Sale Deed Explained: Legal Document for Ownership Transfer
Updated on : Feb. 25, 2023 - 4 p.m. 17 min read.
Buying or selling a property can be a daunting task. It involves a lot of legal documentation, including sale deeds, which can be confusing for many. However, understanding sale deeds is crucial to ensure a smooth and hassle-free transaction. A sale deed is a legal document that transfers the ownership of a property from the seller to the buyer. It contains all the details about the property, including its location, size, and ownership rights. If you are planning to buy or sell a property, it's essential to know all the nitty-gritty details about sale deeds. In this comprehensive overview, we will cover everything you need to know about sale deeds, including its importance, the process of creating a sale deed, and the legal implications of not having a sale deed. So, let's dive in and explore the world of sale deeds.
Sale deed is a legal document that formalizes the transfer of ownership of a property from the seller to the buyer. It is also known as a sale agreement, sale deed, or conveyance deed. The sale deed is an important legal document that should be drafted with care and accuracy to ensure that all parties involved are protected and the transfer of ownership is legitimate.
According to Section 54 of the Transfer of Property Act, a sale deed must be executed by the seller in favor of the buyer in order to transfer ownership of the property. The sale deed must include the names and addresses of both parties, a description of the property being sold, the sale price, and the terms and conditions of the sale.
One of the most important aspects of a sale deed is its registration. Under Section 17 of the Registration Act, a sale deed must be registered with the local sub-registrar's office within four months of execution, and stamp duty must be paid according to the value of the property. Failure to register the sale deed can result in legal disputes and may render the transfer of ownership invalid.
Documents Required for Sale Deed Registration
The registration of a sales deed is mandatory for the transfer of ownership of a property. To register a sales deed, certain documents must be provided by both the buyer and the seller. Here are the documents required for sale deed registration in India:
- Original sale deed: The original sale deed must be provided by the seller to the buyer. This document serves as proof of ownership and outlines the terms and conditions of the sale.
- Khata certificate: A Khata certificate is a document that indicates the property ownership and tax payments. This certificate is usually issued by the local municipal corporation and is required for registration.
- Encumbrance certificate: An encumbrance certificate is a document that shows that the property is free from any legal or financial liabilities. It is issued by the sub-registrar's office and is required for registration.
- Property tax receipts: The seller must provide property tax receipts to show that all taxes have been paid up to the date of sale.
- Identity proofs: Both the buyer and the seller must provide their identity proofs, such as Aadhaar card, PAN card, passport, or driving license.
- Passport size photographs: Passport size photographs of both the buyer and the seller are required for registration.
- Stamp duty and registration fees: The stamp duty and registration fees must be paid in accordance with the value of the property being transferred.
The documents required for sale deed registration may vary depending on the state and local laws.
How to Register a Sale Deed Registration?
Here are the steps to register a sale deed in India:
- Document preparation: The first step is to prepare the sale deed with the help of a legal professional. The sale deed must contain all the necessary information, including the details of the buyer and seller, the property description, sale price, and terms and conditions of the sale.
- Stamp duty payment: The next step is to pay the stamp duty for the sale deed. The stamp duty is a state-specific tax that is levied on property transactions. The stamp duty amount is calculated based on the value of the property being transferred.
- Document registration: Once the stamp duty is paid, the next step is to register the sale deed with the sub-registrar's office. Both the buyer and the seller must be present at the time of registration. The original sale deed, along with all the necessary documents, must be submitted to the sub-registrar for registration.
- Verification and approval: The sub-registrar will verify the sale deed and all the documents submitted. Once the verification is complete, the sub-registrar will approve the sale deed and register it.
- Receipt of registered sale deed: After the registration process is complete, the buyer will receive a registered sale deed from the sub-registrar's office. This document serves as proof of ownership and must be kept in a safe place.
The format of a sale deed can vary, but typically includes the following information:
- Names and addresses of the seller and buyer
- Details of the property being sold, such as the address, area, and boundaries
- Sale price and mode of payment
- Terms and conditions of the sale, including any warranties or guarantees
- Signatures of both parties and witnesses
- Stamp duty and registration fees paid
Why you Require Sale Deed?
- Proof of ownership: A sale deed serves as proof of ownership of the property. It establishes the fact that the seller has legally transferred the ownership of the property to the buyer.
- Legal protection: A sale deed provides legal protection to both the buyer and the seller. It outlines the terms and conditions of the sale and can be used in case of any legal disputes or claims.
- Property registration: In India, the registration of a sale deed is mandatory for the transfer of ownership of a property. Without a registered sale deed, the transfer of ownership is not valid in the eyes of the law.
- Loan and mortgage: A sale deed is required for obtaining a loan or mortgage on the property. The lending institution will require a registered sale deed as proof of ownership before granting a loan.
- Capital gains tax: A sale deed is also required for the payment of capital gains tax. This tax is levied on the profit earned from the sale of a property. The sale deed serves as proof of the sale price and can be used for calculating the capital gains tax liability.
Meaning of Terms Involved in a Sale Deed
To better understand what a sale deed entails, here are some of the key terms and their meanings:
- Seller/Transferor: The seller is the current owner of the property who is willing to sell it for a certain price. The transferor is the person who is transferring the property to the buyer.
- Buyer/Purchaser/Transferee: The buyer, purchaser or transferee is the person who is interested in purchasing the property.
- Witness: A witness is a person who signs the sale deed as an acknowledgement that both the buyer and seller have signed it in their presence.
- Stamp Duty: Stamp duty is a tax levied by the government on the legal recognition of certain documents. In the case of property sales, it is calculated on the market value or agreement value, whichever is higher. The stamp duty charges vary from state to state.
- Registration Fee: The registration fee is an additional cost to the stamp duty charges that must be paid to transfer and register the property in the buyer's name. This fee varies from state to state and is either 1% of the market value or agreement value, whichever is higher, subject to a maximum amount of Rs. 30,000.
- Title: Title refers to the ownership of the property and means that the owner has the right to use and modify the property as they see fit. It can be a partial or full interest in the property, but it cannot be transferred more than what the owner owns.
- Execution: The sale deed is executed when all the parties involved, including the seller, buyer, and witnesses, sign or make thumb impressions on the document.
- Registration: To make the sale valid, the sale deed needs to be registered under the Registration Act, 1908, in the sub-registrar's office in the presence of both parties.
- Proof of Registration: A certified copy of the registered sale deed with the buyer's name can be obtained from the registrar's office, which serves as proof of registration.
- Sale Price: The sale price is the price agreed upon by both the buyer and seller for the property.
- Mode of Payment: The mode of payment refers to how the payment for the transaction will be made, whether through cash, cheque, or online transfer.
- Sale Agreement: The sale agreement is a contract between the buyer and seller that outlines the price agreed upon for the property and details of both parties.