REQUIREMENTS OF A VALID SALE DEED


It is a life time ambition of every individual to have a shelter over head. This ambition was achievable in the past only by a very few people in view of financial and other constraints. Due to technological development and social changes with higher purchasing power now-a-days people could own house and house sites with much ease.

A person may own an immovable property by way of acquisition, succession, transfer or assignment. One of the modes of transfer of immovable property is by way sale and the execution of sale deed results in the transfer of right, title, interest and ownership in the property, transferred in favour of the purchaser. Transfer of immovable property in India is governed by the provisions of Transfer of Property Act, 1882.

SALE :
Explicit and voluntary intention to transfer the ownership of the property by the seller to the purchaser for consideration is the essence of a valid sale. Section 54 of the Transfer of Property Act, 1882, deals with the concept of Sale. Sale is defined as a transfer of ownership of the transferor in favour of transferee in exchange for a price paid or promised to be paid or partly paid and partly promised. The Transferor and the Transferee are also known as “Seller” and “Purchaser” respectively. The amount paid in exchange of such transfer by the Purchaser to the Seller is the “Sale Consideration”. Generally, the entire sale consideration is paid to the transferor at the time of registration of sale deed unless there is an agreement between the parties to the contrary. Deferred payment of sale consideration does not attract passing of the title of the property so transferred from the transferor to the transferee.

SALE DEED :
Sale Deed is also known as conveyance deed. This is a document through which the seller transfers his right, title and interest in a property to the purchaser, who, in turn, acquires and holds the same as an absolute owner. Even though it is neither necessary nor mandatory to enter into a sale agreement before entering into a sale transaction, it is advisable to enter into a sale agreement wherein the terms and conditions of sale could be minutely stipulated. Generally, a sale deed is executed in accordance with the sale agreement and upon compliance with the terms and conditions of the sale agreement.

FACTORS TO BE CONSIDERED BEFORE EXECUTION OF SALE DEED:
Before execution of a sale deed, it is very important to trace the title of the seller. This can be done by scrutinizing the relevant documents of title. Scrutinizing the title documents would mean and include tracing the origin of the property, flow of title and the status of the present owner. It is equally important to obtain and scrutinize the Encumbrance Certificates in order to verify the transactions pertaining to the property intended to be purchased and to know about the existence of any kind of encumbrances or liability over the property. If there is any encumbrance on the property, it shall be the duty of the seller to discharge the same at his own cost. Similarly, previous charges or mortgages, if any, created on the property are to be cleared before execution of the Sale Deed for transfer of valid and transferable title by the seller to the purchaser.

Further, it is also necessary to verify whether all the statutory payments like property tax, water and electricity charges and such other levies on the property have been paid and permission and clearance as are required for transfer of property, according to law, are to be obtained by the seller.

RECITALS IN THE SALE DEED:
Preparation of Sale Deed is not an easy task. Interests of both the seller/s and the purchaser/s are to be protected. Some of the necessary clauses which should find place in the sale deed are:

  • Details of the parties, such as name, residential address, age and name of the father or husband of the parties;
  • If one of the parties is a minor, name of the guardian representing him. Generally the minor is represented by the Natural Guardian.
  • In case of inanimate bodies such as firms, companies, HUFs etc., details of the authorized persons authorized to represent such bodies;
  • Details regarding as to how the seller has acquired property and his ownership and title;
  • Details of advance payment if any made and mode of payment of balance of sale consideration.
  • Acknowledgement of receipt of advance and the sale consideration by the seller
  • The fact of handing over of original documents of the property along with delivery of possession to the purchaser.
  • Indemnifying the purchaser in case of defect in the title of the seller.
  • Authorization letters issued by the seller for transfer of water, electricity meters;
  • Details about execution of General Power of Attorney if any executed by either of the parties.
  • Permanent Account Number (PAN) of the seller and the purchaser if the sale consideration is more than rupees five lakhs.

If either of the party is not an income tax assessee then Form No.60 or Form No. 61 in case of Agriculturists has to be submitted along with the sale deed at the time of registration.

PARTIES TO THE SALE DEED :

  • If the seller has already entered into an agreement to sell with some person other than the present purchaser then such an agreement requires cancellation and the Agreement Holder has to be made as confirming party to the sale thereby confirming the execution of sale deed in favour of the present purchaser since the agreement holder will have right to enforce agreement of sale against the seller for specific performance.
  • All the necessary parties who have got right and interest over the property are to be arrayed as parties. If they are not made as parties, they have to sign the sale deed as Consenting Witnesses consenting for the present sale transaction.

EXECUTION:
After the Sale Deed is prepared all the parties to the deed shall execute it by affixing their full signature. Each page should be signed by all the sellers. Any alteration, addition or deletion is to be authenticated by full signature of the parties. Execution of the Sale Deed requires to be witnessed by two witnesses. The witnesses shall give their full particulars and addresses.

ATTENDANCE OF PARTIES BEFORE SUB-REGISTRAR :
Sale Deed of immovable property of value more than Rupees one hundred needs compulsory registration. The duly executed sale deed should be presented at the jurisdictional sub-registrar’s office for registration. All the parties including the consenting and confirming witnesses shall be present at the time of registration and admit the execution of the sale deed. The purchaser also has to be present at the Sub Registrar’s office at the time of execution of the sale deed. In case the purchaser is not in a position to be present at the time of registration before the Sub Registrar, he can depute his agent with necessary Power of Attorney to be present and sign the documents on his behalf. In Karnataka, photographs of purchaser and the vendor and their thumb impressions are taken at the Sub-Registrar’s office and are printed on the Sale Deed. At the time of registration, there should be two witnesses who could generally be persons known to the purchaser who would sign the deed as witnesses and another person known to the vendor who would identify the vendor and affix his signature to the deed.

TIME LIMIT FOR PRESENTING THE DOCUMENT :
There is a time limit for presenting the documents for registration. The time limit is four months from the date of execution. Thereafter a grace period of another four months is allowed on payment of penalty. The maximum penalty is ten times of registration charges.

DISPUTES REGARDING STAMP DUTY PAYABLE :
At times, the registering authorities may dispute the quantum of stamp duty paid. In such cases, the purchaser has an option of paying the additional stamp duty by way of cash or pay order as demanded by the registering authorities or in the alternative he may contest the decision of the registering authority in which case the Sub Registrar will keep pending the registration and refer the matter to the Registrar of Under Valuation for determination of the proper Stamp Duty payable.

HANDING OVER OF ORIGINAL DOCUMENTS :
The vendor has to make available to the purchaser all the original documents pertaining to the property. If the property is divided into one or more portions, the seller has to give certified copy of the documents to the purchaser while he has to hand over the custody of the original documents to the purchaser who is purchasing the larger portion of the property and make a declaration to that effect.

Since drafting of sale deed requires abundant caution and presence of mind with sufficient knowledge of property and other allied laws it would be better if services of advocates who have vast experience in property transactions are utilized to avoid unexpected and uncalled for litigations which may arise in a poorly drafted sale deed.