Article -> Article Details
Title | Difference Between Agreement of Sale and Sale Deed |
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Category | Real Estate --> Investment |
Meta Keywords | agreement of sale vs sale deed, property terms, property investors |
Owner | Harmanjot Singh |
Description | |
There are various terms that are used in real estate and main confuse the homebuyer. We understand that when purchasing or selling immovable property, persons enter into a contract with the seller. It must be noted, however, that the form and format of the agreement can vary. In general, there are two kinds of contracts, an agreement of sale and a Sale Deed. The names of both contracts may sound very similar, so one tends to believe that they mean one thing or the same thing. Let us understand the concept of both. What is an agreement of sale? The Transfer of Property Act, 1882, which governs matters relating to the sale and transfer of property, describes the sale contract or an agreement for sale as follows: According to the Section 54 “A contract for the sale of immovable property, is a contract that a sale of such property shall take place on the terms settled between the parties” Furthermore, the Section 54 specifies that “it doesn’t, of itself, create any interest in or charge on such properties.” In simple words, an agreement of sale is a deal to sell a property in the future. The terms and conditions on which the property in question will be transferred are set down in this agreement. An agreement for sale consists of the following terms:
Importance of agreement for sale: In view of several factors, signing an agreement of sale becomes essential. Firstly, this is legal documentation of the consumer and seller entering into an agreement on the basis of which, in the event of a disagreement, the potential course of action will be determined. In addition, if you apply for a home loan, the bank will not approve your application until you sign an agreement of sale. What is a sale deed? A sale deed is a legal document proving that the seller has transferred the buyer absolute ownership of the property. The rights and interests in real estate are obtained by the new owner via this document. The deed should, however, be drawn only after the clear resolution of all the contractual terms of the sale agreement. In addition, it is compulsory under the Registration Act, 1908, to register a sale deed at the registrar’s office. A sale deed usually includes the following details:
Key Differences
Agreement for sale: It implies the future transfer of property Sale deed: It signifies an immediate transfer of the property titles
Agreement for sale: Unless the property is sold in the future, risk/liabilities remain with the seller Sale deed: Risk is shifted immediately to the new buyer
Agreement for sale: It is an executory contract. An executory agreement is one which has not been fully implemented Sale deed: It is an executed contract
Agreement for sale: Breach of sale may result in a suit for damages Sale deed: Sale breach results in a legal complaint as well as monetary compensation for damages
Agreement for sale: It is not mandatory to register the agreement of sale. Nevertheless, requirements can vary across states. Sale deed: Registration of a sales deed is mandatory. From a legal perspective, to arrive at a hassle-free closure, it is important to understand the terminologies listed above. A lack of knowledge can not only lead you to legal issues but may also put your investment at risk. For example, if you purchased a house under the agreement of sale and failed to execute a sale deed, then the right to property will stay with the developer even though you get hold of the property possession. Therefore, it is imperative to create a sales deed and have it registered to prevent certain circumstances. Only a stamped and licensed deed ensures the buyer’s possession of the legitimate property. |