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SALE DEED
Today, in India, the Conveyancing is being done by semiskilled persons who do not possess the full and required legal knowledge and skills. Many people involved in Conveyancing are hanging around the Sub Registrar Offices with little knowledge regarding Contract Act, Transfer of Property Act, Indian Stamp Act and Registration Act. They basically got the skills of a computer operator and use cut and paste options extensively to prepare any document by using the templates available without understanding the uniqueness of each document and also importance of capturing all the vital issues/aspects involved in the transaction.
But, Conveyancing has been practiced as a fine art in England and other developed nations by a class of trained lawyers who have specialized as conveyancer after an intensive study of the law relating to contracts and real property. Though the term conveyancing used by most of the England Lawyers for drafting the documents of their clients but as the years rolled by Conveyancing got its own importance even in India too.
In Modern India Draftsman plays an important role while drafting any legal documents or deeds and he can do so if he is highly qualified in the field of law so draftsman must keep in mind all the legal principles before preparing any legal documents or deeds.
The word "CONVEYANCING" means transfer of property inter-vivos i.e. between two living persons.
Conveyancing is an art of drafting deeds and legal documents whereby any right, title or interest in tangible immovable property is transferred from one person to another. Conveyancing is not just an ordinary art but it is thoroughly based on legal knowledge and principles evolved over the years. The term conveyancing is restricted to deeds and documents concerned with the transfer of property; whereas drafting carries a general meaning that of preparing any legal documents or deeds or any other business oriented documents.
It means absolute transfer of tangible immovable property by the vendor to the purchaser by entering into a contract for sale wherein both the parties will settle the terms and conditions of transfer. Such transfer can be done through the registered document and thus delivery of the property can be by handing over the actual possession of the immovable property by the vendor to the purchaser or the person legally authorised by him. In a sale of tangible immovable property, all the statutory rights i.e. easementary rights, beneficiary rights, actionable claims as well as vested interest in the immovable property will be transferred in-toto in favour of buyer from the vendor.
Before explaining the term "Sale Deed", let us define "Agreement to sell" which precedes "SALE DEED" and it protects the interest of both buyer and seller. An agreement to sell is a legal written document on which the conveyance deed is drafted under which both the parties will settle certain terms and conditions i.e. seller will be intending to transfer/sale the property and buyer will be intending to purchase it.
An agreement to sell has to be executed by the seller and the buyer on a non-judicial stamp paper and the same has to be duly signed by both the parties. It has got legal value and if necessary can be produced as evidence in a court of law. An agreement is a pre-requirement for the sale of an immovable property wherein the buyer will pay to seller some token amount as advance and seller must issue receipt for the amount received as token amount.
While entering into an agreement to sell, the seller should mandatorily state all the material defects in the property as well as in the title and it is the right and duty of the buyer to investigate the title before buying the property. There should not be any lis pendens i.e. pendency of suit in a court of law regarding the property in sale. Lastly the agreement to sell must contain all the terms and conditions which are necessary for transaction of a valid sale of an immovable property
The word "SALE DEED" otherwise called as "Conveyance Deed" is a legal written document executed by the vendor and the purchaser which evidences the sale and transfer of ownership of the tangible immovable property.
A sale deed is governed by the Transfer of Property Act and the Registration Act, 1908 and is an important document for both the buyer or the transferee and the seller or the transferor. A sale deed is executed, usually, after the execution of the agreement to sell, and after compliance of various terms and conditions between the seller and the purchaser mutually. A sale deed is the main document which gives details of how the seller got the property, at what consideration the seller is selling the property and assurance to the purchaser that the property is free from any encumbrances, liabilities or indemnity clauses. A sale deed acts as an essential document for the further sale of the property by the purchaser as it establishes the proof of ownership of property
Requirements Of Sale Deed
Sale deed is one of the most valuable legal documents in a purchase or sale of a property. A sale deed is drafted by legal draftsman on a non-judicial stamp paper of the requisite value as prescribed by stamp act of the particular state concerned. Today, in many States including Andhra Pradesh and Telangana, the stamp papers are available up to the value of Rs.100/- only. The parties shall use 5-6 Non-Judicial stamp papers and remaining amount shall be paid through challan system (AP) and through stamping and other mechanism provided by the State Government (in others States). A draftsman must include certain clauses while preparing the construction of the sale deed which are as follows:
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Name of the deed:- It is the parties who have to decide that which deed has to be prepared e.g. DEED OF SALE or DEED OF MORTGAGE or DEED OF LEASE etc. and based on which there will be transfer of ownership of immovable property. Since this Sale deed, parties may use DEED OF SALE (OR) SALE DEED.
