Sale Deed - Meaning, Format and Components

Anyone buying a property in India must execute (draft) a sale deed. A sale deed is necessary for purchasing and registering a property. It is a legal document through which the ownership of a property is transferred from one person to another. 

Continue reading to know sale deed meaning, format sale deed, elements of a sale deed, execution of the sale deed, etc. 

What is Sale Deed?

The meaning of sale deed refers to a legal document that outlines the terms and conditions of the sale. It is executed by the seller and the buyer for the transfer of ownership of the property. The buyer of a property mentioned in the sale deed property will become the new legal owner of the property after its registration.

A sale deed outlines the important information regarding the price to be paid for buying the property, description of the property, how and when the property ownership will get transferred to the buyer, etc. A property is registered based on the details mentioned in the sale deed. 

It is an essential document as it is the proof of ownership of the property. It legally reports the proof of the sale of property from the seller to the buyer. The sale/purchase of the property is not legally complete until the sale deed is signed by the buyer and the seller and is registered. 

Sale Deed Sample Format

Below is the format for sale deed:

Sale Deed Format PDF Download (General)

Download the general pdf format of the sale deed by clicking here. Please note that this sale deed format is specific to Karnataka.

Key Components of a Sale Deed

The sale deed must contain the below elements/clauses:

Parties involved

The seller and buyer must be specified in the sale deed. The seller is the owner of the property or transfers his/her ownership in the property and the buyer is the purchaser of the ownership of a property. If there are more than one seller or buyer, all of them should be mentioned in the sale deed.

Name and address of the executing parties 

The sale deed must specify the name, age, address and contact number of the buyers and the sellers.

Description of the property 

The complete address of the property and description and type of property such as residential flat, Kothi, bungalow, shop, office, etc., should be mentioned. The property’s details, such as the complete address, area of the property and dimensions must be mentioned in the sale deed. It should include the property schedule to define the accurate location of the property.

Sale consideration 

The sale price agreed between buyer and seller, i.e the amount which the buyer has to pay to the seller upon the execution of the sale deed must be mentioned in the sale deed. Also if any advance has already been paid, it should also be specified in the deed.

Payment terms

The parties should mention the mode and date of payment. Payment can be done as a lumpsum or in instalments. The mode of payment such as through a cheque, demand draft, or an online transfer is also important and should be mentioned in the sale deed. If the sale amount is paid in instalments, the date of each instalment should also be mentioned in the deed. It should mention the receipts of the sale transaction.

Possession

The sale deed should mention the date of possession of the property. The date of possession is the date when the property will be handed over by the seller to the buyer. The possession date can be at the time of execution of the sale deed or at a later date.

Transfer of the title 

The sale deed should specify the time when the title of the property will get transferred to the buyer. All the documents related to the property must also be handed over to the buyer. It should provide the information that the possession of the property will be transferred to the buyer by the seller after the completion of the registration process. It should also state the actual date of delivery of possession of the property.

Indemnity 

Make sure that the title of the property is free from any charge, litigation or encumbrances, i.e. any other person does not have the right to the property to be transferred to the buyer. In case such a situation arises, the seller shall be made liable to indemnify the buyer against any loss.

The seller should clear all statutory charges such as property tax, electricity bills, water bills, society and maintenance charges and all other dues before the sale deed is executed. It ensures that the seller frees the buyers from all the previous loans, taxes, and charges related to the property. Also, the seller should pay any loans and mortgages before finalising the sale of the property.

Registration 

A sale deed is not legally binding unless it is registered in the sub-registrar office. Both the buyer and the seller along with their witness must be present at the registrar’s office on the fixed date for the registration of the deed. The stamp duty and registration fees have to be paid for getting the registration done.

Encumbrance certificate

An essential element of sale is the encumbrance certificate ensuring that the property sold is free from any legal or financial liabilities. The sale deed must disclose if the property being sold has any pending dues, mortgage, or any other encumbrances.

Signature 

Both the buyer and the seller must sign the sale deed. It must also be signed by at least two witnesses. It should include their names, addresses, ID proofs, along with the date and place of execution.

Warranties and representations

Both parties involved in the sale can make warranties and representations about the property. For example, the seller can make a warranty that the property is free from encumbrances, while the buyer can acknowledge that he/she has inspected the property before purchase.

