Sales Deed vs. Sale Agreement: Understanding the Differences

When it comes to selling and purchasing property, have you heard professionals in the real estate industry throwing around jargon like sale agreement and sale deed, sale and agreement to sell, sales contract, and found yourself in a dilemma? Well, that’s alright; we’re to take you through everything you need to know when it comes to sales deed vs. sale agreement.

Let us break down the concept to comprehend the differences between a sales deed vs. sale agreement.

What is an Agreement for Sale?

An agreement for sale is a land sale agreement that shows the willingness of both parties to buy or sell the property under specific stipulations and conditions. 

An agreement for sale includes the following elements, they are:

1. Proposal to purchase and an agreement to sell in the future.
2. Description of the property.
3. A notice stating the property is free from any legal encumbrances.
4. Value of the property.
5. Payment details.
6. Original documents submitted on the final payment.
7. Description of the method of property delivery.
8. Carrying out of the sale deed.
9. Sale deed registration.
10. Payment refund in case of any conflict.
11. A remedy for any legal issues that may occur.
12. The transfer of tax-related certificates.

For example, in some states in India, like Uttar Pradesh, the draft sale agreement is not considered legally binding until it is registered with the sub-registrar’s office. 

What is a Sale Deed?

Unlike the agreement for sale that only shows willingness for future decisions, a sale deed is drafted on an actual day that the property is sold or transferred. Once the sale deed of the flat is executed, the owner gets complete ownership of the property in question. The sale deed is registered at the registrar’s office under the Registration Act of 1908. 

 A buyer-seller agreement includes the following elements, they are:

1. Information about both the parties involved.
2. Property description
3. Title transfer.
4. The terms and conditions pertaining to the sale consideration.
5. References pertaining to the agreement of sale.
6. Details in regard to price and payment.
7. Transfer of rights claim of the property and interest the new buyer.
8. It is important to mention a clause stating that the previous owner does not hold any authority on the facility, privileges, and overall ownership.
9. Authority of the vendor to sell the property. 

Sale Deed Format

Here is a sample format of a sale deed in India:

SALE DEED

(General)

This deed of sale is executed on ________ day of ______________ month of
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_____________ year by Sri./Smt.__________________________,

S/o./ W/o.____________________________, occupation____________________,

and aged __________ years, residing

at_________________________________________________________________

_________________________________________________________________.

hereinafter called the “SELLER”.1

In favour of

Sri./Smt.__________________________S/o./W/o._________________________,

occupation____________________, aged __________ years, residing

at_________________________________________________________________

_________________________________________________________________.

hereinafter called the “PURCHASER”. 2

Whereas, the term SELLER and PURCHASER, unless repugnant to the context

shall mean and include there representatives heirs, successors, executors,

administrators, trustees, legal representatives and assigns.

Whereas, the SELLER herein, is the sole and absolute owner of immovable

property 3

bearing No.___________ known as _____________________ situated

at ________________ and morefully described in the schedule hereunder written

and hereinafter called the schedule property.

Whereas, the SELLER is the absolute owner, having acquired the property, by

____________________

4

and since then SELLER has been in possession and

enjoyment of the schedule property and paying taxes and levies thereon, as sole

and absolute owner thereof.

Whereas the SELLER herein being desirous of selling the Schedule property due

to the reason 5

____________

Whereas the PURCHASER has agreed to purchase the schedule property in terms

an oral / written agreement for a total sale consideration of Rs.____________

(Rupees________________________________________only) and the purchaser

in terms of aforesaid oral / written agreement agreed to pay the entire sale

consideration at the time of execution of the sale deed.

Whereas in consideration of the purchaser having paid the entire sale

consideration Rs.____________Rupees_____________________________only)

Agreement for Sale vs Sale Deed: The difference between Sale Deed and Sale Agreement

1. The agreement for sale implies that the property will be sold in the future, whereas the sale deed signifies the immediate transfer of property.
2. When it comes to the sale and agreement to sell, all risk and liability stay with the seller until the property is transferred. All risk is immediately transferred to the new buyer for the sale deed. Element sales have not been fully implemented; it just shows a willingness. In contrast, the sale of an act is an executed contract.
3. When it comes to sales and agreement to sell, a breach of contract might result in a suit for damages. For the sale of the deed, violation results in legal complaints and monetary compensation for any damages.
4. It is unnecessary to register the agreement for sale, but it is mandatory to report the sale deed. 

Importance of an Agreement for Sale

Consenting to an arrangement available to be purchased is very significant considering a few elements. In the first place, this is a lawful verification of the purchaser and seller going into an understanding. The future strategy would be chosen if there should be any conflict. Additionally, on the off chance that you are applying for a home loan, the bank would not acknowledge your application till you consent to an arrangement available to be bought. 
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Sale Agreement Format

Here is a sample of sale agreement for property format in India:

DRAFT OF AGREEMENT FOR SALE

THIS AGREEMENT FOR SALE is made and executed on this the____________ day _____________ of ___________, 200-

BETWEEN

Mr. ____________s/o. ____________ aged_________________ years residing at _____________Hereinafter called “The SELLER” (which expression shall mean and include her legal heirs, successors, successors-in-interest, executors, administrators, legal representatives, attorneys and assigns) of ONE PART.
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AND

Mr. ______________ s /o __________ aged­ ________ years residing at__________ ___Hereinafter referred as “The PURCHASER” (represented by his power of attorney) which expression shall mean and include his heirs, successors, executors, administrators, legal representatives, attorneys and assigns of the OTHER PART.