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Parties to sale deed:- An absolute sale deed must contain the names, age and respective addresses of parties to the transaction and both the parties i.e. seller and buyer must be competent to enter into a contract so that it will not affect the validity of the valid sale. It is very much important that the sale deed is duly signed and executed by both the parties with their bona-fide intention. A valid sale deed must start with clear description of the parties.
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Description of the property sold:- A valid sale deed must contain full description of the property which is the subject matter of sale. It must include identification number, total plot area, construction details as well as its location with its surrounding areas. A schedule of the property must be included in the sale deed which will define the exact location where the property is actually situated.
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Agreement for sale:- In the agreement for sale both the parties may mutually settle the terms and conditions of the agreement so that it will not affect the rights of the parties. A sale deed may be preceded by agreement to sell.
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Sale consideration clause:- A sale deed must include the clause stating the sale consideration/amount as agreed between the seller and the buyer which has to be paid by the buyer to the seller on the execution of sale deed. A sale amount should be clearly stated in sale deed as agreed in the agreement to sell so that there should not be any onus on the parties to the transaction.
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Advance payment, if any:- If there is any transaction of token amount paid by the buyer to the seller then it has to be clearly mentioned in the sale deed, and how much is the remaining balance to be paid on the execution of the sale deed.
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Mode of payment:- It is always the buyer who has to decide that how he is going to pay the sale consideration amount whether by Cash /Cheque/ Demand Draft and the same has to be agreed by the seller.
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Passing of the title:- A sale deed should contain the clause when the original title of the property to be passed to the purchaser. A time limit should be given to the seller for the transfer of the title. Once the title of the immovable property is transferred, all the rights will pass to the purchaser.
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Delivery of the possession: :- The possession of the immovable property will be transferred to the purchaser by the vendor once the registration process is completed. A clause in the sale deed must state when there will be actual delivery of the possession.
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Indemnity provision if any:- A seller must clear all the statutory charges i.e. property tax, electricity charges, water bills, cess, society charges, maintenance charges and all other charges relating to the property before the execution of the sale deed. In case there is any encumbrance on the property, the seller needs to repay the loan amount and get the property papers cleared of the encumbrance. It is the duty of the buyer to verify the encumbrance status from the office of the Registrar/Sub Registrar/Mee Seva Centres (in AP).
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Execution:- Once the Sale Deed is prepared all the parties to the deed shall execute it by affixing their thumb impression or full signature. Each page should be signed by the seller and buyer. Any erasure, alteration, addition or deletion is to be authenticated by full signature of the parties. Execution of the sale deed requires to be witnessed by two witnesses. The witnesses shall give their full particulars and addresses.
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Registration According to Section:- 17 of "The Registration Act, 1908", the registration of a tangible immovable property is compulsory if the value of the respective property exceeds rupees 100/- and it is the registration of the property which makes the sale valid. For getting the registration done both the parties must be present in person or through their duly authorized agent(s) before the jurisdictional sub-registrar office with the original documents within four months from the date of execution. A stamp duty has to be paid by the purchaser to the sub-registrar for getting the registration done. A certified copy of the registration document to be obtained for the future reference.
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Testatum:- Once all the terms and conditions have been settled between both the parties, a sale deed is prepared. The executed sale deed should be witnessed by at least two witnesses one from seller side and one from buyer side, giving their full names, addresses and signatures.
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Original documents:- Once the property gets registered under the registration act all the original documents of the sold property to be hand over by the seller to the purchaser. All the statutory rights along with ownership, possession, title, interest will get vested in favour of the purchaser.
