How to Draft a Sale Deed in India?

A deed of sale is a document that indicates that the ownership of a property has been transferred from the seller to the buyer. In simpler words, it is proof that the ownership of an immovable property has been transferred from one party to another. Therefore, it is a document that acts as essential proof and as evidence of the transfer of ownership by the seller to the buyer. The transfer of ownership includes the transfer of title/ownership from seller to buyer for a fixed consideration. Not only does it describe the property to be transferred in detail, but it also clearly outlines the rights and responsibilities/liabilities of the parties to the sale deed. The parties to the sale deed shall be legally competent. However, as per section 17 of the Indian Registration Act, for a sale deed to be legally enforceable, it has to be registered under the said section. A registered deed serves as evidence in the court of law in case any dispute arises between the parties. The parties shall have to be very vigilant while drafting the deed and shall pay attention even to the minute details. This blog will highlight the do’s and don’ts for an effective sale deed in India.

Requirements for drafting an effective sale deed

1. Clear and Concise Wordings: The deed of sale should be in such a language that clearly reflects the intention of the parties before entering into the agreement of sale. The language should be clear and concise. The terms used in the deed should be such that both parties can clearly understand the same. Excessive use of technical and legal terms shall be avoided as not every buyer may be familiar with legal words.
2. Clarity of Title: The most important pre-requisite for any sale deed is the clear title. The seller shall make it sure to the buyer that the property into the sale deed is free from all sorts of legal issues and encumbrances. The title shall be clear and unambiguous ensuing that the seller has the right to sell the property and is not barred by any law to do the same nor suffers any legal incompetency.
3. Incorporation of all Details: The deed of the sale shall be inclusive of all the necessary details related to the property. The details shall include all the terms required for the sale of the property for example size of the property, locations, any existing boundaries, the agreed terms of payment between the parties , the final sale consideration and any other incidental conditions required for sale as agreed between the parties.
4. Obtaining of all Necessary Sanctions: The seller shall mention in the sale deed that all the necessary approvals/sanctions with the described property have been obtained by the seller, such as approval of the building plan, municipal approvals and other permits as required. This will ensure that no legal issues arise between the parties in future.
5. Compliance with the Existing Laws: The sale deed shall be in accordance with the existing laws of India, such as the Indian Contract Act, the Transfer of Property Act and any other legislation that governs the sale and purchase of property/agreements. The parties shall ensure compliance with these laws so as to avoid any situation where the deed can become null and void.
6. Transfer of Ownership: The deed must necessarily contain a clause that ownership rights shall be transferred to the buyer after the sale is complete.
7. Advance Payment: If there is an agreement between the buyer and seller regarding the advance payment or payment in instalments by the buyer, then it shall actually be stated in the sale deed. The final settlement to be paid at the time of execution of the sale deed shall also be mentioned in the deed of sale. Payment modes, such as cash, cheque, NEFT, etc., shall also be mentioned in the deed of sale.
8. Payment of all Dues: The deed must contain the clause that all utility bills, such as water and electricity bills and tax related to the property are paid by the seller before the final sale.
9. Presence of Witness: The parties shall ensure that the clauses related to the witness are included in the sale deed. At least two witnesses, one from the buyer side and one from the seller side should be present.
10. STAMP DUTY: The stamp is required to be paid by the buyer to the government at the time of purchase of any immovable property. The stamp duty may differ from one state to different state.
11. Signatures: The deed of sale is required to be executed and signed both by the buyer and seller. Not only this , but the parties are required to put their impression of every finger , The signatures and finger impressions of every witness is also mandatory.
12. Registration Clause: The last step required for the execution of a sale deed is registration at the office of the concerned jurisdictional sub-registrar. The deed must provide the time limit within which the parties shall after the execution of the sale deed, shall appear before the registrar office for getting the registration done of the sale deed.
13. Time Limit for Registration: For ana dditional protection the parties shall mention clearly in the sale deed that, as per the law, the same is required to be registered within four months from the date of execution by the parties; this will create an obligation upon the parties to do all the transactions within the time.

Things to be avoided for an effective sale deed

1. Use of vague or ambiguous language – Use of any such word or meaning that is vague or unclear shall be avoided by the parties as the same leads to disputes in future.
2. Non-inclusion of the necessary clause – The necessary clauses of the sale deed shall not be avoided by the parties, such as the clauses related to possession date, delivery of original documents, the requirement of proper attestation and registration clauses shall be duly given importance.
3. Drafting process shall not be rushed – Rushing the process of drafting of the sale deed can result to errors and omissions in the sale deed. The parties shall give ample amount of time to draft the sale deed and the deed shall be subject to various reviews before finalising the same.
4. The boilerplate language shall be avoided – The use of boilerplate language, i.e. language inclusive of too many legal words, shall be avoided. Parties shall ensure that all the terms and conditions of the sale deed are specific to the transaction and not boilerplate.
5. need should be given importance – The need and requirements of the buyer shall be kept in the mind. The sale deed shall be inclusive of all the terms and conditions agreed by the parties .

Suggestions for Error-Free Sale Deed

1. Legal assistance:- It is advised that the parties shall seek the assistance of a qualified lawyer for an error free sale deed. The presence of lawyer will ensure that the deed is following all the applicable laws.
2. Due diligence:- This will ensure that the property is free from al sort of encumbrance and legal issues. It will further help in identification of any issues that needs consideration and address in the sale deed.
3. Clear communication with Buyer:- The parties shall ensure that communication between them is clear while drafting the sale deed so as to avoid any ambiguity in future.
4. The deed shall be printed on a Non-judicial stamp once everything is finalised. Without the stamp paper, it shall be void.

Documents required for a sales agreement

1. Aadhar Card of buyer and seller
2. Pan card of both parties
3. Passport-size photographs of buyer and seller.
4. Date and place of execution of the agreement
5. Aadhar card of witnesses of buyer and seller.
6. The deal value and all the financial details (including TDS payment) plus receipt of registration charge payment and stamp duty fees.
7. Copy of tax bill by the Municipal Corporation
8. Construction completion certificate by the Municipal Corporation.
9. Building plan authorized by the Statutory Authority under the laws
10. Documents If any loan on the property is taken by the seller.
11. Recorded agreements between the builder and landowner.
12. Allotment letter from the seller/builder
13. All title documents of a landowner

Conclusion

The parties shall pay attention to every detail as mentioned above to avoid any conflict. By following the steps in this blog, we can ensure that the deed is drafted correctly and the possibility of any future legal dispute can be minimised to a great extent. Seeking assistance from a qualified legal professional, due diligence, clear communication between the parties, proper stamping, signatures, registration, and witnesses are some of the most important steps that the parties shall follow. A well-drafted deed is crucial for the parties as it ensures a successful property transaction without any legal disputes.