This article is written by Mehnaz Khatoon of 9th Semester of Aligarh Muslim University Centre Malappuram
ABSTRACT
It is a well-established legal principle that when a seller and a buyer agree to sell something for a certain price and under certain conditions, an agreement of sale is created. It may be spoken. It may happen through the exchange of communications that are signed or unsigned. It could be through a single paper that both sides sign. Another option is to use a two-part contract with each party signing one portion before swapping the signed copies so that the buyer has the vendor’s copy and the seller has the purchaser’s copy. The paper could also be delivered to the buyer after being signed by the vendor.
Keywords: Sale deed, agreement of sale, vendor, vendee, consideration.
INTRODUCTION
When a buyer purchases the property, a sale deed must be executed. It is a crucial legal document. It indicates that the buyer has acquired the title from the seller. It includes information on the property and outlines each party’s rights and obligations. A non-judicial stamp paper is used to create a sale deed. The Registration Act of 1908 governs it. In legal documents, these parties are also referred to as “Vendor” and “Vendee.” A sale deed proves that the buyer has acquired possession of the property, or, to put it another way, that ownership has changed hands from the seller to the buyer.
The transfer of ownership of real estate for money is referred to as “sale” under Section 54 of the Transfer of Property Act of 1988. Through a document known as a sale deed, ownership is transferred from the seller to the buyer. The selling deed must be flawlessly drafted because property ownership is a crucial issue.
SALE DEED: WHAT IS IT?
A legal document outlining the terms and circumstances of the sale is referred to as a sale deed. In order to transfer ownership of the property, it is signed by both the buyer and the seller. It includes key details such as the purchase price, a description of the property, the process by which the buyer will become the legal owner of the property, and more.
As the evidence of the property’s ownership, it is a crucial document. It formally notifies the buyer of the seller’s documentation of the transfer of ownership of the property. Before the buyer and seller both sign the sale deed, the sale or purchase of the property is not legally finalised.
SALE DEED FORMAT
IMPORTANT CLAUSES IN THE SALE DEED
- Contractual parties
The parties’ information must be included in the sale deed. According to the sales agreement, the deed should include the right parties’ names, ages, and addresses.
2. Sales property description
A description of the property is required. For example, if I am selling my two-bedroom flat, I must include the entire plot area, ID number, and the location of the flat.
3. Sales contract
Parties must enter into a sales agreement before entering into the sale deed to resolve the terms and circumstances of the arrangement. The buyer makes an advance payment.
4. Sale consideration
The consideration clause contains the amount at which the sale is done; the price should be stated in both numbers and digits.
5. Payment mode
In the sale deed, the parties mutually agree to employ a payment mechanism such as cash, net banking demand, and the amount of payment.
6. Payment in advance
When buying a flat, the buyer always gives a token amount as an advance payment to finalise the sale, and the remainder is paid later. It forces the buyer to get into a sale agreement. The amount paid in advance must be specified in the sale document, and the seller must provide the buyer with proof of payment. The buyer may pay the advance payment in instalments, with interest levied if both parties agree to the instalment payment provision.
7. Title transfer clause
It was stated that the transfer of ownership from the seller to the buyer establishes the seller’s intention to sell.
8. The deed is delivered
The sale deed, along with the sales agreement, should be handed over to the buyer during possession of the property. These are the two crucial documents that must be handed over to the buyer.
9. Indemnity provision
If any charges are left, a buyer who paid the charges has the right to go over to the seller to indemnify him under this condition if any charges are left.
10. Liability in the event of a default
If either side defaults, the party who is not at fault will be charged a penalty price so that the cell is not disrupted.
11.Witnesses and registration
After the sale deed is completed, the buyer and seller X it along with the two witnesses’ testimony in accordance with the Registration Act of 1908. It must be completed within four months after the sale deed’s execution.
12. Right to quiet use of property clause
It means that there will be no interruption from the vendor or any third party, and the vendor will be able to enter and enjoy the property he has purchased in peace.
13. Reddendum clause
Even if the title has been transferred, the seller retains some rights, such as restrictions on how the property may be used.
14.Tandem clause
This closure says that the seller sells any advancement in the property along with the property.
15. Warranty clause
This clause ensures that Vendee is the lawful owner of the property.
16. Time is of the essence clause
The most critical clause in a real estate deal is the time is of the essence clause. It signifies that one party’s effective role within a specific time frame is required. Inability results in contract violation; this provision specifies the delivery of documents, the method of termination, and the closure date. This provision requires that sales deadlines be met.
17. Right to cancel the transaction
If specific circumstances exist, a clause in the sale deed can be included to prevent them from continuing the future commitments. When the other party refuses to deliver over the payment and possession of the property, the parties usually call off the deed.
18. Dispute Resolution clause
This clause is created after mutual agreement to outline the process in the event of a dispute, such as mediation or arbitration. If either side is still not pleased, they can move to court to determine the distance.
19. Miscellaneous provisions
The parties also include some other provisions, which are detailed below in the sale deed:
- Governing Law: The parties choose the governing law that will apply to the sale deed through the sales agreement, and the sale deed will be enforced and executed in accordance with that governing law. For example, if I am the seller selling my 2 BHK flat in Mumbai, the sale deed will be governed by the Municipal Law of Mumbai, Maharashtra.
- Severability: one of the most significant sections in every contract’s sale deed state that if any part of the contract is unlawful or unenforceable, the other provisions remain valid.
