Drafting Sale Agreement

In real estate, the two main parties involved are the buyer and seller of the property. Be it the selling of a house or a commercial property, an agreement is created to mutually benefit both buyer and seller. For a successful deal, both buyer and seller need to ensure that the terms and conditions are laid down properly for a hassle-free deal. Few things need to be ensured for a clear and tension-free transaction.

The sale of a piece of real property usually involves two transactions- the making of the preliminary agreement called the contract and the delivery of the deed in exchange for the purchase price. Before the making of the contract, there may have been a series of negotiations between the parties but when the contract has been made and signed, it is assumed that the final agreement has been reduced to writing and that the contract contains the entire agreement. It is hence of great importance that the agreement may be carefully prepared. For this purpose, it is good to hire a professional to guide you through the process. However, as an informed and responsible buyer, it is good to know the overall process as well.

1.What is an agreement of sale?

An agreement of sale accounts for the terms and conditions of the sale of property by the seller to the buyer. These terms and conditions entail the price at which the property is to be sold and the future date of full payment. In simple words, it is an agreement to sell property.

No particular form is required for the contract. Any agreement that can be understood clearly, describing the property in such a way that it is capable of identification, is apt. It does not have to be written in English or written with a specific ink. The language may be any but translatable to English.

The agreement for sale of a property is between a landlord/real estate owner and tenants. The primary objective of the contract is to ensure that the rent agreement is signed by both parties, money is paid on time and the date of termination of the contract is mentioned correctly. The contract functions are as follows:

Contract Creation: The Landlord initiates the contract by setting up the rental terms and the details of the landlord and tenants. Typically, this is done with the help of a local agent or lawyer.
Contract Commencement: Tenant signs the contract and rent begins and the rental agreement cannot be confirmed again, thus eliminating the possibility of overwriting the current tenant.

2. Importance of agreement for sale

A purchase and sales agreement considers the following certain aspects.

Anything in writing is beneficial for both parties. It has the following benefits for both parties:

Prevents Miscommunication: Keeping a standard contract in place provides information that may not have been discussed, thereby preventing any miscommunication or confusion. Even if both parties have a good relationship, if the agreement is made over the phone, or in an informal gathering, the safest option as a follow-up step is to put everything in writing.
Provide Details: An agreement between two parties ensures the proper execution of any contract. Formal contracts comprise terms for settling disputes including the state in which it is to be arbitrated.
Provide Legal Backup: The most important reason behind having a sales agreement is to protect both parties from legal disputes. Agreement of sale helps the court decide if there was a valid contract by examining the contents of the document and the subsequent actions of both parties.

3. An agreement of sale includes the following terms

Date of Execution
Details of Buyer and Seller (Both Parties)
Details of Witnesses
Identification of Parties and Property
Earnest Money Deposit
Items Included and Excluded in Sale
Contingencies
Disclosures
Price and Terms
Closing Date and Costs
Terms of Possession
Default
Signatures of Each Party

4.What is a Sale Deed?

A Sale Deed is a document that is created when full payment is made by the buyer to the seller when the actual transfer of the property takes place. The benefit of a sale deed is simply getting legal recognition for your sale transaction. It clearly lays down the description of the property, both parties and their rights and responsibilities. It can be used as evidence in case of a legal dispute.

It is an important legal document executed between the seller and the purchaser during the time of purchasing the property. Here, the ownership changes from the seller to the buyer. Aflat sale deedis essentially a proof of property sale deed transfer outlining the rights and obligations of each party.

The following are the steps to transfer property through Sale Deed:

Understanding Requirements: Hire a lawyer and clearly discuss all the requirements.
Drafting Procedure: Based on the requirements, the draft of sale deed agreement can be prepared within 3 working days for review and approval.
Printing Sale Deed: Once the draft is approved, the sale deed can be printed on a non-judicial stamp paper.
Seeking an Appointment with the Sub-Registrar: Reach out to the Sub-Registrar’s office under whose jurisdiction the property comes under through the lawyer.
Getting the Sale Deed Registered: The Sub-Registrar signs the documents in the presence of the buyer, two witnesses and the lawyer. It then gets registered after paying the registration fees.
Registered Sale Deed: Once it is signed and the payment is made, the registered sale deed is issued by the Sub-Registrar’s office.

