All you need to know about the sale deed

Understanding the Property Buying Process

First, let's break down the essential steps involved in purchasing a property. The initial phase is negotiating the price with the seller. To secure your commitment, an advance payment to the seller is required. Typically, a builder will need to pay a 10% deposit and complete a booking form prior to the purchase. Once the buyer and seller reach an agreement, both sign a contract which outlines agreed-upon terms, including a payment timeframe—often spanning two to three months. However, keep in mind that this agreement is not equivalent to a sale deed. Here's what you need to learn about the sale deed and its importance.
A sale is finalized when the seller officially transfers the ownership rights to the buyer. The deed of sale is drafted and registered with the relevant state authority, officially validating the transaction.
How is a Sale Deed Executed? – RoofandFloor Blog

What Is a Sale Deed?

The deed of sale is a conclusive and legal document that facilitates the transfer of ownership of a property. It elaborates on the terms of the sale and must be signed by both the buyer and the seller. Depending on the context, this document may also be referred to as a contract of sale or a property sale contract. The bill of sale adheres to common law, the Contracts Act, the Transfer of Property Act, among others. While it follows standardized terms across various jurisdictions, certain elements are particularly relevant in India, like consideration (usually aligning with the total amount paid).

Advantages of a Sale Deed:

  1. Protection for Both Parties – A meticulously drafted deed safeguards both the buyer and seller by minimizing ambiguity and legal risks.
  2. Specification of Area – Buyers often appreciate the clarity of having precise square footage and location details outlined.
  3. A sale deed is a legally binding document that finalizes the transaction and stands enforceable under law.

Key Clauses and Elements in a Sale Deed:

The sale deed encompasses various critical details, including:

  1. Party Details – This section contains names, ages, and addresses of both buyers and sellers.
  2. Property Information – This includes the property’s location, a comprehensive description, and relevant construction specifics.
  3. Payment Information – It specifies the property's price and the method of payment, whether it's via credit card (Visa, MasterCard, Discover) or a direct bank transfer.
  4. Transfer of Original Documents of the property alongside possession details.
  5. Clear Dues on the Property – Ensures that there are no outstanding loans, taxes, liabilities, or any other dues on the property.
  6. Indemnity Clause – This clause secures the buyer's interests, providing a safeguard against future disputes by stipulating compensation for any losses or expenses that could arise.

Steps to Execute a Sale Deed:

  1. Draft the Sale Deed – Start by preparing a sale deed that outlines the owner's rights, duties, and interests regarding the property, including any encumbrances, liens, loans, taxes, and neighboring property details if applicable.
  2. Pay Stamp Duty – This tax is imposed by the Indian government on property transactions and typically falls on the buyer, varying by state. More insights can be found in our comprehensive video about stamp duty.
  3. Signature Required – The sales deed needs signatures from both the buyer and seller, confirming their agreement to the sale terms. It must be registered within four months from the signing date to maintain its validity.
  4. Registration of the Deed – The sale deed functions not only as proof of ownership but also as a crucial document for tax purposes. It acts as an affidavit from both parties and must be submitted to the revenue department for registration under various tax laws within the stipulated four months. Missing this deadline could jeopardize your rights over the property.
  5. Transfer of Original Documents – The seller will present the original documents, while the buyer completes the payment required to finalize the sale deed.
    Being informed about these procedural, essential, and legal aspects is crucial if you're considering selling your property or purchasing a new one.