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Sale Deed

Through a series of transactions, ownership of property is transferred. Tracing the ownership of a property is crucial, especially when it is being bought or offered as a security. The primary legal record that certifies ownership of property is the sale deed. Since it establishes the buyer's ownership, it also serves as the key document for any subsequent sales. When a buyer owns a piece of property, a Sale deed needs to be executed as a mandatory legal document.

It signifies a transfer of title from the seller to the buyer. It details the finer points of the property and outlines each party's obligations and rights. A sale deed is created on paper with a non-judicial stamp. The Registration Act of 1908[1] is in charge of administering it.In valid reports, the terms "Vendor" and "Vendee" are frequently used to refer to these parties. A sale document demonstrates the transfer of ownership from the seller to the buyer, or, to put it another way, the transfer of possession from the seller to the buyer.

The partition deed, gift deed, release deed, settlement deed, and power of attorney are not identical documents, it is crucial to note. Before the sale deed is signed, the buyer should check the seller's title. Whether the vendor is the legal owner of the property should be verified. The Sale deed is signed by the property's original owner and the organisation that is transferring or selling it.

The fundamental requirements for a valid transfer of immovable property are outlined in Section 54[2]of the Transfer of Property Act, 1882. which include a written instrument, consideration, and registration. Money, products, services, or any other thing of value may be used as the consideration. A property transfer is deemed invalid in the absence of consideration. According to the Section 54 of Transfer of Property Act, 1882. The property must also be transferrable and traceable

Necessity of Sale deed

  • Evidence of ownership:
    In a court of law, it is accepted as a legal document and contains information about the ownership transfer from the seller to the buyer.
  • Legally enforceable:
    The sale deed, which details the terms and circumstances of the sale, is a legally enforceable document. It contains information relating to the transaction, such as the purchase price, the method of payment, the date of possession, and other crucial terms and conditions. After being signed and recorded, the sale deed is a contract that must be followed by all parties.
  • Title transfer:
    In order for the title to pass from the seller to the buyer, a sale document is required. To make the transfer of ownership lawful and enforceable in a court of law, it must be signed on non-judicial stamp paper with a defined value and registered with the appropriate regulatory body.
  • Avoid legal disputes:
    A sale deed assures that the terms and circumstances of the sale have been comprehended by the buyer and the seller. It assists in preventing any future legal issues or complications.

Important clauses in the Sale Deed

  • Description of property:
    This clause includes the complete description of the property being sold, such as its location, boundaries, size, and other relevant details.
  • Consideration:
    This clause specifies the total amount paid by the buyer to the seller for the property, including any advance or deposit made.
  • Payment terms:
    This clause specifies the payment terms agreed upon by the parties, such as the mode of payment, payment schedule, and any interest or penalty for delayed payments.
  • Possession:
    This clause specifies the date of transfer of possession from the seller to the buyer and the consequences of delay or failure in giving possession.
  • Representations and warranties:
    This clause includes representations and warranties made by the seller, such as clear title, absence of any encumbrances, and compliance with all applicable laws.
  • Indemnification:
    This clause provides for indemnification by the seller for any loss, damage, or liability arising out of any misrepresentation or breach of warranty.
  • Arbitration clause:
    This clause provides for the resolution of disputes arising out of the sale deed through arbitration, rather than litigation.
  • Governing law:
    This clause specifies the law governing the sale deed and the jurisdiction of the courts in case of any disputes.
  • Mode of Payment:
    The form of payment for the amount of the property can be paid by cash, demand draft (DD), check, or net banking transfer, depending on the agreement between the two parties, i.e., seller and buyer. Any preferred or ultimately agreed upon method of payment should be specified in the Sale Deed alongside the value of the property. The Sale Deed has to contain any further information regarding the total amount paid in installments and each installment's dates.

These are some of the important clauses in a sale deed. It is important to read and understand the sale deed thoroughly before signing it, and to consult a legal expert if necessary.

Execution of Sale Deed

The legal document used to transfer ownership from one party to another is known as a sale deed. Consequently, this must be carried out when that specific immovable property is prepared for a change of title.

