Agreement of Sale refers to the written contract that establishes the terms and conditions under which a property is sold, while Sale Deed refers to the document that records this agreement.
Whenever a property is subject to future terms and conditions and its transfer is based on a future date, it is referred to as an agreement of sale. When the terms and conditions of the agreement are met or the transfer of property has lapsed, the agreement becomes a sale. A sale deed form is subject to an immediate transfer of the property. Otherwise, it is a sale agreement. Let’s examine the Difference Between Agreement of Sale and Sale Deed in this blog.
What Is an Agreement of Sale?
An Agreement of Sale is a contract between two or more parties where one party agrees to sell an asset to the other party. The Agreement of Sale must be in writing and must be signed by both parties. The Agreement of Sale is different from a Sale Deed in India. A Sale Deed is a legal document that transfers the title to an asset from the seller to the buyer.
What Are the Benefits of an Agreement of Sale?
An Agreement of Sale is a legal document that is used to transfer the ownership of a property. The Agreement of Sale is also known as an agreement to sell and a deed of sale.
The Agreement of Sale can be used to transfer the ownership of immovable property, such as a house or land. The Agreement of Sale can also be used to transfer the ownership of movable property, such as a car or bike.
The benefits of using an Agreement of Sale include:
- The Agreement of Sale is cheaper than using a deed of sale.
- The Agreement of Sale can be signed by both the buyer and seller.
- The Agreement of Sale can be registered with the government.
- The Agreement of Sale can be amended if necessary.
How to Sign an Agreement of Sale in India?
If you are looking to buy a property in India, it is important to know the difference between an Agreement of Sale and a Sale Deed. An Agreement of Sale is typically used when the sale is not finalized. It involves the parties signing a contract to sell the property, which establishes the terms of the sale. A Sale Deed is a legal document that formalizes the agreement between the seller and buyer to sell a property. It usually has signatures from both parties and specifies the price, date of sale, and other details about the sale.
An agreement of sale can only be used to sell property between two private individuals. A sale deed, on the other hand, can be used to sell property between two private individuals as well as between a private individual and the government. The sale deed can also be used to sell the property to a company.
A sale deed must be registered with the local registrar’s office. The registrar’s office will then issue a certificate of registration which constitutes proof of ownership of the property.
What Should I Do if I Have Received a Notice/Letter From My Lawyer Saying That My Agreement Was Not Filed Properly and What Should I Do Now?
If you have received a notice/letter from your lawyer stating that your agreement was not filed properly, the first step is to contact your lawyer to discuss the issue. After speaking with your lawyer, you may need to do one of the following:
– File a new agreement
– File an amendment to your agreement
– Get a declaratory judgment
What is a Sale Deed?
Imagine shaking hands on a deal to buy a house or piece of land. A sale deed is like putting that agreement into a super-official document. It’s a legal contract that formally transfers ownership of a property from the seller to the buyer. Think of it as the key that unlocks the ownership rights to your new property!
Here’s why a sale deed is so important:
- Proof You Own It: This document is your official proof of ownership. It’s like a birth certificate for your property, showing everyone you’re the rightful owner.
- Details Matter: The sale deed spells out everything about the property, like its history, any restrictions, and who owned it before. This helps avoid surprises later on.
- Stops Shady Deals: A proper sale deed helps prevent fraud. It ensures the seller has the right to sell, and everything is done legally and above board.
- Peace of Mind: Knowing you have a solid sale deed gives you peace of mind. It strengthens your claim to the property and helps avoid any ownership disputes down the line.
The Difference Between Agreement of Sale and Sale Deed
In India, an Agreement of Sale is generally an oral agreement between the buyer and the seller to sell a property. Whereas, a Sale Deed is a formal document that is filed with the local government to establish ownership of the property. The main difference between the two is that an Agreement of Sale does not require any Notarization.
The main advantage of using an Agreement of Sale is that it saves both time and money. It can be completed relatively quickly, and there is no need for any additional documentation or signatures. Additionally, it does not impact title or ownership of the property. The main disadvantage of using an Agreement of Sale is that it may not be enforced in court. If either party fails to live up to their part of the agreement, then a legal dispute may ensue.
Sale Deeds are typically used when buyers want more security or want to avoid any potential disputes after purchase. They often require Notarization and can provide more detailed information about the property, such as its boundaries and acreage. Additionally, sale deeds can be filed in court should there be any disputes after purchase.
Is a sale agreement mandatory?
In most cases, an agreement to sale is not mandatory for the sale of a property. However, it is advisable to enter into a sale agreement before entering into a sale transaction, as it can help to avoid any disputes or misunderstandings between the buyer and seller. The agreement of sale should contain all the terms and conditions necessary for the transaction of a valid sale of a property, and it should be executed on a non-judicial stamp paper.
In Andhra Pradesh and Telangana, an agreement to sell is a compulsorily registrable document and stamp duty must be paid on the market value of the property or consideration, whichever is higher, and the same is adjustable on the sale deed executed in pursuance of this agreement.
Important Things to Keep in Mind for Agreement to Sale
Important Considerations for Entering into a Sale Agreement:
- Legal Expertise:
– While it’s not mandatory, considering the complexity of legal aspects, hiring a legal expert is recommended for a thorough understanding of the agreement.
- Seller’s Details:
– The agreement should include complete details of the seller, including full name, PAN, address, and bank account information.
- Witnesses:
– The agreement must be witnessed by two individuals, one from the buyer’s side and one from the seller’s side.
- Title Documents and Ownership Transfer:
– Confirm the authenticity of title documents and ensure clarity on ownership transfer. Verify clearance of all dues related to the property until the transfer date.
- Indemnification:
– The agreement should fully indemnify the buyer against any disputes regarding title and possession of the property.
- Date of Possession:
– Clearly mention the date of possession in the agreement, especially for the transfer of a flat. If possession is not given by the specified date, the buyer retains the right to take legal action.
- Payment Schedule:
– Specify the payment schedule in detail to avoid future ambiguities. Clearly outline the details of each installment.
- Dispute Resolution:
– Include a dispute resolution clause to outline the mechanism for settling disputes through litigation.
- Additional Benefits:
– Consider mentioning any additional benefits or agreements beneficial to the buyer to prevent misunderstandings in the future.
- Penalty Clause:
– Incorporate a penalty clause in case of failure to adhere to any important conditions by either party.
Conclusion
A sale deed in India is an important document that records the terms of the sale. It typically includes information such as the property address, description, and legal description of the property sold. It may also include details about any existing liens or encumbrances on the property, and any restrictions on use that have been granted to either party by law. Typically, a copy of the sales agreement will be attached to the sale deed.
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FAQs
Can an Agreement of Sale be legally binding if not registered?
Yes, an unregistered Agreement of Sale can still be legally binding in most cases. However, it might be difficult to enforce in court without being registered. Registration adds a layer of security and makes the agreement more credible.
How can a buyer verify that the property in an Agreement of Sale has clear titles?
A buyer can verify clear titles through a title search conducted by a lawyer or a title verification agency. This search checks public records for any outstanding claims, loans, or ownership disputes on the property.
Is it necessary to have a lawyer present at the signing of a Sale Deed or an Agreement of Sale?
While not always mandatory, having a lawyer present is highly recommended. They can ensure the agreements are legally sound, protect your interests, and explain the terms clearly before signing.
Can modifications be made to a Sale Deed after it has been executed?
Modifications to a Sale Deed after execution are generally possible, but require a supplementary agreement. This new agreement needs to be drafted and registered like the original Sale Deed. Consulting a lawyer for such modifications is crucial.
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