Registration & Stamps Department

Requirements of Sale Deed

Sale deed is one of the most valuable legal documents in a purchase or sale of a property. A sale deed is drafted by legal draftsman on a non-judicial stamp paper of the requisite value as prescribed by stamp act of the particular state concerned. Today, in many States including Telangana, the stamp papers are available up to the value of Rs.100/- only. The parties shall use 5-6 Non-Judicial stamp papers and remaining amount shall be paid through challan system (AP) and through stamping and other mechanism provided by the State Government (in others States). A draftsman must include certain clauses while preparing the construction of the sale deed which are as follows:

1. Name of the deed:

   It is the parties who have to decide that which deed has to be prepared e.g. DEED OF SALE or DEED OF MORTGAGE or DEED OF LEASE etc. and based on which there will be transfer of ownership of immovable property. Since this Sale deed, parties may use DEED OF SALE (OR) SALE DEED.

2. Parties to sale deed:

   An absolute sale deed must contain the names, age and respective addresses of parties to the transaction and both the parties i.e. seller and buyer must be competent to enter into a contract so that it will not affect the validity of the valid sale. It is very much important that the sale deed is duly signed and executed by both the parties with their bona-fide intention. A valid sale deed must start with clear description of the parties.

3. Description of the property sold

   A valid sale deed must contain full description of the property which is the subject matter of sale. It must include identification number, total plot area, construction details as well as its location with its surrounding areas. A schedule of the property must be included in the sale deed which will define the exact location where the property is actually situated.

4. Agreement for sale:

   In the agreement for sale both the parties may mutually settle the terms and conditions of the agreement so that it will not affect the rights of the parties. A sale deed may be preceded by agreement to sell.

5. Sale consideration clause:

   A sale deed must include the clause stating the sale consideration/amount as agreed between the seller and the buyer which has to be paid by the buyer to the seller on the execution of sale deed. A sale amount should be clearly stated in sale deed as agreed in the agreement to sell so that there should not be any onus on the parties to the transaction.

6. Advance payment, if any:

   If there is any transaction of token amount paid by the buyer to the seller then it has to be clearly mentioned in the sale deed, and how much is the remaining balance to be paid on the execution of the sale deed.

7. Mode of payment:

   It is always the buyer who has to decide that how he is going to pay the sale consideration amount whether by Cash /Cheque/ Demand Draft and the same has to be agreed by the seller.

8. Passing of the title:

   A sale deed should contain the clause when the original title of the property to be passed to the purchaser. A time limit should be given to the seller for the transfer of the title. Once the title of the immovable property is transferred, all the rights will pass to the purchaser.

9. Delivery of the possession:

   The possession of the immovable property will be transferred to the purchaser by the vendor once the registration process is completed. A clause in the sale deed must state when there will be actual delivery of the possession.

10. Indemnity provision if any:

    A seller must clear all the statutory charges i.e. property tax, electricity charges, water bills, cess, society charges, maintenance charges and all other charges relating to the property before the execution of the sale deed. In case there is any encumbrance on the property, the seller needs to repay the loan amount and get the property papers cleared of the encumbrance. It is the duty of the buyer to verify the encumbrance status from the office of the Registrar/Sub Registrar/Mee Seva Centres (in AP).

11. Execution:

    Once the Sale Deed is prepared all the parties to the deed shall execute it by affixing their thumb impression or full signature. Each page should be signed by the seller and buyer. Any erasure, 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.

12. Registration According to Section:

    17 of "The Registration Act, 1908", the registration of a tangible immovable property is compulsory if the value of the respective property exceeds rupees 100/- and it is the registration of the property which makes the sale valid. For getting the registration done both the parties must be present in person or through their duly authorized agent(s) before the jurisdictional sub-registrar office with the original documents within four months from the date of execution. A stamp duty has to be paid by the purchaser to the sub-registrar for getting the registration done. A certified copy of the registration document to be obtained for the future reference.

13. Testatum:

    Once all the terms and conditions have been settled between both the parties, a sale deed is prepared. The executed sale deed should be witnessed by at least two witnesses one from seller side and one from buyer side, giving their full names, addresses and signatures.

14. Original documents:

    Once the property gets registered under the registration act all the original documents of the sold property to be hand over by the seller to the purchaser. All the statutory rights along with ownership, possession, title, interest will get vested in favour of the purchaser.

15. Default clause:

    An agreement for sale of immovable property should include the clause stating if there is any default by the vendor or the purchaser then the party who rescinds the contract need to pay damages to the other party for the breach of contract so that it will not affect to the execution of the sale deed.

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.