All you should know about a Sale Deed while buying a Property
A property purchase transaction gets concluded with the execution of Sale Deed by the Seller to and in favor of the Purchaser.
The term “Sale” means the intent of the Seller to transfer ownership in his property in favor of willing Buyer for a consideration. A document signifying this intent and when being executed, is termed as a Sale Deed or Conveyance Deed.
The instrument through which the Seller of a property transfers right, interest & title with or without possession for a valid consideration is known as Sale Deed also known as Deed of Conveyance.
This signifies and evidences the conclusion of all negotiations and eventual transfer of ownership upon receipt of the agreed consideration.
Essential Elements of a Sale Deed
The essential elements of a sale deed include the following
- Details of the Parties to the transaction.
- Details of the property sold under that Sale Deed
- Boundaries of the property.
- Linear Measurements of the property.
- Tracing of title of the Vendor to the property, in brief.
- Reason for sale.
- Consideration and the manner of payment by the Purchaser
- Acknowledgement of receipt of consideration
- Indemnification clause for defects in the title of the Vendor
- List of original documents handed over to Purchaser by the Vendor.
- SRO details
Confirming party in Sale Deed
In situations where there exists or claimed or suspected third party interests in the Property apart from the Title Holder (Seller), then such Third Party “Interest” holders are included as Confirming Parties to the Sale Deed. This enhances the title of the Buyer and protects him from future disputes which may arise from such parties. Alternatively a “Confirmation Deed” can also be registered separately Sec 17 of the Registration Act by those “Third party” interest holders. Additional Stamp duty is payable under either of the options.
Minor as seller
A “Minor” is incompetent to execute a Sale Deed and hence has to be represented by a “Guardian” while executing a Sale Deed. A natural guardian or otherwise may represent a Minor in a Sale Deed only with a prior permission from Court. Though the Hindu Minority and Guardianship Act, 1956 mandates the natural guardian has powers to do all acts which are necessary or reasonable and proper for the benefit of minor, Section 8(2) stipulates prior permission from court when dealing with Minor Interests in Properties. In the absence of a permission from Court, the “Minor” within 3 years of attaining “Majority” can prefer a civil suit to declare the Sale Deed as “Null & Void”.
Conditional Sale Deed
The Buyer and Seller, may mutually agree to conclude a sale however subjected to few conditional clauses. When these conditions get documented in Sale Deed and executed in a SRO office, this document is referred to as Conditional Sale Deed. There are no specific guidelines on what constitutes a Conditional Sale Deed and is left entirely to the discretion of the Parties to the Sale. Examples may include Sale executed with a Buy Back provision after 5 years or Condition to complete the construction with 2 years etc etc.
Part payment of Consideration
The statute governing properties viz Transfer of Properties Act, 1882 does not mandate payment of entire consideration during the execution of Sale Dee. The Act defines “Sale” as transfer of ownership in exchange for a price paid or promised or part-paid and part-promised and hence it is possible to execute a sale deed with consideration payable in future either in part or full. In the event of the buyer failing to pay the remaining consideration within the agreed time limit, the Seller is at liberty to annul the Sale Deed previously executed.
Cancellation of Sale Deed
In the event of a Sale Deed becoming in fructuous to the Purchaser or when the conditions agreed in a Conditional Sale Deed are not honored, the parties to the Sale Deed can mutually agree upon to cancel the document. All parties to the Sale Deed will have to execute the Cancellation Deed also. In many Indian States, there exist charges towards cancellation of sale deed.
Time limit for Sale Deed Registration
A sale deed need not be mandatorily registered on the same day of execution. The Registration Act stipulates that a Sale Deed has to be presented for Registration within 4 months from its execution. The District Registrar may condone a delay of 4 more months however with a penalty. Though executed, all parties to the Sale Deed need to be personally present during Registration of the Sale Deed.
Expiry Date of Stamp Paper
There exists a 6 month time frame within which an unused Stamp Paper can be returned for refund. The Indian Stamp Act, 1899 does not prescribe any expiry period for Stamp papers. The buyer of a stamp paper may hold on and use it whenever he deems fit.