Agreement of Sale vs. Sale Deed
Purchasing a real estate property can be a long, time-consuming and complex transaction, which can span over a couple of weeks or even months.
It involves multiple steps including finding a property with the help of a real estate agent, conducting due diligence on the property, arranging funds, navigating through the legal complexities and much more. When buying a property, it is important to understand the distinction between a sale agreement and a sale deed. These two contracts serve as the foundation for property transactions and can have a significant impact on the result of your real estate ambitions.
What is an Agreement for sale?
A Sale Agreement/Agreement for Sale is a preliminary agreement between the buyer and seller of a property.
It lays down the terms and conditions under which the property will be sold, and it acts as a legally enforceable contract that protects both parties’ rights during the transaction’s many stages.
The agreement generally includes information about the property, such as its description, price, payment plan, possession date, and any other special criteria agreed upon by both parties.
This agreement between a buyer and seller of property does not result in an immediate transfer of ownership rights.
In Maharashtra, an Agreement for Sale must be registered under Section 17 of the Indian Registration Act, 1908. It is a good practice to register an Agreement to sell, although it is not required.
What is a Sale Deed?
A Sale Deed is created when a property is sold or transferred. The sale document verifies the transaction and transfers ownership of the property from the seller to the buyer.
However, the deed is only prepared once all of the contractual provisions of the selling transaction have been clearly agreed upon. In addition, the Registration Act of 1908 requires that the deed be registered with the registrar’s office.
Key Differences
The Agreement for Sale outlines the terms before the Sale Deed, whereas the Sale Deed is the ultimate transfer instrument.
Agreement for Sale registration is optional but highly recommended, whereas Sale Deed registration is mandatory.
If an Agreement for Sale is breached, one may have to face a lawsuit for damages and contract termination. However, violating a sale deed may result in the filing of a court complaint, coupled with an application for monetary compensation as damages.
In Maharashtra, real estate transactions begin with an Agreement for Sale and end with a Sale Deed. Both contracts have significant legal importance and should be fully understood by all parties involved to guarantee a smooth and legally sound property transfer procedure. Buyers and Sellers should get legal counsel to understand the ramifications of both contracts before entering into any property transaction.
