Understanding the Difference between Sale Deed and Agreement to Sale

Table of Contents​

1. Sale Deed: Meaning & Definition​
2. Registration of Sale Deed
3. Cancellation of Sale Deed
4. What is an Agreement for Sale?
5. Agreement for Sale vs Sale Deed
6. Formats for Sale Deed and Agreement for Sale

When purchasing a property, we often come across terms such as “Sale Deed” and “Agreement to Sale”. While they may sound similar and are often confused by buyers as the same document covering purchase and sale agreements, in reality, they are two different types of registration documents serving different purposes.

Sale Deed: Meaning & Definition

A sale deed agreement normally contains the following information:

• Description of the property (exact address and surroundings, construction details, total area, details of its original construction and registration, etc).
• KYC details of the buyers and sellers (name, age, PAN number, Aadhar number, and addresses).
• Purchase price agreed between the buyer and the seller, including stamp duty and any advance payment made, along with the mode (cheque, wire transfer etc) of the payment.
• Timeframe in which the title of the property is to be transferred to the buyer.
• Actual date of the delivery of the property possession to the purchaser.
• Indemnity clauses which the seller agrees to pay to the purchaser in the event of a breach of agreement (such as ownership dispute, unpaid taxes etc) that results in monetary losses to the buyer.

Registration of Sale Deed

As per the Indian Registration Act, 1908, registration is required for any sale and agreement to sell or transfer any ownership interest in an immovable property (such as land sale agreement or house property sale agreement) of value exceeding INR 100. If a property is purchased under any sale agreement without it being registered via a proper sale deed, the buyer does not get any ownership interest in such property. 

The only exception to the above is provided under Section 53A of the Transfer of Property Act, which provides that “where the buyer has obtained possession of the property that is subject matter of the transfer, while fully complying with his part of the obligation under the agreement, the seller shall not be entitled to disturb the possession so granted to the buyer.” In such instances, the ownership of the property remains with the seller, however it offers a shield to the buyer against the seller by preventing the seller from disturbing possession of the buyer. 

As such, in situations where a property has been purchased under a sales agreement from a real estate developer along with the possession, the title of the property remains with the developer, till the time a sale deed is executed and registered under the Indian Registrations Act. A sale of immovable property along with transfer of its title to the buyer is legally valid only when a duly stamped and registered sale deed has been executed.

Also Read: The Ultimate Property Buying Guide for NRIs’

Cancellation of Sale Deed

These include: 

a) registration of the sale deed under the Indian Registration Act, 1908, and 

b) if the individual who is party to the agreement feels that the deed is voidable or has reasonable doubt if the deed would cause him injury if it is left outstanding. The seller and purchaser should also have an agreement to cancel the sale deed.

What is an Agreement for Sale?

Matters relating to sale and transfer of immovable property are covered by The Transfer of Property Act, 1882, which defines an agreement for sale as under: “A contract for the sale of immovable property, is a contract that a sale of such property shall take place on the terms settled between the parties” as per Section 54. Furthermore, Section 54 provides that “It does not, of itself, create any interest in or charge on such property.”

All agreements to sell property are required to be documented and registered in order to have a legal validity. In the Balram Singh vs Kalo Devi case, the Supreme Court ruled on Sept 23, 2022 that “an unregistered agreement to sell is not admissible as evidence in a permanent injunction suit”.

Also Read: The Most 7 Important Factors to Choose the Right Property Within the Budget

Agreement for Sale vs Sale Deed:

The below table summarizes key differences between an Agreement for Sale and Sale Deed:

Formats for Sale Deed and Agreement for Sale:

Sale deed format

This DEED OF SALE is made and executed on this _______ day of ______________,

BETWEEN 

Sri ____________________, son/wife/daughter of Sri/Late _______________, aged about _______ years, holding PAN _____________, by Caste ________, by Nationality Indian, residing at _____________________________________________,                                                                                                     hereinafter called the “SELLER” (which expression shall mean and include his legal heirs, successors, successors-in-interest, executors, administrators, legal representatives and assigns) of the ONE PART.

AND

Sri __________________________________, son of  _______________________,                                aged about _______ years, by Caste __________, by Nationality Indian,  holding PAN _____________, residing at _____________________________________________,                                                                                                        hereinafter called the “PURCHASER” (which expression shall mean and include his legal heirs, successors, successors-in-interest, executors, administrators, legal representatives and assigns) of the  OTHER PART.