WHEREAS THE SELLER is the absolute owner in possession and enjoyment of the more fully described in the schedule hereunder and hereafter called the “SCHEDULE PROPERTY.

WHEREAS the property more fully described in the schedule hereunder is the self acquired property of the SELLER who purchased the same from Mr._____________ in and by sale deed dated _____________ and registered as Doct No._________of Book 1 Volume No______________Page No_____to_________, registered on and filed on the file of the Sub-Registrar,

WHEREAS the SELLER is the absolute owner of the property and he has been enjoying the same with absolute right and he has clear and marketable title to the Schedule Property

WHEREAS the SELLER being in need of funds for the purpose of ________________ has decided to sell the property more fully described in the Schedule hereunder and the PURCHASER has offered to purchase the same..
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WHEREAS the SELLER offered to sell and transfer the schedule property to the PURCHASER for a sale consideration of Rs.___________(Rupees___________ only) and the PURCHASER herein has agreed to purchase the same for the aforesaid consideration on the following terms and conditions:

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

The Sale consideration of the Schedule Property is fixed at Rs. __________ (Rupees________ only).

The PURCHASER has paid a sum of Rs.­­­­­­­­­­­­­___________(Rupees _________ only) by cash/ cheque /D.D. bearing No _________ drawn on ___________ dated________ as advance, the receipt of which sum the SELLER hereby acknowledges.

The balance payment of Rs._____________(Rupees _________ only) will be paid by the PURCHASER to the SELLER at the time of execution of the absolute Sale Deed and thus completing the Sale transaction.

The parties herein covenant to complete the Sale transaction and to execute the Absolute Sale Deed by the end of

The SELLER confirms with the PURCHASER that he/she has not entered into any agreement for sale, mortgage or exchange whatsoever with any other person relating to the Schedule Property of this Agreement.

The SELLER hereby assures the PURCHASER and he/she has absolute power to convey the same and there are no encumbrances, liens, charges, Government dues, attachments,acquisition, or requisition, proceedings etc.

The SELLER agrees to put the PURCHASER in absolute and vacant possession of the schedule property after executing the sale deed and registering the same in the jurisdictional Sub-Registrar’s office.

The SELLER covenants with the PURCHASER that he/she shall not do any act, deed or thing creating any charge, lien or encumbrance in respect of the schedule property during the subsistence of this Agreement.

The SELLER has specifically agreed and covenants with the PURCHASER that he/she shall do all acts, deeds and things which are necessary and requisite to convey absolute and marketable title in respect of the schedule property in favour of the PURCHASER or his nominee.

IT IS AGREED between the parties that all expenses towards Stamp Duty and Registration charges shall be borne by the PURCHASER only.

 The PURCHASER shall have the right to nominate or assign his right under this agreement to any person / persons of his choice and the SELLER shall execute the Sale Deed as per terms and conditions of this Agreement in favour of the PURCHASER or his nominee or assignee.

  The SELLER has agreed to get consent deed duly executed to this Sale transaction from his wife/her husband, sons and daughters on or before date of registration of Sale Deed and assured that they all join to execute sale deed in favour of the purchaser.

It is hereby expressly provided and agreed by the parties here to that both parties are entitled to enforce specific performance of the agreement against each other in case of breach of any conditions mentioned in this Agreement.

The original of the “AGREEMENT” signed by both the parties shall be with the PURCHASER and copy of the same similarly signed shall be with the SELLER.

SCHEDULE

IN WITNESS WHEREOF the SELLER and the PURCHASER have signed this Agreement of Sale on the day month and year herein above mentioned in the presence of the witnesses:

WITNESSES:

1.

2.

Signed by SELLER_____________

In presence of

Signed by PURCHASER______________

In presence of

Are Sales Deeds and Conveyance Deed the Same Thing?

The sale deed is considered a type of conveyance deed. But the two have different meanings behind their concept. Conveyance deed is more of an umbrella term, covering exchange deed, mortgage deed, lease deed, etc. All these papers/documents are considered as a part of types of conveyance deeds. Though they need two documents for the property purchase rather than one.

Sale Agreement at The Time of Property Registration

When property is being registered, the new buyers must also present the contract of sale and the other required papers or documents. This ensures that the deal is the same as that made by both parties previously. 

Supreme Court Ruling on Sale Deed and Agreement for Sale

According to the Transfer of Property Act, a contract for sale, whether with possession or without possession, is not a conveyance. The sale of immovable property can be made only by a registered individual as per section 54 of the Transfer of Property Act. Any interest or charge on its subject matter does not create via an agreement for sale.

The Consequences of Not Having Your Paperwork in Order 

According to the Indian Registration Act of 1908, any agreement for transferring an interest in immovable property of value more than 100 rupees must be registered.  Therefore, if you have purchased some property under any contract for sale, it is considered null and void without proper documentation and paperwork.

Before purchasing your abode, it is crucial to understand the terms and differences between the Sales deed vs. sale agreement to have no confusion or misunderstanding.

Some of these things may go over your head, and it may be confusing at first, but that’s alright. Instead of stressing yourself out, we at NoBroker can help you! If you need any help with documentation while buying or selling a house, let our experts help. Click the link below to find out how we make the process of buying and selling safer with great legal assistance. 

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