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Agreement of Sale vs. Sale Deed: Key Differences

By LODHA

December 08, 2023

Purchasing property takes you a step closer to fulfilling your dream home.  It's a significant milestone that symbolizes your financial prowess and the realization of long-cherished aspirations; nonetheless, it also brings along a flurry of legal processes.

If you've had any dealings concerning property, or are anticipating the same in the future, it's crucial to know the difference between a sale agreement and a sale deed. These two documents are the pillars upon which property transactions stand, and they can greatly influence the outcome of your real estate endeavours. While the two terms are often used interchangeably, they refer to two distinct documents that serve varying purposes. This understanding will not only protect your interests but also ensure a seamless and legally sound transaction. In this blog, let's delve into the distinctions between an agreement to sell and a sale deed.

Understanding What is a Sale Agreement for Property

Essentially, a sale agreement is a preliminary agreement between the buyer and the seller of a property.  It outlines the terms and conditions under which the property will be sold, and it serves as a legally binding contract that safeguards the interests of both parties during the transaction's intermediate stages.

However, this agreement between a buyer and seller of property does not refer to an immediate transfer of ownership rights. So, the buyer does not develop a right or interest in the property by simply signing such a house sale contract. 

To help you understand real estate sales agreements better, here are the elements it comprises:

- It occurs between two or more parties and is a buy or sell agreement for the future.
- A sale agreement format should specify the property's exact location, boundaries, and any relevant details.
- Since it is a property purchase agreement, it should include the value, payment details of the same, and how original documents have to be delivered upon the final payment.
- A real estate purchase and sale agreement confirms that the titles of the property are clear and facilitates the execution of the sale deed agreement and registration. It's also crucial to get refunds if the title is found to be improper as it acts as proof of non-completion of sale.
- A sale agreement delineates a proper method of property delivery and can act as a remedy if any legal issues arise.

Deciphering What is a Sales Deed for Property?

A Sale Deed Agreement, also known as a Conveyance Deed or a Title Deed, sales deed means the final and irrevocable legal document that transfers the property's ownership from the seller to the buyer. It is the conclusive evidence of the property's sale and signifies the completion of the transaction.

Do note that a transfer deed is drawn only when the contractual terms listed in the sale agreement have been fulfilled. Additionally, a deed of sale of real property must be registered at the registrar's office as per the Registration Act, of 1908. 

To better understand a sale deed in real estate, here are the elements it comprises of:

- A sale deed format includes the details of the parties involved and a description of the property. 
- It acts as a transfer of titles, rights, interests and claims of property.
- A sale deed draft contains the value of the consideration involved in the sale along with other price details. 
- Part of the sale deed information is a clause that remarks on the transfer of authority concerning privileges, easements, and facilities, from the seller to the buyer. 
- It also lists out the compensation the buyer will receive in case there is any loss arising out of negligence to the property on the seller's end. 

Agreement of Sale vs Sale Deed; What is the Difference?

A sale agreement and a sale deed are two types of contracts for buying a house from an owner. Here are the various points on which the two documents differ in terms of residential real estate transactions:

Purpose

A flat purchase agreement acts as an implication that the property will be transferred in the future. On the other hand, a sale deed of a flat is an indication that the property titles are to be transferred immediately. 

Risks

With a house sale agreement, a seller is to remain liable for any risks till the property is transferred. However, once a sale deed for a house comes into effect, the risk is immediately transferred to the buyer.

Contract

A home purchase agreement is a contract wherein the terms have not been implemented at present. So, it is an executory contract. A sale deed for a house property is an executed contract. 

Violation

If you breach an agreement of sale, you may get involved in a suit for damages and for terminating a contract. However, breaching an apartment sale deed can result in the filing of a legal complaint along with an ask for monetary compensation as damages. 

Contents

The Agreement of Sale includes terms, conditions, and contingencies, while the Sale Deed includes property details, ownership transfer, and encumbrances.

Registration

While the norms concerning the registration of agreements of sale differ across states, it is mandatory to register a sale deed.

At Lodha, our commitment to clear titles, transparency and legal compliance ensures that buyers can invest with confidence. With timely handovers and a reputation for legal integrity, we ensure that property transactions are legally sound, giving buyers peace of mind and a secure investment.

Frequently Asked Questions 

1. What is the difference between Sale Deed and Registration?

The Sale Deed is the agreement that transfers ownership of a property, and Registration is the official confirmation of that agreement with the government.

2. What is Apartment Deed?

An Apartment Deed is a legal document that conveys ownership rights to an individual for a specific apartment within a multi-unit building. It delineates the property boundaries and outlines the terms and conditions of ownership for the designated unit.

3. Can the Agreement of Sale be terminated?
Yes, the Agreement of Sale can be terminated by mutual consent of both parties or due to a breach of terms outlined in the agreement, allowing for legal dissolution of the contract. Termination conditions are typically specified in the agreement itself.

4. Can a Sale Deed be terminated?
A Sale Deed is a final, legally binding document that signifies the completion of a property transaction, and it is not typically terminated once executed. Any disputes or issues will require legal resolution or mutual agreement between the parties involved.

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