Sale Agreement refers to a written contract which establishes terms and conditions under which the property is sold, while the sale deed refers to a document which acts as a record of this agreement. Whenever there is a property subjected to future terms and conditions and transfer is based on future date, its referred as an agreement of sale. When terms and conditions of agreement are fulfilled when the transfer of property has lapsed, this agreement become a sale deed. A sale deed is subjected to immediate transfer of property. Whereas, it is a sale agreement. Here, we discuss the difference between sale deed and sale agreement.
A Sale Agreement is contract between two or more of parties where one of the party agrees for selling an asset to other party. This Agreement shall be in writing and should be signed by both of the parties. This Agreement of sale differs from sale deed in India. A sale deed is a legal document which transfers the title to an asset from the seller to buyer.
Agreement of sale is document which is used for transferring the ownership of property. This Agreement to sale is known as agreement to sell and a deed for sale. Agreement of sale could be used for transferring the ownership of immovable property such as house or land. This Agreement of sale could also be used for transferring the ownership of movable property as a car or bike.
Benefits of using an Agreement of Sale are:-
If you are looking for buying any property in India. It is important to know difference between an agreement of sale and a sale deed. An agreement of sale is generally used when the sale is not fixed or finalised. It involves the parties signing a contract for selling the property, it establishes the terms and conditions of sale. This Sale deed is a document which formalises the agreement between the seller and buyer. It has signatures of both parties and specifies the price, date and other detail about the sale.
An agreement of sale could be used to sell property between two or more individuals. A sale deed on the other hand could be used for selling the property between a private individual and the government. This Sale Deed could be used for selling a property to a company.
Sale Deed shall be registered with the local registrar office. The office of registrar will issue a certificate of registration which will constitute the proof of ownership of Property.
An agreement of sale is typically an oral agreement between the buyer and the seller for selling a property. While on the other hand a sale deed is document which is filed with local government for establishing ownership of property. The major difference between them is that an Agreement of Sale do not require a Notarisation.
The major advantage for using and Agreement of Sale is it saves both the time and money. It could be completed quickly and there is no need for any additional documental or signatures. Also. it does not impact the title or the ownership of property. Major Disadvantage of Agreement of Sale Deed is typically used when the buyers needs more security or wants to avoid any dispute after the purchase. It often requires notarisation and could provide much more detail information about the property which includes boundaries and acreage. Also, sale deeds could be filed in the court if there is any dispute after the purchase.
An Agreement to sale is not mandatory for sale of a property. Although it is suggestionable for entering into a sale agreement before entering in a sale transaction, as it helps in avoiding any disputes or misunderstanding between the buyer and the seller. Agreement of Sale should have all the terms and conditions which are necessary for transaction of valid sale of property. It should be executed on a non judicial stamp paper.
In some states like Andhra Pradesh and Telangana, an agreement to sell is compulsorily registrable document and stamp duty for the same shall be paid on the market value of property or consideration, whichever is higher and the same is adjustable on sale deed execution in pursuance of agreement.
Important Considerations for Entering into a Sale Agreement:
– As its not mandatory, considering the complexity of the legal aspects, hire an expert as it is recommended for a thorough understanding of the Agreement.
– This agreement shall have complete details of seller which includes full name, PAN, Address and Bank account information.
– This Agreement shall be witnessed by two individuals one from buyer and the other from seller side.
– Confirm the authenticity of the documents and ensure the clarity on the ownership transfer . Verify the clearance of all the dues which are related to property till the transfer date.
– The agreement should fully indemnify the buyer against any sort of disputes regarding title and possession of the property.
– 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.
– Mention the payment schedule in detail for avoiding further ambiguities and clearly outline the details of all the amounts which are to be paid.
– Include a dispute resolution clause to outline the mechanism for settling disputes through litigation
– Consider mentioning any additional benefits or agreements beneficial to the buyer to prevent misunderstandings in the future.
– Incorporate a penalty clause in case of failure to adhere to any important conditions by either party.
In conclusion a sale deed in India is a vital document which records the terms of the sale. It includes the information such as the property address, description and the legal description of property sold. It also includes the detail about any existing liens on the property and any restrictions on use that have been given to any party by law. Generally a copy of sake agreement will be attached to the sale deed.