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Essentials of a Sale Deed

  A sale deed is one of the most important documents in any deal involving housing or property. It is the document that proves one as the owner of the property. It is drafted when the sale is done and it is the one that completes the sale. It does so by transferring the ownership rights to the buyer. Provisions of the Transfer of Property Act, 1882, and the Registration Act, 1908 are the acts that govern the said sale deed. 

Now, once this deed is drafted and signed, the rights get completely transferred. Due to this, a sale deed is of paramount importance and it is essential that it is drafted in a well-organized and effective manner. Firstly, it is necessary to look at when a sale deed comes into the picture and to whom it is applicable. Simply put, the sale deed becomes essential when there is a sale of a property. It is thus applicable to both the seller and the buyer and acts as proof of transfer of ownership and hence, the ownership of the buyer. 

Sale deed and sale agreement are different terms

It is important to understand that a sale deed is not the same as a sale agreement. While the latter is merely an agreement to transfer the property later, the deed actually transfers the property. Naturally, for a sale deed, there are certain essentials that must be kept in mind to ensure that the deed is legally binding and to remove any difficulty which is dealt with below.

What are the essentials of a sale deed?

  • Details on parties: While drafting a sale deed, first and foremost, it is absolutely necessary to mention the name and the details such as an address, age, contact, occupation of the parties involved i.e. the buyer and the seller. It is a must that these details are bonafide. There must then be a description of the property with complete details on its dimensions, registration number, construction details, location, neighborhood, and so on. 
  • Consideration of sale: The sale deed must contain the exact consideration of the sale which is the price at which the property is being transferred. It must be mentioned in both words and numbers. Along with the same, the mode or method of payment must also be specified. Similarly, if the payment is being made in installments, full details on the same, the regular payment, and the time duration must be specified. There must also be complete clarity on the delivery of the property and how and when it shall be transferred. 
  • Other important clauses: Apart from the details of parties and consideration, there are certain details or ‘clauses’ that are must-haves in a sale deed. For example, there is a ‘Transfer of Title’ clause which is a key component as it expressly states the intent of the seller to transfer ownership of the property to the buyer. Further, Encumbrance clauses and Indemnity clauses are also essentials in this regard. The former is one that ensures that the seller has freed the property and hence the buyer of all existing charges like taxes, arrears, and so on. If there are any such charges, the indemnity clause takes effect as it indemnifies the buyer against them as well as any legal dispute relating to the property arising due to the prior actions of the seller.
  • Default clause: Finally, a sale deed must contain a default clause were details on how the penalty has to be paid by either the buyer or seller on defaulting can be elaborated. It can also include details on how to resolve disputes arising out of the same. 

Apart from these, there can be various other details and clauses that can be added as long as they are legally valid and fair. All of the aforementioned essentials must be kept in mind and included while drafting a sale deed.

The sale deed is of huge importance and therefore must be drafted by a legal personnel

The sale deed is of huge importance as it is a legally binding document that acts as proof of ownership. Since it contains a plethora of details on the transfer of the property, it provides clarity to not only the parties themselves but also to others who could be interested in the same such as an investor in case of resale. Thus, such a valuable document requires utmost care in drafting. Lapses in drafting could have huge repercussions and to avoid such a situation, care is required. This is exactly why drafting must be done preferably by legal personnel who are trained in doing it. 

By Nevin Clinton