Steps in the Property Buying Process
Let's explore the process of purchasing a property step by step. Initially, buyers negotiate the price with the seller. Once both parties reach an agreement and the buyer is satisfied with the price, a deposit (usually 10% of the price) must be paid to confirm the booking, typically accompanied by a signed booking form when dealing with builders. Following this, a sale agreement is drafted, outlining the terms and conditions along with a timeline for payment, which generally ranges from 2 to 3 months for properties that are ready to move in, as well as plots or land. However, it's important to note that this agreement is distinct from the sale deed. After full payment has been made, the final sale deed is prepared, effectively transferring ownership from seller to buyer. This transfer is only valid upon registration with the relevant state authority.
What Is a Sale Deed?
A sale deed is a crucial legal document finalized to facilitate the ownership transfer of a property. It encapsulates all terms and conditions agreed upon by both buyer and seller, and it may be referred to as a purchase deed or sales-mortgage deed based on its context. Sale deeds adhere to established legal frameworks such as Common Law, the Contracts Act, and the Transfer of Property Act, although specific details often pertain to Indian law, such as consideration, which usually aligns with the transaction amount.
Benefits of a Sale Deed
- Protection for Parties: A meticulously drafted sale deed ensures both buyer and seller are protected by eliminating ambiguity and mitigating legal risks.
- Clear Definition of Property: Buyers appreciate a detailed description of the purchased property, detailing the square footage and its location on paper.
This document is enforceable by law and acts as the conclusion of a sale transaction.
Key Clauses or Elements in a Sale Deed
- Party Details: Information pertaining to both parties, including full names, ages, and addresses.
- Property Details: Specifics about the property, such as its location and a comprehensive description including area and construction features.
- Payment Information: A section outlining the property's price, payments already received (like the initial deposit), and the payment date, along with modes of payment like credit cards or bank transfers.
- Delivery of Original Documents: Ensures the transfer of original property papers along with possession details.
- No Dues Clauses: Confirms that there are no outstanding dues on the property, including taxes or loans.
- Indemnity Clause: Protects the buyer by allowing for claims against the seller in case future losses or expenses arise regarding the property.
The Process for Executing a Sale Deed
- Drafting the Sale Deed: The first step in executing a sale deed is drafting the document, which encompasses all rights, duties, and interests of the property owner, detailing any encumbrances or mortgages associated with the property, alongside information about surrounding properties if necessary.
- Pay Stamp Duty: Buyers must pay stamp duty, a tax levied by the Government of India when selling a property, which varies by state. For further details, a comprehensive video on stamp duty is available.
- Signing the Deed: Both buyer and seller need to sign the sale deed, confirming their agreement on the sale's terms. This deed must be registered within four months post-signing to maintain its validity.
- Registration: Serving as proof of ownership and a vital legal document for taxation purposes, the sale deed requires submission to the revenue department under various tax laws. Registration must occur within four months of signing; failure to do so can jeopardize the buyer's ability to secure the property.
- Document Handover: Finally, the seller presents the original documents to the buyer upon receiving the appropriate payment to finalize the sale deed.