Types of Sale Deed

Different types of sale deeds are used depending on the nature of the property transaction and the terms agreed between the buyer and seller. 

• Absolute Sale Deed: It is the most common form, in which the property is transferred completely and unconditionally from the seller to the buyer, granting the buyer full ownership rights. 
• Conditional Sale Deed: Under this deed, ownership is transffered only after certain agreed conditions are fulfilled, such as full payment, approvals, or completion of construction. 
• Lease-cum-Sale Deed: Here, the buyer and seller enter into a lease and later convert it into a sale after the buyer meets the required conditions, commonly found in government housing and allotted plots. 
• Mortgage with Conditional Sale Deed: This deed is used when a property is mortgaged as security for a loan, with ownership transferring to the lender only if the borrower fails to repay the loan within the specified time. 

How to Execute a Sale Deed?

Here is the process involved in the execution of a sale deed:

Verification of documents 

The buyer must verify all the documents related to the property. The buyer must first obtain the title deeds and other documents from the seller to verify that the seller is the property owner and has a clear title to sell the property. These documents include the original title deed, encumbrance certificate, property tax receipts, etc.

Sale deed drafting

A sale deed must be prepared by a buyer of a property after obtaining the required property documents from the seller. The buyer may consult an advocate or legal professional to verify the documents and prepare the sale deed, including all clauses and elements.

Forward the sale deed to seller

Once the buyer or the buyer’s advocate prepares the sale deed, it is forwarded to the seller. When the seller approves the contents of the sale deed, it is finalised, and the parties can proceed to register it in the sub-registrar's office.

Stamp duty payment

Once the seller finalises the sale deed, it must be printed on stamp paper as required by the respective state laws. The buyer must pay the stamp duty and registration fees before registering it with the Sub-Registrar’s office. 

Execution of sale deed

Both the seller and buyer must sign the sale deed in the presence of two witnesses. The witnesses must also sign the sale deed and provide proof of identity. Once it is signed, the sale deed must be registered in the Sub-Registrar’s office. After registration, the buyer becomes the owner of the property and the seller must hand over its possession to the buyer. 

Registration of a Sale Deed

As per the Indian Registration Act, 1908, an agreement for the transfer of an interest in immovable property of value more than Rs.100, is required to be registered. Thus, the sale deed of a property, such as a flat, building or land must be registered for the sale to be legally valid.  

The sale deed must be registered in the local Sub-Registrar’s office. An unregistered sale deed has no value in the eyes of law. The sale deed is made on non-judicial stamp paper, that is purchased as per the value prescribed by the stamp duty act of a state.

The amount of stamp duty levied on properties differs from one state to another. The charges on stamp duty vary from 4% to 6% on the property’s sale value. The sale/purchase of a property is valid when the sale deed is registered by a Sub-Registrar and when the buyer and seller sign it in the presence of at least two witnesses.

Documents Required for Sale Deed

Certain essential documents are required from the seller of the property which ensure that the seller is the property owner for preparing a sale deed. The documents required to prepare the sale deed are as follows:

Title deeds: Title deeds are the documents that prove that the seller is the owner of the property. It may be a previous sale deed under which the seller purchased the property, a gift deed in favour of the seller, or a partition deed under which the seller obtained the property.

Identity proof: Identity proofs and passport-size photographs of both the seller and the buyer are required. The identity proof, photographs and contact details of the witnesses is also required. The identity proofs may be Aadhaar card, PAN card, Voter ID, driving license or passport.

Address proof: Address proof of both the seller and buyer is required to confirm their residential addresses. Utility bills (electricity, water, or telephone) from the past 3 months, bank statements, or property tax receipts can be provided as proof of residence.

Payment receipts: The payment receipts for a property, such as electricity and water receipts, should be collected from the seller.

Property tax receipt: An owner of a property should pay the property tax and provide the property tax receipts. Prompt property tax payments confirms that there are no outstanding dues on the property.

Encumbrance certificate: An encumbrance certificate of the property is required to verify that the property does not have any pending legal dues, loans or mortgages. The certificate can be obtained from the sub-registrar’s office where the property is registered. It usually covers a period of 12 to 30 years.

Copy of the building/layout plan: The layout/building plan states that the land/structure of the property is legal.

No Objection Certificate (NOC): In the case of the sale of a flat/building, the developer must get the NOC from different government authorities. Similarly, if the property is mortgaged, an NOC is required from the bank or lender.

