Agreement of sale vs sale deed: What every Indian homebuyer must know! Buying Guide

Buying a property is a significant investment for most Indians. It is not just an emotional decision but also a financial one. Therefore, it is essential to understand the legal aspects of property transactions before taking the plunge. Two important documents that every homebuyer must know about are the agreement of sale and sale deed. In this article, we will discuss the differences between the two documents and their importance in a property transaction.

Agreement of Sale

An agreement of sale is a legal document that records the terms and conditions agreed upon between the buyer and the seller before the sale of a property. It outlines the details of the transaction, such as the sale price, payment terms, possession date, and any other relevant clauses that the parties have agreed upon. The agreement of sale is a precursor to the sale deed, which is executed after the payment is made in full.

One of the most critical aspects of an agreement of sale is that it establishes a legal relationship between the buyer and the seller. It acts as proof of the intention of the parties to enter into a transaction, and it protects the interests of both parties. It is a legally binding contract that can be enforced in a court of law if either party fails to meet their obligations as per the agreed terms and conditions.

Sale Deed

A sale deed is a legal document that transfers the ownership of a property from the seller to the buyer. It is executed after the payment of the full sale price, and it is registered with the Sub-Registrar of Assurances in the jurisdiction where the property is located. The sale deed is a crucial document as it establishes the buyer's legal ownership over the property, and it is essential for obtaining a loan, paying property tax, and other legal purposes.

Unlike the agreement of sale, which is a private document, the sale deed is a public document that can be accessed by anyone. It contains the details of the property, such as its location, area, and boundaries, and it also records the sale price and the mode of payment. The sale deed must be signed by both the buyer and the seller in the presence of two witnesses, and it must be stamped and registered with the Sub-Registrar of Assurances.

Key Differences between Agreement of Sale and Sale Deed

The agreement of sale and the sale deed are both crucial documents in a property transaction, but they serve different purposes. The following are the key differences between the two documents:

1. Legal Status: The agreement of sale is a private document that establishes a legal relationship between the buyer and the seller. On the other hand, the sale deed is a public document that transfers the ownership of the property from the seller to the buyer.

2. Execution: The agreement of sale is executed before the sale deed, and it outlines the terms and conditions agreed upon between the parties. The sale deed is executed after the payment of the full sale price, and it transfers the ownership of the property to the buyer.

3. Registration: The agreement of sale is not required to be registered, whereas the sale deed must be registered with the Sub-Registrar of Assurances.

Conclusion

In conclusion, the agreement of sale and the sale deed are two critical documents that every Indian homebuyer must know about. While the agreement of sale establishes a legal relationship between the buyer and the seller and outlines the terms and conditions of the transaction, the sale deed transfers the ownership of the property to the buyer. It is essential to understand the differences between the two documents and their importance in a property transaction to protect one's interests and avoid legal disputes. It is advisable to seek the services of a legal expert or a professional real estate agent before entering into a property transaction to ensure a smooth and hassle-free process.