Sale Deed Drafting Overview
A deed is a legal document that confirms an interest or right on the mentioned things or the privilege and has following key features:
A sale deed is the most important document in a housing deal and as mentioned above, acts as an instrument for the transfer of ownership between the seller and the purchaser of the mentioned property. As per Section 54 of the Transfer of Property Act 1882, a sale deed defines the sale of an immovable property and describes it as transfer of the ownership of the property in exchange for a price paid or promised or part paid and part promised and as per Section 17 of the Registration Act 1908, it is mandatory to register the sale deed concerning all immovable property whose value is more than 100 Rs and also it is mandatory to register the same in the sub registrar’s office.
Reason of Executing a Sale Deed
The main reason of executing a sale deed is to protect its executors from getting duped; it saves both the parties from any kind of fraud because it has name and details of both the parties and property in picture such as the donor and the donee, details of the property such as area, built area etc.
As a mandatory practice, sale deed must contain following details:
- Title of the Sale Deed: Title is the foremost thing to decide in a sale deed and it becomes important to ensure if the title to the property is free of all encumbrances and once it is ascertained that there are no encumbrances, the next step is to check for any pending liabilities or payment of tax or bills such as water bill, electricity bill or property tax for that matter.
- Details of the parties involved: In a sale deed, it is mandatory to mention the complete details of the concerned parties such as full name, address, age, residence address, and such details are mentioned at the very beginning of the deed. If the details of the parties are not mentioned in the sale deed, it is not considered valid. In a sale deed, seller is referred as lessee and buyer is referred as lessor.
- Witnesses: A sale deed is not valid if it is not executed in presence of at minimum two witnesses and thus presence of at least two witnesses is mandatory for a sale deed to be executed.
- Property Details: A sale deed must have all relevant details of the property in picture such as if it is a house or a flat, number of rooms, plot area, construction area and number of balconies, any modification i.e. addition or subtraction in the mentioned property. The main reason for listing out all the relevant details of the property is to save the parties from getting duped in any sense.
- Delivery Details and Passing of Title: Once the sale deed is signed by both the parties, it irrevocably transfers the title of the property from the seller to the buyer and former one holds no right on the property once the sale deed is executed.
- Registration of the Sale Deed: As per the act, it is mandatory to get the sake deed registered if the total value of the immovable property is more than Rs 100. Registration of the sale deed is done with the office of sub registrar and as per Section 17 of Registration of Property Act 1908, it is mandatory for both the parties to be present for the registration within four months of the execution of the sale deed. At the time of registration, all supporting documents should be furnished if asked for.
Key Points to Consider While Drafting A Sale Deed
Drafting a sale deed is a dexterous process and in order to seal the deal for your own benefit, it is important to draft a perfect sale deed.
One needs to keep following points in mind while drafting a sale deed:
- Be Original: It is important to keep the document as original as possible and not to retort to usual copy-paste method. For a sale deed to be original, you must get it drafted from an expert who is very well aware of all the nuances and terminology involved. Generally to save themselves from any work, executors of sale deed prefer to visit DTP centers near Sub-registrar offices and get the sale deed drafted by changing the names and details of an existing sale deeds. While in theory it sounds simple, in practice it is a dangerous trend because not every case is same, also the law is ever-changing. Thus, it is advisable to draft your sale deed from an expert rather than doing it by yourself or by opting a shortcut method.
- Introduce the Document and Parties Correctly: A sale deed is effective and valid only if mentions the name of its executors, details of property and title correctly. For a layman, a “Sale Deed” is not different from “Deed of Sale”, however in legal terms both are quite different from each other. Also details of the parties such as full name, address, age, occupation etc. should be mentioned in clear words and in detail. It is also required to verify the age of its executors because as per the Act, it is illegal to enter into any kind of contract with the minors. Also, in case of minors, a power of attorney given by a major is not considered valid.
- Describe What Is Being Sold: Apart from mentioning the name and details of its executors, it is important to mention every details of the property in being picture because it is the key aspect of any sale deed. Every single detail of the property should be recorded in the sale deed starting from the extent of the property, its survey number, the address, the construction details including no. of rooms, roofing, borewell, parking facilities if any, boundary details etc. Apart from the details of the property in picture, a perfect sale deed should also mention how the seller got its ownership. For example – vide a sale deed dated xx-xx-xxxx.
- Clear Titles: A sale deed must have clear and non-ambiguous titles and the ownership must be absolute and not conditional and in case of a jointly owned property, it is important to have all the sellers present for the registration of the sale deed. For a clear and non-disputable sale deed, it is important to mention all facts regarding the property. Also, it should not be liable to be attached by any authorities and be free from all encumbrances, liens etc.
- Connect it to the Agreement to Sell: A sale deed should be drafted in a way that it must give a proper mention to the detailed agreement to sell drafted between the parties where the seller agreed to sell and the buyer agreed to buy.
- Payment details:A sale deed must have a clear mention of the exact amount of the property and taxes applicable. Also, any advance payment made while making the agreement to sell should also be mentioned in the sale deed. Details of how the payment is made should be mentioned as well and in case the payment is done via cheque, details of cheque such as cheque number should be mentioned in clear words.
- Passing of Title to the Buyer: A sale deed is basically an instrument to pass the title and ownership of property from one party to another and is used later on to change all documents and certificates related to the property.
- Indemnity Clause: As a buyer, it will work in your interest if you have a detailed indemnity clause mentioned in the sale deed, because it is the indemnity clause which will allow you to enjoy your rights on the property.
- Witness: As mentioned above, a sale deed is no significance without its witnesses and thus it must have details and signature of the witnesses.
- Delivery Details: A perfect and well drafted sale deed must have all the details pertaining to delivery of the possession i.e. how is it going to get handed over need to be mentioned in the sale deed. Mentioning all the details well in advance helps in avoiding confusions in future.