Once Both parties, i.e., the buyer and the seller, has verified all the property paperwork. Both the parties to contract will sign the sale deed and continue with the property registration at the sub-registrar's office. Two witnesses must be required while signing the deed and they will also sign sale deed and which include their names, addresses, and signatures. For registration, original property documents must be delivered to the registrar's office. The selling deed includes the buyer's photo, thumbprints, and signature.

Within the four months after the date of execution, all the paperwork must be given for registration. A further four months grace period will be granted based on a penalty if it is not completed within the allotted four months. The maximum fine that the registrar may impose is ten times the registration fees.

Documents required to complete the registration of a sale Deed:
  • Sale deed
  • Latest Water, electricity and Tax receipt
  • No Objection Certificate
  • Allotment letter by the builder or housing board
  • Original Documents of the Stated Property
  • Power of attorney, if any

Registration of Sale Deed

The transfer of property ownership from the seller to the buyer is legally recognised and authenticated by the registration of a sale deed, which is a crucial legal necessity. The Registration Act, 1908 governs the registration of sale deeds in India and Section 17[3] of the Registration act makes it necessary.

The registration of Sale deed are:

  • Payment of Stamp Duty:
    The buyer must pay the government's stamp duty before the sale deed can be registered. The cost of stamp duty varies from state to state and is often determined by the property's sale price.
  • Execution of Sale document:
    Both the seller and the buyer must sign the sale document, which must be executed in front of two witnesses. The sale price, a description of the property, and any other pertinent terms and conditions must also be included.
  • Submission of Sale Deed:
    After signing the sale deed, it must be submitted to the registrar's office which has jurisdiction over the property. The witnesses, the seller, and the buyer must all be present when the submission is made.
  • Sale Deed Verification:
    The sub-registrar will examine the sale deed to make sure that it has all necessary information. Additional documents, such as proof of the parties' identities and addresses, may also be requested by the sub-registrar.
  • Sale Deed Registration:
    After the sale deed has been validated, the sub-registrar will register the sale deed.

Effect of non-payment of the acquisition price on the constitutionality of the sale deed
In the case Vidyadhar v. Manikrao[4], (1999) 3 SCC 573, a two-judge panel composed of Hon'ble Justice Indu Malhotra and L. Nageswara Rao, JJ, decided that the sale deed's validity was unaffected by the failure to pay a portion of the purchase price. Even if the remaining sale consideration is not paid, the sale cannot be cancelled on this basis once the seller and buyer have officially exchanged the title to the property.

A "sale" must be intended by the parties to be a transfer of ownership based on an agreement to pay the price in the present or in the future. The sale deed's recitals, the parties' actions, and the evidence on file all corroborate to this fact.

Advantages of Sale Deed

  • Legal recognition:
    A sale deed is a legally recognized document that proves the ownership of the property. It is a conclusive evidence of the transfer of ownership from the seller to the buyer.
  • Protection against fraud:
    A sale deed protects the buyer against fraud and ensures that the seller has a clear title to the property. It provides the buyer with the necessary legal rights and safeguards against any future disputes.
  • Transfer of possession:
    A sale deed ensures the transfer of possession of the property from the seller to the buyer. It serves as a legal proof of the possession and protects the buyer from any unlawful eviction by the seller.
  • Access to finance:
    A sale deed is a crucial document for availing of any loan or mortgage against the property. It provides the necessary legal proof of ownership and facilitates the process of getting loans and mortgages.
  • Capital gains tax:
    In case of a sale of the property, the sale deed serves as proof of the cost of acquisition for the purpose of computing capital gains tax. This helps in reducing the tax liability of the seller.
  • Legal remedy:
    A sale deed provides the buyer with the necessary legal remedy in case of any breach of contract by the seller. It enables the buyer to seek legal recourse for any violation of the terms and conditions of the sale deed.