The  SELLER and the PURCHASER are hereinafter referred collectively as parties and individually as party.

WHEREAS the SELLER is the absolute owner, in possession and enjoyment of the piece and parcel of ______ land measuring about ____ decimal, lying and situated in R.S. Plot Number ____, corresponding L.R. Plot Number ____, Recorded in R.S. Khatian Number _____ and L.R. Khatian Number ____, at Mouza _____, J.L. Number _____, Touzi Number ______, under Police Station __________, Registration Sub-District _________, in the district of ________________, more fully and particularly described in the schedule here under written and hereafter referred to as the “SCHEDULE PROPERTY”.

ANDWHEREAS the SCHEDULE PROPERTY was the self acquired property of  __________, deceased father of the SELLER and he purchased the same from Sri __________________, son of _____________ of _________________________________, by virtue of a Sale Deed dated ________________, registered in the office of the _____________________________, in Book 1,  Volume No. ____, Pages ____ to _____, Being Number ___________ for the Year _____.

ANDWHEREAS the said _________ died in-estate on _________ leaving behind his only son namely, Sri _______________, the SELLER herein, as the only legal heir.

ANDWHEREAS the SELLER herein, as the only legal heirs of the deceased ____________, have become the absolute owner of the SCHEDULE PROPERTY since the death of his father _____________ on and he has been enjoying the same with absolute right, title and interest sice then and he has clear and marketable title to the SCHEDULE PROPERTY.

ANDWHEREAS the SELLER being in need of funds to meet his personal commitments and family expenses have decided to sell the SCHEDULE PROPERTY and the PURCHASER has agreed to purchase the same.

ANDWHEREAS the SELLER agreed to sell, convey and transfer the SCHEDULE PROPERTY to the PURCHASER for a total consideration of  Rs._________ (Rupees                        ___________________________) only and the PURCHASER herein agreed to purchase the same for the aforesaid consideration and to that effect the parties entered into an agreement on the _________________ .

NOW THIS DEED OF SALE WITNESSETH:

1. THAT in pursuance of the aforesaid agreement and in consideration of a sum of Rs._________ (Rupees ___________________________) only received by the SELLER in cash/cheque/bankdraft and upon receipt of the said entire consideration of Rs._________ (Rupees                        ___________________________) only (the SELLER doth hereby admit, acknowledge, acquit, release and discharge the PURCHASER from making further payment thereof) the SELLER doth hereby sells, conveys, transfers, and assigns unto and to the use of the PURCHASER the SCHEDULE PROPERTY together with the water ways, easements, advantages and appurtenances, and all estate, rights, title and interest of the SELLER to and upon the SCHEDULE PROPERTY TO HAVE AND TO HOLD the SCHEDULE PROPERTY hereby conveyed unto the PURCHASER absolutely and forever.

2. THAT THE SELLER DOTH HEREBY COVENANT WITH THE PURCHASER AS FOLLOWS:

1. That the SCHEDULE PROPERTY shall be quietly and peacefully entered into and held and enjoyed by the PURCHASER without any interference, interruption, or disturbance from the SELLER or any person claiming through or under him.

2. That the SELLER have absolute right, title and full power to sell, convey and transfer unto the PURCHASER by way of absolute sale and that the SELLER have not done anything or knowingly suffered anything whereby their right and power to sell and convey the SCHEDULE PROPERTY to the PURCHASER is diminished.

• That the property is not subjected to any encumbrances, mortgages, charges, lien, attachments, claim, demand, acquisition proceedings by Government or any kind whatsoever and should thereby and the SELLER shall discharge the same from and out of his own fund and keep the PURCHASER indemnified.

1. That the SELLER hereby declares with the PURCHASER that the SELLER have paid all the taxes, rates and other outgoings due to local bodies, revenue, urban and other authorities in respect of the SCHEDULE PROPERTY up to the date of execution of this sale deed and the PURCHASER shall bear and pay the same hereafter. If any arrears are found due for the earlier period, the same shall be discharged/borne by the SELLER.

