This article is written by Mayank Singh, pursuing Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.
A sale deed is an important legal document that needs to be executed when a buyer buys the property. It means the title is transferred from seller to buyer. It consists of the property details and sets out the rights and obligations of each party. A sale deed is made on a non-judicial stamp paper. It is governed by the Registration Act 1908. These parties are also referred to as the ‘Vendor ‘ and ‘Vendee’ in legal documents. A sale deed indicates that the title of ownership has been transferred from the seller in favour of the buyer; or in simpler words, the ownership has been changed from the seller to the buyer. Section 54 of the Transfer of Property Act 1988 defines shade as the transfer of ownership of immovable property for consideration. This transfer of ownership from the seller to the buyer is done by the document called sale deed. Ownership of the properties is an important thing so drafting a sale deed must be faultless.
Important clauses in the sale deed
1. Parties in the sale deed
The sale deed must have the details of the parties. The deed should contain the name, age, address of the proper parties according to the sales agreement.
2. Description of the sales property
Description of the property is a must. For example, if I am the seller selling my 2 BHK flat, I must mention the total plot area, ID number, and exact location of the flat.
3. Sales agreement
Before making the sale deed parties need to enter into a sales agreement to settle the terms and conditions of the agreement. An advance amount is paid by the buyer.
4. Sale consideration
The amount at which the sale is made is contained in the consideration clause the price should be mentioned in both numbers and digits.
5. Payment method
Parties mutually agree in the sale deed to use the payment method like cash, net banking demand, along the amount of payment.
6. Advance payment
In buying a flat token amount is always given by the buyer that is an advance payment to close the deal and the rest of the amount is paid later. It makes the buyer forced to enter into a sale deed. The sale deed must mention the amount that is paid in advance the receipt of the amount shall be given by the seller to the buyer. The buyer can pay the advance payment in instalment as well and interest is charged on that both parties shall agree to make the instalment payment clause
7. Transfer of title clause
This was mentioned that the transfer of ownership from the seller to the buyer sets out the aim of the seller to sell the property to buy. All the rights should be shifted from buyer to seller
8. Delivery of the deed
The sale deed should be handed over to the buyer during the possession of property along with the sales agreement these are the two important documents that have to be handed over to the buyer.
9. Indemnity clause
The property of the sale shall be free from all charges like electricity bills, water bills, motor gauge any due if any charges are left, a buyer who paid the charges has the right to go over to the seller to indemnify him under this clause.
10. Liability in the case of default
If either party defaults, the party at no fault will be paid a penalty fee so that the cell does not get troubled.
11. Registration and witnesses
After the sale deed is ready, buyer and seller X it along with the two witnesses’ testimony as per the registration act 1908. It must be done within four months from the date of execution of the sale deed.
12. Right to quiet enjoyment of property clause
It means there shall be no interruption from the vendor or any third party and the vendor can peacefully enter and enjoy the property that he has purchased.
13. Reddendum clause
This clause is added by the seller even though the title is transferred, the seller has some rights like restrictions while using the property.
14. Tandem clause
This close mentions that any advancement in the property is also being sold by the seller along with the property
15. Warranty clause
This clause satisfies to Vendee that he is now the rightful owner of the property.
16. Time is of the essence clause
The most important closed today in the real estate contract is the time is essence clause. it means one party’s efficacious role within a certain time is needed. Inability leads to breach of contract; this clause mentions the delivery of the documents, termination method, closing date. This clause demands to meet the deadlines to do sales.
17. Right to call off the deed
If certain circumstances arise one can include a clause to refrain them from continuing the future obligations in the sale deed. Usually, parties call off the deed when the other party refuses to hand over the payment and the possession of the property.
18. Dispute resolution clause
This clause is made after mutual agreement to set out the process in case any dispute arises like mediation-arbitration if any party is still and satisfied it can go to court to decide the distance.
19. Miscellaneous provisions
Parties also provide some miscellaneous provisions, the sale deed these are listed below:
- Governing Law: parties through the sales agreement choose the governing law that should be applicable to the sale deed and the sale deed should be enforced and executed by that governing law for example, if I am the seller selling my 2 BHK flat in Mumbai the sale deed shall be governed by the Municipal Law of Mumbai, Maharashtra.
- Severability: this provision is one of the important reasons in the sale deed for any contract it says that if any part of the contract is invalid or unenforceable the other provisions remain valid.
- Confidentiality: this clause restricts the disclosing of any private details or any confidential information between the parties involved in the sale deed It is important to mention the confidentiality clause when drafting the sale deed.
- Breach of contract: when any party violates any of the clauses of the sale deed and terminates the sale deed, the other party can take action on that and recover the losses in the event of a breach of the contract.
- Notices: during the drafting of the sale deed and agreement between the parties regarding the sale the communication plays an important role. This clause is drafted to describe the mode of communication between the parties and the frequency of the communication between the parties to the sale deed.
- Amendments: when any clause needs to be added or struck out by the mutual agreement between the parties as per the terms of the contract the amendments are made. This clause addresses the amendments to be done in the sale deed.
The plan of execution of a sale deed
The first step that is required in the sale deed is to make it if spotless sale deed the drafting is done by the parties to avoid any errors.
The draft of the sale deed shall mention all the details of the parties the details of the property like identification of the property location of the property description of the property, the total area covered by the property, details of construction, facilities provided in the property, any advancement in the property, the consideration of the sale, The monetary transaction between the buyer and seller in the sale deed. The draft should also clearly specify any future obligations of the seller. Once both the parties are in agreement over the contents of the draft sale deed, the same details are taken over to the final document.
Registration of a sale deed
When the sale deed is ready, it needs to be registered in the office of the registrar of that jurisdiction. The party should be aware of the charges and the mode of payment for the same. In the registrar’s office, stamp duty and registration charges need to be paid. The buyer has the responsibility of paying these charges. The process of registration requires the presence of both parties in person. There is also a requirement for the presence of 2 witnesses to make the process legally binding. During the registration, two witnesses must mark their presence. An appointment must be marked Sub-Registrar of properties to register the sale deed.
Can a sale deed be executed by power of attorney?
The Supreme Court of India 2011 ruled that “a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property”. The order directed all the municipal bodies in the country not to register properties based on documents of power of attorney The Supreme Court, on the other hand, reinstated the legality of valid transactions carried out through General Power of Attorney.
The court held that ‘Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said transactions may also be used to obtain specific performance or to defend possession under Section 53 A of the Transfer of Property Act, 1882’.
The states in India followed the Supreme Court order and made it illegal to register properties sold through a general power of attorney. Taken hook up the flow of Black Money that was going through in the real estate sector where titles are being manipulated.
Effect of non-payment of the sale price on the validity of sale deed
In the case, Vidyadhar v. Manikrao, (1999) 3 SCC 573, two-judge bench of Hon’ble Justice Indu Malhotra and L. Nageswara Rao, JJ held that non-payment of a part of the sale price had no effect on the validity of the sale deed. Once the title in the property has already been transferred from seller to buyer, even if the balance sale consideration is not paid, the sale could not be invalidated on this ground. In order to constitute a “sale”, the parties must intend to transfer the ownership of the property, on the agreement to pay the price in present or in future. This fact is gathered from the recitals of the sale deed, the conduct of the parties, and the evidence on record.
When one is drafting the sale deed, it is better to draft with patience while scrutinizing all the clauses correctly because it is an important legal document. Further, it also acts as the main document for further sale by the buyer in the future as it establishes his proof of ownership of the property.
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