Disadvantages of sale Deed:

  • Legal Formalities:
    Sale deed registration involves several legal formalities, such as payment of stamp duty, registration fees, and submission of documents to the registrar's office. This can be time-consuming and may involve additional expenses, which can be a disadvantage for some buyers and sellers.
  • Risk of Fraud:
    Sale deeds can be subject to fraud or forgery, especially if proper due diligence is not conducted prior to the transaction. Buyers and sellers need to be aware of the risks involved and take steps to ensure the authenticity of the sale deed and the property.
  • Disputes over Property Description:
    Sale deeds typically include a detailed description of the property, but there may be discrepancies or errors that can lead to disputes or legal issues. For example, if the property is not accurately described in the sale deed, it can lead to confusion or disagreements over property boundaries, size, or other important details.
  • Liability for Encumbrances:
    If a sale deed is executed without proper due diligence, the buyer may unknowingly assume liability for encumbrances such as mortgages or liens on the property. This can be a significant disadvantage and may lead to financial losses or legal disputes.
  • Difficulties in Transfer of Ownership:
    If a sale deed is not executed properly or is not registered with the appropriate authorities, it can lead to difficulties in the transfer of ownership of the property. This can be a significant disadvantage for both the buyer and seller, as it can result in legal complications and delays.

Difference between sale deed and agreement to sell:

  • The immediate exchange of goods for payment of consideration is known as a sale and the exchange of goods for a future consideration at a certain time or after the fulfilment of specific criteria constitutes an agreement to sell.
  • A sale deed is an executed contract, whereas a sale agreement is an executing contract that will be executed in the future.
  • A sale deed must be registered in order to be effective, and the buyer is responsible for paying the stamp duty and in agreement to sell the registration depends upon the state regulations some state made it mandatory and some not.
  • The sale document contains information about the individuals involved, the property, and payment information, among other things and in agreement to sell it involves the conditions of sale of property.

The revocation of the Sale Deed

The Specific Relief Act of 1963[5] Sections 31[6] to 33[7] outline the circumstances in which a sale deed may be revoked. If any of the parties involved is dissatisfied with the deal and files a lawsuit challenging it, the sale deed may be annulled. The Registrar will proceed with the cancellation process after receiving an order from the Civil Court from the petitioner and presenting it to him. A sale deed can only be revoked for a legitimate cause; it cannot be done for any reason at all. A sale deed cannot be cancelled for the reason that either the buyer or the seller are simply disinterested in the transaction.

Only one of the following grounds can lead to its cancellation:
  • The deed is unlawful.
  • Unfair influence was used to persuade the action.
  • Deed was executed with inaccurate data or fraud.
  • The entire transfer and transaction were carried out illegally.
  • The act was carried out by a minor.
  • If the court considers that the transaction may endanger or negatively impact the petitioner.

Reimbursement for Sale Deed Cancellation
The defaulter may be asked to reimburse the injured party for their debts as well as any advantages they may have received if the court rules that the injured party's claims are justified and orders the sale deed to be cancelled. The defaulter has benefited from it in multiple ways, so the court may order them to pay for the damages.

Furthermore, if the deed does not comply with Section 11[8] of the Indian Contract Act, 1872, the court might choose to order them to forfeit the advantages they received as a result of the deed.

Although it is simple to transfer property between two people, it becomes slightly more complicated when there are several owners. Therefore, one such document that helps with such an issue during the transfer of a property is a Sale Deed document.

The Sale Deed is a useful record, particularly in a legal dispute. A sale deed offers a guaranteed level of security and a legitimate mechanism to transfer ownership of the property to a new owner. In light of this, a Sale Deed is essential for any property you wish to sell since it will act as a legally-binding record that proves your actual property ownership rights.

  1. Registration Act, 1908, Acts of Parliament, 1908 (India)
  2. Transfer of Property Act, 1882, �54, Acts of Parliament, 1882 (India)
  3. Registration Act, 1908, �17, Acts of Parliament, 1908 (India)
  4. Vidyadhar v. Manikrao, (1999) 3 SCC 573
  5. Specific Relief Act of 1963, Acts of Parliament, 1963 (India)
  6. Specific Relief Act of 1963, �31, Acts of Parliament, 1963 (India)
  7. Specific Relief Act of 1963, �33, Acts of Parliament, 1963 (India)
  8. Indian Contract Act 1972, �11, Acts of Parliament, 1972 (India)

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