Published On: Jun 14, 2023 • Last Updated: Aug 28, 2023 • 6.6 min read •
Legal disputes concerning the transfer of ownership in immovable property are a nightmare. An essential tool that will protect any party to a transfer of immovable property is a valid and duly executed sale deed. The sale deed is the most important legal document when it comes to the sale of a property. A well-executed sale deed draft is the legal proof of ownership of the buyer. Once they go through the deed registration process, the buyer can claim their rights to own, use, and lease the property in question. Through this article, let’s look at what a sale deed is, its essential elements, and how it can protect the parties from unnecessary legal disputes.
A sale deed is a written formal document that allows the owner of a property to transfer the whole of their rights in the property to another in exchange for a consideration. A sale deed is the final document that is required to transfer the right of ownership in a property. Once you register a sale deed, the transaction of the transfer of a property is complete. The is to allow the new owner of the property to register themselves as the owner to the sub-registrar office of the district. A sale deed draft about the sale or purchase of property is governed by the terms of the Transfer of Property Act, of 1908.
What is the format of a sale deed?
The sale deed is that legal document that will govern the entire property transfer transaction. Once the deed is duly executed, both the parties, i.e. the transferor and transferee are bound to it. Hence, you must ensure that the sales contract draft you have includes the following terms:
While drafting a contract of sale, the seller/original owner must indemnify the buyer from all past claims and liabilities of the property i.e., pending charges, lawsuits, mortgages, damages, etc. This protects the buyer from incurring any liabilities incurred to the property before the sale transaction.
This clause must have the exact cost of the property, date of payment, and mode of payment. Further if the payment is supposed to be taken in installments, then details of each such applicable installment are necessary.
Possession of property
The buyer needs to ensure that there is a clause that expressly that the new owner, i.e., the buyer will retain the possession of the property on a fixed date. As a result, this date is known as the date of possession.
Other mandatory disclosure
If there are any damages to the property, the seller must mention all damages, etc in the final contract of sale. Besides, this clause helps the buyer in figuring out whether they want to execute the deed or not.
Sale Deed v/s Sales Agreement
At a glance, the two terms seem interchangeable to each other. However, both these terms apply to different legal documents. Hence, let’s take a look at all the points of difference between a conveyance deed and a sales agreement.
Sale Deed refers that the sale is immediate in nature.
Sales agreement refers to the fact that both parties have agreed to make a sale/purchase in the near future.
In a sale deed, the risk is highly on the buyer, since the sale has been made.
In a sales agreement, the onus and risk are still on the seller of property.
A sale deed is legally executed.
A sale agreement is executable in the future.
Registration of a sale deed is mandatory.
Registration of a sales agreement is not mandatory. It depends on the state laws.
All rights and claims of the property are transferred to the buyer.
Here, there is only a transfer of the right to buy the property at a future date.
The scope of a sale deed covers all the final informational aspects of a property sale transaction.
The scope of this agreement covers the terms and conditions leading up to a sale.
Only a duly executed deed is legally valid. The execution is very important since in the terms of law, it completes the transfer of ownership process. Let’s dive into how the execution process takes place.
Finalize the draft
Usually, the seller prepares the contract of sales after taking assistance from their lawyers. However, it is both the right and duty of the buyer to negotiate the terms as per their interest. Hence, the final deed draft must be framed after keeping the interests of both parties in mind.
Get Non-Judicial Stamp paper of appropriate value
Once the deed draft is final, the parties need to print it on non-judicial stamp paper. Besides, the value of stamp duty varies based on state laws. However, the usual charges are between 4 to 6% of the property’s sale value.
Registration of Sale Deed
According to the Registration Act, all agreements for the sale of immovable property, where the value of the property is more than Rs. 100 must be registered at the sub-registrar’s office of appropriate jurisdiction. To register a deed, both parties need to physically visit the sub registrar’s office, submit the required documents, along with the requisite registration fees, and get the name of the buyer registered as the new owner of the property. Lastly, for more information on drafting a contract of sales, feel free to connect with LegalWiz.in experts. Contact us today!
Signature of two witnesses
For this transaction to be legal and valid after registration, both parties need to provide one witness each.
Documents required for sales deed registration
The following documents are mandatory while executing a sale deed:
Documents of previous sale (only applicable in case of resale); and
Power of Attorney (if applicable).
Did you know? Lease Deed registration is also sometimes mandatory. Read all about lease deeds to understand the implications.
Are all registered sale deeds legally valid and enforceable?
As we all know there is a huge backlog of property title disputes in India. Keeping that in mind, the Hon’ble Apex Court has passed varied orders in different matters related to the legal validity of a deed of sales. For instance:
In a recent landmark judgment, the hon’ble Supreme Court stated that payment or consideration is an integral part of any sale. Hence, the registration of a deed, which does not have any mention of a consideration or any payment term is legally unenforceable.
However, in another case, the payment terms were mentioned in the registered deed, but part of the payment was not made by the buyer. Here, the Supreme Court stated that the mere non-payment of the part of the consideration did not render the wholesale deed invalid.
From the above two examples, we can understand that the legal validity and enforceability are completely dependent on the contents of the final deed itself. Hence, making it even more necessary to draft such agreements with utmost care.
Points to note
That the seller mentions transfer of ownership rights expressly;
Ensure that the title to the property is free of all encumbrances, liabilities, etc;
Re-check that the old owner has paid all utility bills, maintenance charges, etc; and
Vetting of all terms and conditions leading up to the sale.
Frequently Asked Questions
What happens if I lose the sale deed to my house?
In case you lose your sale deed, you can go to the police station and file an FIR. The police will issue a non-traceable certificate to you. You need to submit this certificate, along with an affidavit and relevant fees to the sub-registrar office, and they shall provide you with the certified copy of the sale deed.
What is a sale deed number?
The number assigned to all registered sale deeds are sale deed number. It is usually given on the receipt of registration and is also stamped on each page of the sale deed.
Can a registered sale deed be canceled?
Yes, under certain circumstances either party can file a request to cancel a registered sale deed by getting a court order in their favor. These circumstances include misrepresentation of information, unlawful activities, violation of terms of the sale deed, etc. by either party to the deed.
As a writer, Diksha aims to make complex legal subjects easier to comprehend for all. As a Lawyer, she assists startups with their legal and IPR drafting requirements. To understand and further spread awareness about the startup ecosystem is her motto.