the construction details including roofing, number of rooms, parking facilities, borewell if any, boundary details, etc. The sale deed should mention how the property came under the ownership of the seller as well.
5. Clear title
The property should not be liable to be attached by any authorities. All facts regarding the same should be mentioned.
Consideration is the monetary compensation that a seller receives in exchange of his property. The advance amount paid while making the agreement to sell should be mentioned as well. How you made/received the payment also matters.
7. Transfer of title
The very purpose of a sale deed is to enable the transfer of title from one party to another. This is the main document that will be used to change all certificates and documents related to the property.
If you are a buyer, make sure that there is a detailed indemnity clause which shall make the seller responsible for any hindrances in the peaceful enjoyment of the property
9. Delivery details
All details regarding how the possession is getting handed over need to be mentioned. Delivery of all the important documents in original and copies as applicable should be recorded. This will avoid confusions in future as to which document lies with whom.
10. Details of the Witnesses
A valid sale deed should be attested by two witnesses: one from the seller’s side and one from the buyer’s side. Both the witnesses should be competent to contract as well. Their contact details should be mentioned as well.