Real Estate Property is one of the most sort-after investment options in India. Whether you are a first-time property buyer or an experienced owner, buying a real estate property in India is not an easy task.
As property related transactions involve lot of money and risks, they require stricter measures for legal protection for all the parties involved (buyer or seller).
Between the formalities of buying and selling, there are various legal approaches that everyone generally undertakes.
While buying a property, people enter into an agreement with the seller. This contract can be through a Sale Deed or a Sale agreement.
So, what is the difference between Property Sale Agreement and Sale Deed?
Property Sale Agreement Vs Sale Deed
There are certain important documents required to be executed between buyer and seller in order to complete the process. The selling or purchase of real-estate property titles is a prerequisite for ‘Transfer’, these transactions are well regulated by certain binding documents.
Sale agreement and Sale deed are two such important documents. The distinction between these two documents is not widely known and both are regarded as synonymous.
“An agreement to sell is not equivalent to a sale deed of the same property.”
- If the property’s transfer is on a future date and subject to further terms and conditions – it is called Agreement to Sell.
- Execution of ‘Sale Agreement’ document does not lead to ‘transfer of title of property’.
- However, if the property is transferred through the contract – it is called Sale. This can be done through the execution of a Sale Deed.
- The Deed of Sale is based on the ‘Sale agreement’ (if any). If the payment is one shot (single payment), then Agreement to sale often becomes the Absolute Sale Deed.
- The sale deed ensures that the title of ownership is transferred from the seller to the buyer in return of a valid consideration.
Below are the main differences of these two important property documents;
|Sale Agreement||Absolute Sale Deed|
|It is also called as ‘Bayana’ (advance)||It is also referred to as ‘Registry’.|
|It is a proposal to sell the property. It only implies ‘future transfer’ of property.||It is a document which signifies immediate effect of the transfer.|
|Risks are not transferred even after the execution of this document||Risks get transferred after the Sale.|
|Rights and obligations remain with the seller.||The rights and liabilities are transferred to the buyer instantly.|
|Violation of ‘agreement T&Cs’ can result in a suit for damages only.||Violation of ‘Deed’ can result in a suit for both ‘price’ and ‘damages’|
|Contains schedule of payments to be made between a buyer and seller||Contains details of full payment amount received, details of payment mode (DD No, Cheque No) etc.|
|May or may not be Registered with the Sub-Registrar.||It is a compulsorily registrable document. Buyer has to pay a certain amount of charges (stamp duty & Registration fee) for the registration of the property transfer.|
Supreme Court’s judgement order – “Immovable property can be transferred/conveyed only by a deed of conveyance (sale deed), duly stamped and registered as required by law.” “Any contract of sale (agreement to sell), which is not a registered deed of conveyance (deed of sale), would fall short of the requirements of Sections 54 and 55 of the Transfer of Property Act and will not confer any title, nor transfer any interest in an immovable property (except to the limited right granted under Section 53A of the Transfer of Property Act).”
Kindly note that the transfer of ‘ownership title’ also happens through the execution of other legally accepted documents like – Gift Deed, Relinquishment deed, WILL etc.,
Read related article : 5 ways of transferring your Immovable (or) Real Estate Property
Once the property is acquired through a Sale Deed or Gift Deed, the buyer (or donee) has to get the property mutation done in his/her name.
Many of us often get confused with Registration (Sale Deed) and mutation of property. So, let’s know discuss – What is the distinction between Property Sale Deed and Property Mutation?
Property Sale Deed Vs Property Mutation
Registration of the property is a full and final agreement signed between two parties ie., buyer and seller.
Once a property is registered through the execution of ‘Sale Deed’, it means that the property buyer in whose favor the property is registered will become the lawful owner of the property and is fully responsible for it in all respects.
The new owner is liable to pay property taxes, development charges etc which are levied by the local civic body (Panchayat / Municipality / Corporation).
Once the property is registered in Sub-registrar office, the buyer of the property has to get the title of the property updated in his/her name in the local revenue office (municipality or panchayat office). This is known as mutation. Once the property is updated in the revenue records, henceforth the new owner has to pay the applicable taxes to the civic body (like property tax, development charges etc.,).
So, registration of property and mutation of property are two different things. Mutation of property happens after the registration of property.
Registration of property through the execution of a Sale Deed is done at Sub-registrar office (Registration office) and mutation is done at local civic body office. Registration of the property does not lead to automatic update of land records in revenue office.
” By merely transferring the name in mutation records, one cannot claim that he/she has title to the property. Kindly note that without a registered sale deed on his/her name, mutation is invalid and illegal.“
|Property Registration (Sale Deed)||Property Mutation|
(Khata/Patta Registration & Transfer)
|It is also known as ‘Conveyance Deed’||It also known as Katha or Patta,|
|On execution, Property gets transferred from one person to another.||The name of tax payer gets entered in Revenue tax records.|
|Registration can be done without a ‘mutation record’.||Based on ‘Sale Deed’ or ‘Gift Deed’, the buyer can get mutation done.|
|A Sale Deed without Mutation is still a legally valid document||Without a Sale Deed, Mutation is invalid and illegal|
|A must-have document for any type of Property.||In case of Agricultural lands, mutation is must.|
|Deed Ownership title can be cross-checked through Encumbrance Certificate||Mutation record can be cross-checked through a Mutation or Khatha Extract|
I believe that some States like Andhra Pradesh are planning to fully-integrate both the Registration & the Revenue departments, so that the land records are automatically updated in revenue dept (mutation) as soon as the property registration is done at the Registration office.
When Mutation of property can be done?
You need to get the transfer of title of property (mutation) done in the below circumstances to avoid any legal disputes in the future;
- After buying/purchasing a property through a Conveyance Deed / Sale Deed.
- After inheriting a property through a Will or without a Will.
- After acquiring a property through a Gift Deed.
Read related article : How to apply for Mutation of Property?
If you are planning to buy a property, do get Sale Agreement (if any), Sale Deed and Mutation done without fail and with utmost care.
In case, you already own a property, get your name updated in Revenue department’s records.
- Checklist of Important Property Documents in India | Legal Checklist for Property Purchase
- Khatha Registration & Khatha Transfer in Bangalore
- New alternative Real-Estate investment options – REIT Vs Real Estate Crowd Funding | Should you consider ‘Fractional Real Estate Investments’?
(Post first published on : 28-August-2020)