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Default clause:- An agreement for sale of immovable property should include the clause stating if there is any default by the vendor or the purchaser then the party who rescinds the contract need to pay damages to the other party for the breach of contract so that it will not affect to the execution of the sale deed.
What Are The Important Things That A Property Sale Deed Should Contain?
A Sale Deed is the Ultimate Document that is required for transfer of property rights from one individual to another. Without a registered sale deed the rights of a property cannot pass on from the owner to the buyer. Here are a few things that a Property Sale Deed should contain.
The details of the individuals including their names, spouse name, fathers name etc. Their complete present address will also form a part of these details.
Sale Consideration The sale consideration must be agreed upon by both the parties. The amount should be mentioned on the sale deed before it is registered with the sub registrar.
Location and other details of the property. The location and other details of the property must be clearly mentioned in the sale deed.
Seller must clear all charges The Seller must clear all charges pertaining to the property. These include taxes paid to the local authorities and all other dues including electricity and water charges etc
Original Documents To Be Handed Over
All original documents have to be handed over by the Buyer to the Seller. This maybe in respect of whatever sale deeds have been executed by the previous owners.
Both Buyer And Seller Have To Be Present At The Registrar's Office
The Buyer and the Seller have both to be Present at the Registrar's Office for Registering of the Sale deed. This must be done at least 4 months before the execution of the sale deed. A registration cannot take place without both the parties being present.
Execution Of Sale Deed
At the registrar's office a thumb impression and photographs are likely to be taken. All the concerned parties are required to sign on each page of the sale deed.
Witnesses
There need to be at least two witnesses at the time of signing the sale deed. Preferably, both the buyer and the seller can have one witness each during the registration of the sale deed
Fulfilling Timeline
It is the responsibility of both the buyer and the seller to work on a timeline to complete the process of registration. There should also be a declaration that the property is not subject to government acquisition. It's important that you read the sale deed before getting the same registered.
Key Points For Drafting A Sale Deed
The key points given below, from Seller and a Buyer's perspective should be included in a Sale Deed, and should be kept in mind while drafting a Sale Deed for selling/ buying residential premises. These guidelines are merely indicative and vary from case to case depending on the commercial arrangement and agreement between the parties and the local laws that may apply
Key Points For The Buyer.
Property Description
The exact description with the areas and location of the premises should be mentioned, including description of any parking space(s), fixtures and fittings, etc., or any other benefits being provided.
Title Verification
The Buyer should ensure that the Seller has complete control and valid title over the premises and has the rights to sell the property. The Seller should furnish adequate proof to establish beyond doubt, his title over the premises.
Encumbrances/ Third Party Claims
The premises should be free from all kinds of third party claims/ encumbrances, such as prior sale, gift, mortgage, disputes, attachment in the decree of any Court notices, lien, injunction, lease, etc
Representations & Warranties
The Buyer should take appropriate representations and warranties with respect to the title to the property, the Seller's rights to sell and that the property is free from all encumbrances.
IStamp Duty & Registration
The Sale Deed should be appropriately stamped and registered in accordance with the applicable stamp duty as per the applicable laws. The Sale Deed should specify whose obligation it is to pay the stamp duty and the registration charges.
Revenue Records/ Mutation
The Sale Deed should be entered into the mutation/ revenue records of the concerned authorities, depending on where the property is located and the Buyer should be reflected as the owner of the property. The records of the society/ apartment/ builder, (if property is located in a society/ apartment or if is still under the authority/ control of the builder), as the case may be, should also be updated and the Buyer should obtain an endorsement in its name with respect to the property.
Title Flow
The complete title flow in relation to premises along with references to the relevant documents should be stated in the Sale Deed.
Relevant Documents
All relevant documents including the original title deeds, should be handed over to the Buyer by the Seller, simultaneously with the execution of the Sale Deed.
Ownership & Rights
The Sale Deed should clearly specify that from the date of execution of the Sale Deed, the Seller shall have no rights/ claims pertaining to the premises and the Buyer will be the sole and absolute owner of the premises and further shall be inter alia, entitled to,; (i) all ownership rights; (ii) rights over all attachments in the premises; (iii) rights pertaining to the land beneath the premises; and (iv) right(s) of way, if required.