Clauses in a Sale Deed

Parties involved in the Sale Deed (Vendor and Vendee): It should clearly mention the names and addresses of both parties entering into the transaction. Moreover, both parties must be competent so that the validity of the contract remains unaffected.
Description of the Property: A legitimate sale deed should include a complete description of the belongings concerning the sale’s concerning the matter. It should encompass identity number, overall plot area, production information in addition to its region with its surrounding areas. An agenda of the belongings should be covered within the sale deed to outline the location wherein the belongings are virtually situated.
The Sale Consideration: A sale deedought to consist of the clause declaring the sale consideration/quantity as agreed between the vendor and the customer which needs to be paid with the aid of using the customer to the vendor at the execution of the sale deed. A sale quantity ought to be definitely said in the deed for sale as agreed in the settlement to promote so that there ought to now no longer be any onus at the events to the transaction.
The Payment Method Clause
Advance Payment and Installments: If there may be any transaction of the quantity token paid through the client to the vendor, then it needs to be actually stated alongside the sale deed. The ultimate stability to be paid at the execution of the sale deed is also required to be mentioned here. The choice of the mode of charge for the sale consideration, whether or not a cheque, coins or call for the draft, is of the client and should be agreed upon through the vendor.
Title Clause Transfer
Delivery of the Deed and Possession of the Property
Indemnity Clause and the Encumbrance Clause
Liability in case of a Default
Registration and Witnesses
Right to Quiet Enjoyment of Property
Reddendum Clause
Tenendum Clause
Warranty Clause (Ownership)
Time is of Essence Clause
Right to Call off the Deal
Dispute Resolution

5.Is the sale deed the same as the conveyance deed?

The phrase ‘transfer of title’ is used in a sale deed, meaning the transfer of ownership. It is the clause that specifies when the title in the property is transferred to the buyer on the basis of ownership. It can also be called a conveyance deed. It specifies the intention of the seller to transfer ownership to the buyer. All sale deeds can be conveyance deeds but not all conveyance deeds are sale deeds. Conveyance deed is a slightly broader term used in a property ownership transfer. \

6.A sale deed includes the following details

A sale deed includes the basic details:

Name and address of buyer and seller
A detailed description of the property
Total payment required for the sales
Mode of payment
Date when the payment is to be made

For instance, a Sale Deed sample for a flat consists of the date of execution, name of the property owner, their father or husbands name, occupation and age. If the buyer is a minor, then the name of the representative is to be mentioned. In the next paragraph comes the details of the buyer such as name, age, occupation etc.

7.Sale agreement at the time of property registration

It is a settled proposition of law that the sale agreement comes into life while the seller has the same opinion to promote and the consumer has the same opinion to purchase, for an agreed consideration on agreed terms. It may be oral or it may be through the trade of communications which may or may not be signed. It can be through a report signed by both parties or a report in parts. It also can be through the seller executing the report and turning in it to the consumer who accepts it. In the end, the consumer has the copy signed through the seller and a seller has a replica signed through the consumer.

An agreement forsale and purchase is a reciprocal arrangement imposing obligations and benefits on both parties. The interpretation of this kind of agreement could be ruled through the legal guidelines of agreement regarding the overall performance of reciprocal promises. However, in a contractual agreement, a choice of a seller is reserved for repurchasing the assets offered through them. This choice is like a concession or privilege and it could be exercised on strict fulfilment of the situations at the fulfilment of which it is made exercisable.

The following documents are required to get the Sale Deed registered:

Building Plan sanctioned by the Statutory Authority
No Objection Certificate from Developer/Society (if formed) (The standard NOC formatis followed)
Latest Tax paid receipts
Latest electricity bill and receipt for the property There
All documents of the property owner
Draft of Sale Deed
Power of Attorney
A copy of previous agreements
Recent electricity bills and receipts for the property

8.Key differences between agreement of sale and sale deed

The agreement of sale and sale deed are two concepts that are interdependent on each other. However, both have significant differences between them. The foremost is the purpose of the sale and the sale deed. A sale can be described as the transfer of property which makes it an executory contract whereas a sale deed is the document which is required for the actual transfer to take place, which makes it an executed contract. For a sale, the seller has to bear the risk or liabilities of the property until it is transferred in the future. On the contrary, risks can be immediately transferred to the buyer when a sale deed is used.

Another stark difference between the agreement and sale deed can be observed in respect to the registration process. For the former, it is not mandatory whereas registration of the latter is a compulsory process. A non-judicial stamp paper is used for agreement of sales by the buyer and the seller. However, for a sale deed, it is mandatory for the buyer to pay stamp duty which is 4-10% of the property’s selling value. Through a sales agreement, a buyer does not gain the right to the property which is the opposite for sales deeds. Another difference is that, a breach of agreement of sale can cater to charges for damages whereas for sale deed, legal complaint or monetary compensation for damage may be required.

A few clauses of the sale agreementinclude details of the property, details of the buyer and seller, final price after negotiation along with payment schedule of property, and advances paid, encumbrance and tax dues on the property to be cleared by the seller.

