This article is written by Rushikesh Jayantrao Dharmadhikari, pursuing Certificate Course in Real Estate Laws from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).

Introduction

A Sales Deed is a document in which a seller transfers his right to the property to the buyer, who then becomes the only owner. Before signing the Sales Deed, the buyer should double-check the seller’s title. As a result, it is governed by the Registration Act, 1908 and it is an important document for both the buyer and the transferee.

Section 54 of the Transfer of Property Act, 1882, defines such provisions as those relating to a sale deed. A sale deed covers any type of transfer of ownership from one person to another for a valuable consideration. This type of paperwork would be used to consider the last phases of a property’s selling.

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There is a transfer of property ownership from the seller to the buyer in exchange for a valuable consideration. The buyer would become the sole owner of the property as a result of this deed. The sales document would outline all of the parties’ rights, terms, and conditions regarding the property. If the rights to future property are present, such a sales deed would represent an agreement to sell. The sales deed is a document that is used in all real estate transactions.

Importance of a sale deed

A sales deed’s legal definition

The Transfer of Property Act, 1882, provides special provisions for sales deeds (TPA). The sales deed is described in Section 54 of the TPA as “any type of transfer of property from one person to another for some sort of valuable compensation.”

Aside from that, the Registration Act of 1908 would apply to Sales Deeds in India. According to the provisions of the foregoing act, such a deed must be registered. The buyer and seller must both sign the sales deed in order for it to be legal.

Within four months of the date of execution of the sale transaction, the deed must be registered.

Benefits of a sales deed

By registering the selling deed in India, you can gain the following benefits:

Prevents any type of fraud

The parties’ effective compliance would be carried out by registering the sale deed. By registering the sale deed, both the buyer and the seller are complying with the applicable provisions of the act.

It eliminates ambiguity

A Sale Deed precisely describes the parties’ actions, rights, and obligations, reducing uncertainty among the contracting parties.

Gives you legal protection

If the value of the asset involved is high, a legal document is always required. As a result, it acts as a legal safeguard in the form of a rental agreement.

When is the sale deed executed?

The document that transfers ownership from one party to another is known as a sale deed. As a result, this must be done when the immovable property in question is ready for a title change. The agreement to sale is a preliminary contract that two parties sign when they first decide to undertake a real estate deal. This document serves as a preamble to the sale deed and contains all of the facts regarding both parties’ rights and obligations. It should also include information such as the property’s expected delivery date, the buyer’s payment schedule, and so on. When the seller’s obligations are completed and the buyer pays the requisite payments, the property is considered sold.

Procedure for execution of sale deed

Prepare sale deed

Both parties usually draft a draft sale deed before proceeding with the final document to avoid any inaccuracies in the final document.

The draft sale deed contains all of the information needed to identify the property, including survey numbers, geographical information, a description of the land, building specifications, total area, and amenities given, among other things. It also contains information about numerous financial transactions between the buyer and the seller. The seller’s future obligations, if any, such as property maintenance, must also be explicitly stated. 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. Before moving over to the final step of registration, the seller needs to make sure that all obligations from his end like payment of relevant taxes, full payment of existing loans and all permits and certificates necessary for occupying the property are made available.

A sale deed’s registration

A Sale Deed is a legal document that must be registered with the Registrar of Properties in the area where the property is located, you should be aware of the charges and the method of payment before proceeding to execute a Sale Deed. Stamp Duty and Registration Charges must be paid in order for a sale deed to be completed. The buyer is responsible for paying the correct amount for these fees. It’s a good idea to double-check the appropriate fees ahead of time and have Demand Drafts, franked or e-stamp papers on hand if necessary. The registration process necessitates the attendance of both parties in person. The participation of two witnesses is also required to make the process legally binding. A meeting with the Sub Registrar of Properties is also required, as the registration can only take place in his or her presence.

The parties are requesting a meeting with the Sub Registrar’s office. There is also the option of booking an appointment online.