- Confidentiality: This condition prohibits the parties engaged in the sale transaction from releasing any private details or secret information. When drafting, it is critical to include the secrecy clause.
- Breach of contract: If one party violates any of the terms of the sale deed and terminates the sale deed, the other party can take action and recover the losses.
- Notices: Communication is critical during the development of the sale deed and the agreement between the parties about the sale. This clause is written to explain the form of communication and frequency of communication between the parties to the sale deed.
- Amendments: when any clause needs to be added or removed by mutual agreement between the parties in accordance with the terms of the contract, amendments are made. This clause addresses the proposed changes.
EXECUTION OF A SALE DEED
An agreement for the transfer of an interest in immovable property worth more than Rs.100 must be registered under the Indian Registration Act, 1908. Thus, in order for a property, such as a flat, building, or land, to be legally recognised, the sale deed must be registered. The sale deed is signed by two parties: the seller and the buyer. The individual selling or transferring ownership of a property is known as the seller. The buyer is the individual who acquires ownership of a property for a fee.
The sale deed must be recorded at the local Sub-Registrar’s office. In the viewpoint of the law, an unregistered sale deed has no value. The sale deed is written on non-judicial stamp paper, which is acquired at the value specified by a state’s stamp duty laws.
The amount of stamp duty levied on real estate varies from state to state. Stamp duty rates range from 4% to 6% of the property’s transaction price. When the sale deed is registered by a Sub-Registrar and the buyer and seller sign it in the presence of at least two witnesses, the sale/purchase of a property is lawful.
IS A POWER OF ATTORNEY ABLE TO EXECUTE A SALE DEED?
A 2011 Supreme Court of India judgement said that a power of attorney is not a transferable document for any right, title, or interest in movable property. All municipal organisations around the country were told not to register properties using power of attorney papers, following the mandate. However, the Supreme Court reinstated the legality of transactions carried out with general powers of attorney.
Nothing stops impacted parties from obtaining registered deeds of conveyance to complete their ownership, the court ruled. According to Section 53 A of the Transfer of Property Act, 1882, the aforementioned transactions may also be utilised to demand particular performance or assert possession.
The Supreme Court’s directive was followed by the Indian states, who outlawed the registration of real estate sold under a general power of attorney. Taken to stop the flow of black money that was passing via the altered title real estate market.
NON-PAYMENT OF THE SALE PRICE’S IMPACT ON THE VALIDITY OF THE SALE DEED
The two-judge bench comprising Hon’ble Justice Indu Malhotra and L. Nageswara Rao held that the non-payment of a portion of the purchase price had no bearing on the validity of the sale deed in the case Vidyadhar v. Manikrao, (1999) 3 SCC 573. The transaction cannot be cancelled because title to the property has already passed from the seller to the buyer, even if the remaining sale consideration is not paid. A “sale” must be meant to transfer ownership of the item and be supported by a promise to pay the price, either now or in the future. This information is gleaned from the sale deed’s recitals, the parties’ conduct, and the evidence on file.
DIFFERENCE BETWEEN SALE DEED AND SALE AGREEMENT
| S.No. | Sale Deed | Sale Agreement |
| 1. | A sale deed is an actual transfer of ownership of a property. | The promise of a future transfer of property ownership is contained in a sale agreement. |
| 2. | An immediate and complete sale of the property is referred to by a sale deed. | According to a sale agreement, the property will likely be sold at some point. |
| 3. | According to the sale deed, the buyer is in charge of the property’s risk. | Up until the property is sold, the seller is responsible for taking on the associated risk. |
| 4. | A sale deed is an accomplished contract. | A sale agreement is an executing contract, meaning it will eventually be carried out. |
| 5. | After a violation of contract, a lawsuit is brought to get compensation in the form of damages, an injunction, or execution. | A breach of the sale agreement can only result in a lawsuit for damages. |
| 6. | A sale deed must be registered, and the buyer is responsible for paying the stamp duty. | According to state regulations, the sale agreement must be registered. In some states, registering must be done, but not in others. |
| 7. | The buyer receives all of the property’s rights and claims as outlined in the sale deed. | Only in accordance with the provisions of the sale agreement is the buyer given the right to purchase a property in the future. |
| 8. | The sale deed contains information about the individuals involved, the property, and payment information, among other things. | Only the terms and conditions under which the property will be sold are included in the sale of the agreement. |
CONCLUSION
A sale deed is a legal document that certifies who owns a piece of property. Additionally, it contains information about the property, the buyer and seller, the buyer’s rights, etc. The selling deed certifies the buyer’s ownership of the property. The legal owner of the property is the purchaser named in the selling deed. However, for the sale deed to be legitimate, it must be registered with the sub-registrar office. The ownership of the property will not be transferred to the buyer absent sale deed registration.
REFERENCE
- Dr. Avtar Singh, The Transfer of Property Act (Universal law publication an imprint of Lexis Nexis; Fifth Edition, 2016)
- “Sale Deed”, available at: https://www.scribd.com/ (last visited on July 05, 2023)
- “Sale Deed”, available at: https://www.cleartax.in/ (last visited on July 05, 2023)
- “Sale Deed”, available at: https://www.vakilsearch.com/ (last visited on July 05, 2023)
- “Sale Deed”, available at: https://www.myadvo.in/ (last visited on July 05, 2023)
