A sales agreement, for the seller to the buyer, is the primary document that evidences ownership and vesting exact title to the property. When an immovable property is to be sold, usually there are two types of agreements - a sale for agreement and a sale agreement or sale deed. The agreement for sale is necessarily needed to be stamped and registered, as per the registration law. There may exist a delay between the registration date and agreement execution. This is generally believed that with an agreement's registration, the property's rights would get transferred from the vendor to the buyer. For any home buyer, the much-awaited sense of ownership of a dream home follows the execution and registration of the sale agreement. Hence, the buyer is always advised to thoroughly scrutinize all the major terms of the sale agreement for ensuring that all rights are well-protected and an absolute title is conveyed to the property.

Sales Agreement Under The Transfer Of Property Act

Section 54 - Transfer of Property Act, 1882 (TP Act) clearly defines a particular sale as an ownership transfer of immovable property for consideration. For constituting a valid sale agreement, all the critical components of a sale agreement as mentioned below are to be fulfilled ―

The property, being the subject matter of the conveyance/transaction.

The seller, being the earlier owner, transfers the property.

The buyer, being the individual who acquires the title from the property's seller.

The act of transferring the ownership of the property from the seller to the buyer.

The consideration is the amount paid or payable by the buyer to the seller, and such amount may either be paid fully or promised to be paid in due course or partly paid and partly to be paid eventually.

Clauses & Essential Details

Components Of Sales Agreement

Proposal of sale and purchase of a property.

Property Details and description.

Information about the property being free from legal encumbrance.

Details on the value of the property and payment schedule.

What will be the method of property delivery?

Delivery of property documents post the final payment.

Both the seller and buyer should ― attained a mature age, necessarily be of sound mind & not prohibited under any judgment or law of a court for entering into the contract.

Before Signing A Sales Agreement

Things To Check

Name of the parties involved
Schedule of payment
Details of the property
Details relating to possession of the property
Map of the property
Address of the property
Encumbrance certificate
The minimum time required for transfer
Penalty clauses, if any
Methods of resolving dispute, in case of occurrence
Evaluating the Differences

Sale Agreement v/s Sale Deed

Sale Agreement

A sale agreement is a promise for the future, which states that a specified property will be transferred to the buyer or the rightful owner at a later date.

When it comes to a sale agreement, the liabilities and risks remain with the seller until the property has been transferred to the buyer.

While a sale agreement is an executory contract, which means it is not to be fully implemented until a later date.

Most importantly, it's not mandatory to register a sale agreement immediately (regulations may differ across states).

Sale Deed

On the other hand, a sale deed is a document that is to be considered the actual transfer of property ownership between two or more parties.

For a sale deed, as you could imagine, the risk along with the document is immediately transferred to the new property buyer.

A sale deed is a completely executed contract binding both parties to the terms therein.

However, a sale deed needs to be registered mandatorily with the local and regional government authorities.