To summarise, a sale agreement is the forerunner of a sale deed. The sale agreement may or may not result in an actual sale of the property. Hence, only when the sale deed is agreed upon and signed by both buyer and seller, then the sale is finalised and completed.

9.Consequence of failure to execute a sale deed

It is risky to not register or execute a sale deed. An unregistered sale deed cannot be submitted as evidence in Court. A sale deed is an official way of transferring rights of ownership of the property from the seller to the buyer. Once the document is drafted, signed and registered, the ownership rights get transferred to the buyer through the deal.

There are ways to get a certified copy of a lost sale deed. The first and most crucial step is to lodge an FIR at the local police station when the document is lost. The FIR must be valid and therefore the sign of the complainant in the complaint must be checked thoroughly. If the police do not find the document, a non-traceable certificate is issued.

Advertising in newspapers is a way of advertising the loss to show to the Sub-Registrar that best efforts have been made to locate the document. It should contain all the necessary details.

Frequently Asked Questions (FAQ’s)

1. What is Sale and Purchase Agreement in property?

It is done to obtain the legality and authenticity of the transfer of rights so that the Sale And Purchase Agreement is made in the form of a Deed. In the present practice, the agreement was developed due to maintaining the legalities of the parties. This is due to the requirements that have not been met or the existence of matters agreed upon by the parties which must be fulfilled.
The discovery of the regulation itself is the procedure of setting up regulation through regulation officers, because of the lifestyles of doubtful or incomplete legal regulations. Therefore, with that, the binding sale and buy settlement agreement were born. The sale and Purchase agreement lays down all the agreed elements of the deal that also includes the important protection to all the parties involved to complete the sale.
In entering into a binding purchase agreement, both parties must pay attention to the terms and conditions outlined in the agreement, so that disputes do not occur in the future. The making of a binding sale and purchase agreement for land should be made before a Notary Public as an authentic deed. This process can guarantee legal certainty for the parties. And, the clauses in the binding agreement of sale and purchase can be expressly implemented to avoid the occurrence of defaults in the future.

2. What is a land sale agreement?

It is an agreement between a buyer and seller in which the buyer, or owner of the land, sells the land with the condition that the seller retains title to the land until the buyer pays the full purchase price. In other words, a land sale agreement allows the seller to retain ownership of the land until it’s fully paid off. Since the sale deed draft requires abundant caution and presence of mind with sufficient knowledge of property and other allied laws, it would be better if the service of deed writer is utilised to avoid unexpected and uncalled for litigations that may arise in a poorly drafted sale deed.

3. What is the importance of a real estate contract?

A contractual agreement is a deliberate engagement between competent parties supported by a sufficient consideration to do or refrain from doing something not illegal and not against public policy. The term contract in real estate business simply means providing the sale and purchase of the real property. It must possess all of the requisites of any legal contract. Moreover, to be legally enforceable under the statute of fraud, it must be in writing and subscribed by the party to be charged.
It should provide for the sale of the property owned by the seller, subject to such liens and encumbrances as exist and are to remain, and for the price and on the terms that the seller has agreed to accept. The property described should be the one the purchaser has in mind. The exceptions should be such as what they are willing to take, and the price and terms that he has agreed to pay. One shouldn’t draw the contract to represent both parties since their interests might be opposed.

4. Can a seller cancel a purchase and sale agreement?

There is a provision for the seller to cancel a purchase and sale agreement in a situation where the buyer fails to abide by the terms and conditions of the agreement of sale. In a situation where the buyer makes a partial payment and fails to pay the rest of the amount within a certain duration of time, the seller has the authority to sell the property to a new buyer.

5. What is the difference between sale, deed & registry?

Sale Deed is the printed copy of the agreement draft on Stamp Paper. In a sale deed, the value of stamp paper should be according to the instruction of the registrar. Every local district or municipality will have a registrar office of the government. If you are purchasing land or a house, you have to be physically present before the Registrar with the owner of the land. In their presence, both parties have to sign the above-mentioned Sale Deed. Photographs of both the parties will be affixed on the last page of the agreement to prevent the sale of the same property to multiple customers. After this, the Registrar will give a serial number for your land document and finish his duty. After all this procedure you can say that I purchased the land. One copy of the document registrar will keep in his office.

6. Can you sell the property without the original sale deed?

The property can’t be registered if the seller does not have the sale deed. No other document can replace a sale deed.

7. How can we invalidate a house purchase contract?

A house purchase agreement can be cancelled under certain circumstances. The most important factor is to read the contract carefully and point out the cancellation clause through the agent.