  • On the day of the appointment, both parties must be physically present in the sub-office. The original documentation is presented by the seller. The same is verified by the Sub Registrar.
  • The attendance of the parties might also be shown by the power of attorney holder.
  • The sale deed’s witnesses are also present   
  • The selling deed includes the seller’s and buyer’s pictures, thumbprints, and signatures.
  • All parties must have valid identification.
  • The buyer is responsible for paying the registration fees.
  • The registered sale deed can be picked up at the specified time.
  • Property registration is also available online in a few states. The parties appear in front of the authority for final signatures and document registration.

The legal importance of sale deed

Legal importance

A registered sale deed is a document that is legally binding.

Ownership evidence

When the procedure of finalising the sale deed is completed, the buyer receives ownership of the property. The buyer has complete control over the property and receives the title to it.

It also helps the investor and the parties by providing information on the parties and the property.

The following elements can be found in a sale deed

  1. Parties’ names, father’s/names, husband’s and addresses The property’s address, as well as the neighbourhood in which it is located – a complete description.
  2. Mode and timing of sale consideration payment.
  3. Possession is handed over.
  4. Encumbrances on the property, such as a loan or a mortgage.
  5. Statutory requirements are met.
  6. Utility bills, property taxes, and other statutory payments.
  7. Penalty or compensation clause in case of default.
  8. The date of the deed’s execution, as well as the registered deed number, serial number, book number, and page number, are all included.

This data is beneficial because:

  • It reduces uncertainty by outlining the parties’ obligations and rights.
  • It assists an investor in making a decision on whether or not to invest in a property for resale.
  • Buying and selling– The resale of a property is made easier with a sale deed. It is the fundamental document that grants the buyer the title. Based on the deed, he can further transfer this title.

When can a sale deed not be executed?

Within four months of the date of execution, the documents must be delivered for registration. If it is not completed within four months, a four-month grace period is granted upon payment of a penalty. The registrar has the authority to impose a penalty of up to ten times the registration fees. The purchaser of the property is responsible for paying the stamp duty as well as the registration fees.

Significant case laws

In Vidyadhar v. Manikrao, (1999) 3 SCC 573, a two-judge bench of Hon’ble Justice Indu Malhotra and L. Nageswara Rao, JJ found that non-payment of a portion of the sale price had no bearing on the sale deed’s validity. Even if the balance of the sale consideration is not paid, the transaction cannot be voided on this basis once the title to the property has been transferred from seller to buyer. To be considered as “sale,” the parties must intend to transfer ownership of the property in exchange for payment of the price now or in the future. The recitals of the sale deed, the conduct of the parties, and the evidence on record all point to this fact.

Gulab Singh Hamirsingh Rajput vs Tarabai W/O Sagar Singh Bhilala: On 25 April, 1958. Court held that there is no direction to the appellant Gulab Singh to join in the sale deed that may be executed and registered by the other defendants in favour of the plaintiff, though the appellant Gulabsingh has been directed by the decree under appeal to deliver possession of the house to the plaintiff. Such a direction was necessary for the view of the decision in AIR 1954 SC 75 (E). It shall now be incorporated in the decree. The appeal thus fails in substance and is dismissed with costs of respondent No. 1 Tarabai.

Conclusion

Because the sale deed is such an essential legal document, it is best to design it with patience while carefully studying all of the clauses. It also serves as the primary document for the buyer’s future sales, as it establishes his proof of ownership of the property.

As a result, both documents play a role in transferring the title to the buyer, albeit at distinct stages of the transaction. However, in order for these documents to be executed, two parties, namely the Buyer and Seller, must be present during the property transfer. By virtue of owning an indisputable title to the property being sold, the seller must be competent to engage in an agreement to sell or sale deed. To transmit the property in the buyer’s favour, there must also be a monetary consideration. The said transfer of ownership entails the transfer of the subject property’s rights and liabilities, as well as the money involved in the transaction.

References

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