Completion certificate: In case of the sale of a flat/building, the buyer must obtain the completion certificate from the developer, which confirms that the building is constructed according to the approved plan.

Occupancy certificate: In case of the sale of a flat/building, the buyer must obtain the occupancy certificate from the developer to ensure that the property is ready to be occupied.

Possession letter: The possession letter is given to the buyer by the developer in the case of the sale of a flat/building.

Allotment letter: When the property is owned by a housing society or a government authority, such as a land development authority, the developer/government authority issues an allotment letter in favour of the buyer containing the property details.

Special Power of Attorney (SPA): In case the property is being sold by a person authorised by the seller, it is essential to obtain the SPA from the authorised person. This confirms that the seller has the right to sell the property on behalf of the authorised person.

Original share certificate: In case of properties within a co-operative housing society or project, the original share certificate or membership certificate issued by the society is required. This certificate confirms ownership or membership in the society or project.

Sale agreement: A sale agreement is the agreement executed between the buyer and seller before the sale deed is prepared. 

Bank release certificate: If the seller has taken a loan against the property, a bank release certificate from the bank or lender is required. It confirms that the seller has repaid the loan and the mortgage has been cleared.

Registration application form: The application for registering the sale deed (such as Form 32 or the relevant form) must be submitted to the sub-registrar’s office along with the sale deed to confirm the intent to register the deed.

Points to Remember When Executing a Sale Deed

• The sale deed must include a clause that indicates the transfer of ownership rights to the buyer after the purchase is complete.
• The title of the property must be free from all encumbrances.
• The buyer must verify the encumbrance status of the property from the sub-registrar office.
• All utility bills, including water and electricity bills, property tax, etc., related to the property must be paid.
• There must be no further dues, such as mortgages, litigation or charges on the property.
• The sale deed must specify all the terms and conditions of the sale of the property. 
• The sale deed must specify the rights and liabilities of the buyer and seller over the property.

Certified Copy of Sale Deed

The sale deed is a title deed document ensuring the buyer has the ownership of the property. Thus, the property owner must keep the sale deed in a safe place. Any person can obtain a certified copy of the sale deed from the sub-registrar office where it is registered by filing an application and paying the required fee. The sub-registrar will issue the copy of the certified copy of the sale deed within 2 weeks.

However, if the property owner loses the sale deed, he/she must file a complaint at the nearest police station. A non-traceable certificate is issued to the property owner after filing the complaint (FIR) at the police station. The property owner should publish an advertisement in the newspaper about the loss of the sale deed after getting the non-traceable certificate. The property owner should file an affidavit and application and pay a fee to the sub-registrar office to get a certified copy of the sale deed.

The affidavit must be notarized and contain the attachments of the copy of FIR, advertisement, non-traceable certificate and details of the property. It must also contain a signed undertaking stating that the information in the affidavit is genuine. After the process is complete, the sub-registrar office will issue the certified copy of the sale deed in 2-4 weeks.

What is the Cancellation of a Sale Deed?

Either party, i.e. the buyer or seller, can cancel the sale deed by filing a suit for cancellation in court when the other party does not agree. The buyer and seller can even cancel the sale deed by mutual consent by registering a cancellation deed. 

The Specific Relief Act, 1963, provides the conditions under which a sale deed can be cancelled by either party, which are as follows:

• The sale deed should be registered under the Indian Registration Act, 1908.
• The individual feels that the sale deed is voidable or has a doubt that the deed will cause him/her injury.

Upon cancellation of the sale deed, the court will send a copy of its decree of cancellation to the sub-registrar office where the sale deed was registered. The sub-registrar officer will note the facts of the cancellation of the sale deed and the property ownership will revert back to the seller mentioned in the cancelled sale deed.

Difference Between Sale Deed and Sale Agreement

A sale agreement is an agreement between the buyer and seller that the property will be sold by the seller and the buyer will purchase the property by paying the required amount for the sale. The sale agreement does not transfer the ownership of the property from the seller to the buyer. It only shows the intention of the future sale.

Below are the differences between the sale deed and the sale agreement: 

A sale deed is a document which establishes property ownership. It also includes the details related to the property, buyer and seller, rights of the buyer, etc. The sale deed establishes the ownership of the buyer over the property. However, the sale deed must be registered with the sub-registrar office for it to be valid. 

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