Utility Services
The Sale Deed should mention that the Seller has no-objection to transfer of electricity, water and other such utility connections required on the premises (including the security deposits made with the concerned authorities in this regard) in his name.
Other Costs
The Sale Deed should specify all other costs and expenses that may be involved such as transfer charges payable to the builder, society transfer charges payable to the society, as may be applicable, and also whose responsibility it will be to make these payments.
Handover Of Possession
The Buyer should ensure that the Sale Deed clearly mentions that the handover of peaceful and vacant possession of the premises shall take place simultaneously with the execution of the Sale Deed.
Power Of Attorney
In case the Seller originally purchased the premises through a power of attorney granted to another person or has given any power of attorney to any person, the Buyer should ensure that the Sale Deed clearly mentions that upon execution of the Sale Deed, the power of attorney holder shall not have any rights in relation to the premises.
Consideration
The Sale Deed should specify, (i) the total consideration payable, (ii) the amount of sale consideration already paid (whether under an Agreement to Sell or otherwise), if any, and (iii) the manner of balance payment, whether upfront or in instalments. Copies of the cheque, demand draft, etc., should be attached, depending on the manner of payment.
Claims/ Charges
The Seller should be responsible for all and any claims, charges, taxes, duties, etc., that may arise in connection with the premises till the date of execution of the Sale Deed, unless otherwise agreed.
Indemnities
The Buyer should typically obtain indemnities from the Seller, inter alia from and against, (i) any defect in the title of the premises or due to any legal proceedings pendingor threatened against the premises; (ii) breach of the Sale Deed, or, (iii) all suits/ proceedings or any other claims/ penalties which the Buyer may suffer in relation to the period until the execution of the Sale Deed, (iv) misrepresentation/ fraud by the Seller, etc.
AThe court which will have jurisdiction in case of any dispute arising between the Buyer and the Seller should be mentioned.
Key Points For The Seller.
Property Description
The exact description with the areas and location of the premises should be mentioned, including description of any parking space(s), fixtures and fittings, etc., or any other benefits being provided. The Seller should ensure that all rights of the Buyer are restricted to the said area. ➢ Claims/ Charges a The Seller should ensure that the Sale Deed specifically provides that from the date of execution of the Sale Deed, the Seller shall not be responsible for any charges/ claims which may arise in respect of the premises whatsoever and that the Buyer will be the solely responsible for any claims/ charges arising therewith.
Consideration
The sale consideration outstanding to be paid by the Buyer should be mentioned. If the consideration is to be paid in instalments, then definitive timelines pertaining to such instalments must be clearly mentioned.
Indemnities
The Seller may obtain indemnities from the Buyer against any breach of the provisions of the Sale Deed or, misrepresentation/ fraud by the Buyer.
Utility Services
The Seller should ensure that the Sale Deed clearly provides that the Buyer shall only be entitled to transfer the electricity, water, telephone or such other connections as may be agreed between the parties, in relation to the premises (including the security deposits made with the concerned authorities in this regard) in his name, only after the actual conveyance of the premises.
Stamp Duty & Registration
The Sale Deed should be appropriately stamped and registered in accordance with the applicable stamp duty as per applicable laws. The Sale Deed should specify whose obligation it is to pay the stamp duty and the registration charges.
Once all the terms and conditions have been settled between both the parties, a sale deed is prepared. The executed sale deed should be witnessed by at least two witnesses one from seller side and one from buyer side, giving their full names, addresses and signatures.
Revenue Records/ Mutation
The Sale Deed should be entered into the mutation/ revenue records of the concerned authorities, depending on where the property is located and the Buyer should be reflected as the owner of the property. The records of the society/ apartment/ builder, (if property is located in a society/ apartment or if is still under the authority/ control of the builder), as the case may be, should also be updated
Jurisdiction
The court which will have jurisdiction in case of any dispute arising between the Buyer and the Seller should be mentioned.
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