Understanding the difference between agreement to sell and sale deed
Buying a real estate property brings you closer to your dream life and residence. It represents your financial strength and the achievement of long-held goals. It also boosts your stability and is one of the finest investments. You can use this property to generate an alternative income source. However, it involves an upsurge in legal procedures. You must gather necessary information regarding legal steps like the sale agreement and the sale deed to ensure a hundred per cent legality of your property. These documents secure your ownership. Take note that often, people use these terms interchangeably; they have significant differences. In this blog, we will discuss the meaning and difference between agreement to sell and sale deed so that, as a buyer, you can make an informed decision.
What is a Sale Agreement?
A sale agreement is a preliminary agreement between the buyer and the seller of a property. It gets signed by both parties and contains all the necessary terms and conditions of sale. If the property has two or more owners and multiple buyers (in sharing), it must mention that information. It is a legal contract that safeguards the interests of both sides and maintains the transparency of the process.
Remember, it does not confirm the immediate transfer of ownership. Here is an overview of what the paper must contain-
- The document must state the property’s accurate location, boundaries, and any relevant details.
- To maintain the transparency of the process, it should include the value, payment details of the same, and how the original documents have to be delivered upon the final payment.
- The titles of the property must be cleared. Remember, you can’t get a refund if the titles are not properly cited.
What is a Sale Deed?
A Sale Deed, also known as a Conveyance Deed or a Title Deed. The documents aim to transfer ownership from the seller to the buyer. It works as evidence of selling the property and transferring the ownership. It also establishes that the terms and conditions of the sale agreement have been fulfilled. A deed of sale of real property must be registered at the registrar’s office as per the Registration Act of 1908.
Difference between agreement to sell and sale deed: Here is a glimpse of the factors a sale deed must contain-
- The sale deed must contain the details of the parties involved and a description of the property.
- It works as a transfer of titles, rights, interests, and claims.
- The sale deed must elaborate on the value of the consideration involved in the sale, along with other price details.
- The document must have a clause that remarks on the transfer of authority concerning privileges, easements, and facilities from the seller to the buyer.
- The legal document must include the compensation amount the buyer will receive in case there is any loss arising out of negligence of the property on the seller’s end.
Difference between agreement to sell and sale deed
| Difference | Sale Agreement | Sale Deed |
| Purpose | It stated the terms and conditions of the sale and the names of the involved people. In short, it is a legal document that states the property “will be” transferred. | A sale deed is proof of immediate property transfer. It denotes the title of the property, address and other details. |
| Risks | The sale agreement does not ensure the property transfer. Hence, if the property gets any damage, the loss goes to the buyer. The buyer may take on the risk once they have paid for the goods, even if they haven’t been delivered yet. | The sale deed ensures immediate property transfer. Therefore, there is no risk related to the property’s condition. However, there is a risk of incorrect property details or missing essential clauses. It can affect the legalities of the property and put the ownership at stake. |
| Contract Type | The sale agreement says that the deal will be executed with the XYZ terms and conditions. | The sale deed is kind of a hammer. It says that from now onwards, the agreement is executed. |
| Information | A sales agreement only contains the terms and conditions of the deal that are going to be followed in the future. It also includes the names of the buyer and seller. However, the sale agreement does not specify other details. | A sale deed contains all the information regarding the property, including title, address, etc. |
| Payment | For the sale agreement, one needs to pay the stamp duty and registration fees. Mostly, it gets divided between the buyer and the seller. | The sale deed also involves stamp duty and registration charges, and the buyer needs to pay them. |
Is a Sale Agreement and Sale Deed Mandatory in Property Transactions?
The sale agreement asks for significant investment, and due to this, many buyers ask whether it is mandatory. Well, it is not mandatory for all kinds of property transactions in India. However, a sales agreement holds significant value for both buyer and seller.
The sale agreement works as a foundation of the deal and specifies crucial details such as property title, parties involved, agreed price, and terms, providing clarity and legal intent ahead of registration. It helps to avoid many disputes in the future. Additionally, many banks ask for a sales agreement to get a clear idea about the deal.
On the other hand, a sale deed is mandatory for buying a property. It ensures your ownership and legality of the property. According to the Registration Act of 1908, the registration of immovable property valued above ₹100 is compulsory.
Difference between agreement to sell and sale deed: Frequently Asked Questions
Can a Sale Agreement Get Terminated?
Yes, you can terminate a sales agreement. If you want to cancel it with the consent of your opponent, you can go for a cancellation deed and register it with the sub-registrar. However, if your opponent is not ready to cancel it, a legal suit is the only way of cancellation.
If the sale agreement has any clause regarding cancellation, you must follow that.
Is a Sale Agreement mandatory?
No sale agreement is not compulsory, still, we suggest that you do it to maintain the transparency of the process.
Can I Terminate the Sale Deed?
Yes, a sale deed can also be terminated, however, you must follow the right legal procedure.
Wrapping Up: Difference between agreement to sell and sale deed
A sale agreement and a sale deed are different. One is just a statement of terms and conditions for a deal, while the other is the final step towards ownership transfer. If you are stressing over how to manage it before buying a property. Don’t worry; we offer the correct assistance to every property buyer in this.
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