The sale deed is a vital document that facilitates the transfer of a property from the buyer to the seller. It is however quite crucial that the document encompasses the stipulated legal elements in order to prevent any conflict that could possibly arise between the buyer and the seller in the future.
A sale deed is one of the most commonly used legal documents through which a seller transfers the right to the property to the purchaser, who would subsequently acquire absolute ownership of the property. Therefore, the sale deed is the most critical aspect of a real estate purchase or sale. The process of selling a property is governed by the Registration Act, 1908.
A sale deed is a legally binding document that lays down the terms and conditions in order to legally bring about the sale or transfer of property. This is done to prevent the possibility of unnecessary legal hassles between the parties. A sale deed should be drafted upon a non-judicial stamp paper by a legal professional in consonance with the stamp duty value affixed by the respective state.
The buyer and the seller thereafter sign the sale deed, after reaching a consensus over the terms and conditions stated in the sale deed. Unless the sale deed is signed by both of them, the purchase or sale of the property is not complete legally. Apart from the parties to the sale, the witnesses must also sign the sale deed. In addition to selling an asset, people tend to either mortgage or lease their real property, so the agreement must indicate if it’s a deed of sale or a mortgage deed.
Fundamental Components of a Sale Deed:
The sale deed usually consists of a set of terms and conditions in order to facilitate an amicable transfer between the parties. The transfer is said to be complete only after the parties agree to the said terms and sign the deed. Therefore, it is crucial that the sale deed comprises these essential components and leaves no room for ambiguity. The following components have to be included in a sale deed mandatorily:
- Parties Involved:
As with any legal document, details about the parties to the sale are the first and foremost prerequisite to be enclosed in the deed. The names, ages, and addresses of the parties are to be duly mentioned in the sale deed. The parties should thereafter sign the sale deed with bonafide intention. The sale deed is also required to be signed by a minimum of two witnesses.
- Details Pertaining to the Property to be Sold:
The property to be sold is the core component of the sale deed. Therefore, an elaborate briefing of the same has to be enclosed in the sale deed. The details pertaining to the property such as the ID number, the exact location, the address, square footage, etc. have to be recorded. If it’s a residential property, details about the building should be mentioned. For instance, a sale deed with respect to a 2 BHK in Chennai, must enlist the following specifications:
- The total plot area of the residential building
- Construction details
- Identification number of the building
- Precise location
An annexure that elucidates the property schedule should be attached to the sale deed. The seller should also certify that the property is devoid of any encumbrance.
- Details about Existing Loans:
If there is an existing loan taken against the property the seller should settle the loan prior to executing the sale deed. The buyer is also obligated to perform the required due diligence to check the same through the registrar’s office in the respective jurisdiction.
- Total Sale Consideration:
The clause pertaining to the sale consideration speaks about the amount agreed between the parties in exchange for the sale of the property. The consideration is the amount the buyer pays the seller, in proportion to the value of the property. It might also specify the advance payment if any, the remaining amount payable, the dates on which the payment is received, the time allowed for the payments, the specifics of the payment transactions, etc. This is one of the most important factors that has to be mentioned in the sale deed. Failing to mention the same could create unnecessary legal hassles between the parties.
- Title:
The passing of the title from the buyer to the seller must be duly mentioned in the sale deed. It reflects the true owner of the property, subsequent to the execution of the sale deed. Once the title has passed from the seller to the buyer, the buyer’s rights over the property get dissolved.
- Possession of Property:
The seller has the obligation to place the property in the possession of the buyer after completing the registration process. The exact date on which the seller will acquire possession of the property must be mentioned.
- Indemnity Clause:
An Indemnity clause is predominantly applicable in the case of a resale property. This deals with the handling of statutory charges such as water bills, electricity bills, property tax, etc at the time of execution of the sale deed. The seller will be liable to settle any dues with respect to the utility bills prior to selling the property. The buyer should be prudent enough to verify the status of encumbrance vested on the property through the registrar’s office before signing the sale deed.
- Default Clause:
The sale deed speaks of the terms and conditions required to manifest the sale. When the stipulated terms and conditions are not abided by, the default clause comes in handy. The default clause basically mentions the measures to be taken when the terms of the agreement are not being met by either of the parties. The clause directs the defaulting party to pay the penalty or damages to the affected party.
A sale deed facilitates the passing of a property from the buyer to the seller in a legal manner, thereby protecting the interests of the parties involved. Also, having a sale deed in place helps to avert legal disputes between the buyer and the seller. Every component of a sale deed is equally important and missing out on any of it could create a lot of chaos. It might however be burdensome to draft every single element in a sale deed. Hence entrusting the same to professionals is the easiest way to facilitate the process.
At Vakilsearch, we have a skilled team in place, who can handle all the legal issues pertaining to selling of a property. With us by your side, we can assure you that buying or selling a property wouldn’t be cumbersome anymore.
Read more,
- What are the advantages of sale deed?
- You Need to Know about the Sale Deed of Land
- How to obtain a duplicate copy of a lost sale deed?
