Sale Agreement vs Sale Deed
When dealing with property transactions, you might hear real estate professionals using terms like sale agreement, sale deed, agreement to sell, and sales contract. If this jargon leaves you confused, don't worry. We're here to guide you through everything you need to know about the differences between a sale deed and a sale agreement.
What is a Sales Agreement?
An agreement for sale is a land sale agreement that demonstrates the willingness of both parties to buy or sell the property under specific terms and conditions.
An agreement for sale typically includes the following elements:
- Proposal to purchase and agreement to sell in the future
- Description of the property
- Notice stating the property is free from any legal encumbrances
- Value of the property
- Payment details
- Submission of original documents upon final payment
- Description of the method of property delivery
- Execution of the sale deed
- Sale deed registration
- Payment refund in case of any conflict
- Remedies for any legal issues that may arise
- Transfer of tax-related certificates
What is a Sale Deed?
Unlike an agreement for sale, which only indicates a willingness for future transactions, a sale deed is executed on the actual day the property is sold or transferred. Once the sale deed is executed, the buyer obtains complete ownership of the property. This deed is registered at the registrar’s office under the Registration Act of 1908.
A buyer-seller agreement typically includes the following elements:
- Information about both parties involved
- Property description
- Title transfer
- Terms and conditions related to the sale consideration
- References to the agreement for sale
- Details regarding price and payment
- Transfer of rights and interests to the new buyer
- A clause stating that the previous owner no longer has any authority over the property, including its facilities and privileges
- Authority of the vendor to sell the property
Difference between Sales Deed and Sales Agreement
A sale agreement and a sale deed are two distinct types of contracts involved in buying a house from an owner. Here are the key differences between these documents in the context of residential real estate transactions:
| Sales Agreement | Sales Deed |
Purpose | A flat purchase agreement implies that the property will be transferred in the future. | A sale deed signifies that the property titles are transferred immediately. |
Risks | In a house sale agreement, the seller remains liable for any risks until the property is transferred. | Once a sale deed is executed, the risk is immediately transferred to the buyer. |
Contract | A home purchase agreement is an executory contract, meaning its terms have not yet been implemented. | A sale deed is an executed contract, meaning the terms have already been fulfilled. |
Violation | Breaching an agreement of sale may result in a suit for damages and contract termination. | Breaching a sale deed can lead to a legal complaint and a demand for monetary compensation as damages. |
Contents | An agreement of sale includes terms, conditions, and contingencies. | A sale deed includes property details, ownership transfer, and encumbrances. |
Registration | Registration norms for agreements of sale vary across states. | It is mandatory to register a sale deed. |
How is Sales Agreement important?
Agreeing to a sale agreement is crucial for several reasons. Firstly, it serves as legal proof that the buyer and seller have entered into an agreement, providing a basis for resolving any future disputes. Additionally, if you are applying for a home loan, the bank will not accept your application until you have agreed to a sale agreement.
Are Conveyance Deed and Sales Deed the same?
A sale deed is a type of conveyance deed, but the two terms have different meanings. Conveyance deed is an umbrella term that includes exchange deeds, mortgage deeds, lease deeds, and other such documents. All these documents are considered types of conveyance deeds. For property purchases, both a sale deed and an additional document are required.
Sale Agreement at The Time of Registration of Property
When registering property, new buyers must present the contract of sale along with other necessary documents. This ensures the agreement reflects the terms agreed upon by both parties.
According to the Transfer of Property Act, a contract for sale, whether with possession or without, is not a conveyance. The sale of immovable property can only be made by a registered individual as per Section 54 of the Transfer of Property Act. An agreement for sale does not create any interest or charge on the property.
Ruling of the Supreme Court on Sale Deed and Agreement for Sale
According to the Transfer of Property Act, a contract for sale, whether it includes possession or not, is not considered a conveyance. The sale of immovable property can only be conducted by a registered individual as stipulated in Section 54 of the Transfer of Property Act. An agreement for sale does not create any interest or charge on the property in question.
Penalty For Not Having Your Paperworks in Order
As per the Indian Registration Act of 1908, any agreement transferring an interest in immovable property valued at more than Rs.100 must be registered. Therefore, if you purchase property under an unregistered contract for sale, it is considered null and void without the proper documentation and paperwork.
Before purchasing your home, it is essential to understand the terms and differences between a sale deed and a sale agreement to avoid any confusion or misunderstandings.
FAQs on Sale Agreement vs Sale Deed
- What distinguishes a registration from a sale deed?
The agreement that changes ownership of a property is called a sale deed, and the formal government confirmation of that agreement is called a registration.
- Apartment Deed: What Is It?
A legal document known as a flat deed grants ownership rights to a person for a particular flat in a complex with multiple units. It describes the terms and conditions of ownership for the specified unit and the property's boundaries.
- Is it possible to end the Sale Agreement?
Indeed, the parties may mutually agree to end the Agreement of Sale at any time, or the Agreement may be dissolved legally if any of the conditions of the Agreement are broken. Usually, the agreement itself specifies the terms of termination.
- Is it possible to cancel a sale deed?
The conclusion of a property transaction is marked by a Sale Deed, which is a definitive, legally binding document that is usually not revoked once it is executed. Any disagreements or problems must be settled through the legal system or by mutual consent between the parties.
- How important is a sale agreement?
Giving your assent to a purchase and sell agreement is crucial. First of all, this is legitimate confirmation that the buyer and seller have reached an agreement. In the unlikely event that you are applying for a home loan, the bank will also not accept your application until you agree to a purchase agreement.
- Which is preferable—a sale agreement or a sale deed?
While the agreement of sale is more akin to a future promise for the transfer of ownership from one person to another, with more detailed terms and circumstances, the sale deed is a crucial legal document for the actual transfer of title of the property concerned.
- Can we execute a selling agreement in lieu of a sale deed?
It is not required or necessary to engage into a selling Agreement before beginning a selling transaction, but it is wise to do so, so that the terms and circumstances of the sale can be precisely outlined.
- For whom is a selling agreement paid?
On an Agreement to Sell, stamp duty is typically paid by the buyer. The seller, however, could occasionally also be responsible for paying stamp duty. It is significant to remember that stamp duty paid on an agreement to sell is typically less than that paid on a sale deed.
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