2. That the SELLER have handed over the vacant possession of the SCHEDULE PROPERTY to the PURCHASER on ___________ and delivered the connected original title document in respect of the SCHEDULE PROPERTY hereby conveyed on the date of execution of these presents.

3. That the SELLER will at all times and at the cost of the PURCHASER execute, register or cause to be done, all such acts and deeds for perfecting the title to the PURCHASER in the property hereby sold and conveyed herein.

• That the SELLER do hereby covenants and assures that the PURCHASER is entitled to have mutation of his name in all public records, local body and also obtain all documents in the name of the PURCHASER and undertakes to execute any deed in this respect.

SCHEDULE  OF PROPERTY

All that piece and parcel of _____ land measuring about _____ decimal, lying and situated in R.S. Plot Number ____, corresponding L.R. plot Number ____, Recorded in R.S. Khatian Number ____ and L.R. Khatian Number ____, at Mouza _____, J.L. Number ____, Touzi Number _______, under Police Station ______, Registration Sub-District ______, in the district of ____________, butted and bounded by:

On the North   :

On the South   :

On the East     :

On the West    :

             IN WITNESS WHEREOF the SELLER and the PURCHASER have set their signatures on the day month and year first above written.

                                                            ______________________________            

                                                                                  SELLER

                                                            ______________________________

                                                                                PURCHASER

WITNESSES:

1.

2.

Agreement for Sale format 

THIS AGREEMENT for SALE executed on the…………………. day of………………. 2022

between (name of seller) son of …………,, resident of…………………., hereinafter called the “Vendor” of the one part and (name of buyer), son of …………, resident of…………………. hereinafter called the “Purchaser” of the other part.

WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule hereunder:

AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for the sum of Rs………………….. (Rupees in words) free of all encumbrances.

NOW THIS AGREEMENT OF SALE WITNESSES AS FOLLOWS:

1. The price of the property more fully set out in the Schedule is fixed at Rs…………………..(Rupees………………….) free of all encumbrances.

2. The purchaser has paid to the vendor this day the sum of Rs………………….(Rupees………………….) by way of earnest money for the due performance of the agreement, the receipt of which the vendor doth hereby admit and acknowledge.

3. The time for performance of the agreement shall be…………………. months from this date, and it is agreed that time fixed herein for performance shall be the essence of this contract.

4. The purchaser shall pay to the vendor the balance sale price of Rs…………. (Rupees…………………………………………………) before registration of the sale deed.

5. The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of the sale deed.

6. The vendor shall execute the sale deed in favour of the purchaser or his nominee or nominees as purchaser may require.

7. The vendor shall hand over all the title deeds of the property to the purchaser or his advocate nominated by him within………………. days from the date of this Agreement for scrutiny of title and the opinion of the vendor’s Advocate regarding title of the property shall be final and conclusive. The purchaser shall duly intimate the vendor about the approval of the title within……………. days after delivering the title deeds to him or his advocate.

8. If the vendor’s title to the property is not approved by the purchaser, the vendor shall refund to the purchaser the earnest money received by him under this Agreement and on failure of the vendor to refund the earnest money within…………………. days he shall be liable to repay the same with interest thereon at…………………. per cent per annum.

9. If the purchaser commits a breach of the Agreement, he shall forfeit the earnest amount of Rs…………………. (Rupees………………….) paid by him to the vendor.

10. If the vendor commits a breach of the Agreement, the vendor shall not only refund to the purchaser the sum of Rs…………….. (Rupees………………….) received by him as earnest money, but shall also pay to the purchaser an equal sum by way of liquidated damages.

11. Nothing contained in paras 9 and 10 supra shall prejudice the rights of the parties hereto, to specific performance of this Agreement of sale.

(Schedule of Property)

IN WITNESS WHEREOF the vendor and the purchaser have set their hands to the Agreement of sale on this the………………day of…………………. 2022 in the presence of the witnesses:

Witness: Vendor

Witness: Purchaser

Specimen Schedule of the Property

1. Municipal No/ward no/plot no/khasra no

2. Location: Street number, name

3. Place/Area: North, South, East,West

4. Sub-District Hqrs./Tehsil/Mandal:

5. Police Station

6. District/State

7. Measurement of all sides

8. Plinth area/floor area

9. Carpet area

10. Fixtures 

11. Permitted use of the land/building: