Legal Guide

5 Key Differences Between Agreement of Sale vs. Sale Deed

by Bhavya Choudhary · 3 min read

difference between sale deed and agreement

There are many differences between a Sale Deed and a Sale Agreement regarding the ownership and payment of the property involved.  This difference between Sale Deed and Sale Agreement makes it crucial for both the buyer and seller to thoroughly read and obey every clause.  We will be discussing the meaning and difference between Sale Deed and Sale Agreement in this blog.

What is an Agreement of Sale?

  • An Agreement of Sale is a legal document that contains all the necessary terms and conditions related to the transaction of immovable property.
  • The difference between the Sale Deed and Sale Agreement includes the amount to be paid in full and the date when it is to be paid as agreed upon by the seller and buyer.
  • This is a very crucial document without which the sale process cannot be completed.  So to avoid hindrance to any transfer, the sale of the agreement should be carefully prepared and attested because it acts as the main difference between the Sale Deed and the Sale Agreement prepared for the transfer.
  • An Agreement of Sale is a vital legal document after which the Sale Deed is drafted.

Can the Agreement of Sale be terminated?

The Sale Agreement can be terminated easily through a lawyer online if any one of the individuals from both parties has languished the terms and conditions mentioned in the legal agreement.  There is no such termination difference between the Sale Deed and the Sale Agreement in case of termination.

  • If the person who has failed is the seller, then the buyer can demand the defect caused.
  • If the person who erred is the buyer, then the seller can seek damages in regards to ownership.

What is a Sale Deed?

It is the legal agreement that denotes the sale or purchase of a property.  The transaction between the two parties of the transfer of absolute ownership is input in the Sale Deed as evidence of ownership.  It is also the difference between a Sale Deed and a Sale Agreement because the agreements are formed beforehand and contain every detail of the property involved.

It is also called a conveyance deed or final deed.  It also acts as legal evidence that enables the buyer to resell the property according to their wish.

The difference between Sale Deed and Sale Agreement must be clarified beforehand to avoid any further complications during the registration of the contract.

  • The deed of sale is ascertained after both the parties mutually comply with the terms and conditions of the Sale Agreement as agreed by the seller and the buyer.  A title in the case of any immovable property can only be acquired by the buyer if a Sale Deed is registered under the Indian Registration Act, 1908.
  • The buyer must verify the immovable property encumbrance or any charges that are yet to be cleared before signing the deed as the encumbrance then is transferred to the buyer, and they have to compensate to clear the loans or debts through the registrar’s office.
  • The seller receives a price or compensation as agreed upon in the deed of sale.  The main difference between Sale Deed and a Sale Agreement is the compensation is noted down in the agreement but made only after the registration of the Sale Deed.

What are the Terms included in the Sale Deed and Sale Agreement?

The terms which are included have many differences between Sale Deed and Sale Agreement:

  • Every detail regarding the buyer and seller is jotted down in the Sale Deed and forms no difference between the Sale Deed and Sale Agreement.
  • The overall description of the property, such as area, construction date, address, and surrounding areas, are written for verification.
  • The amount of sale includes when the payment will be received and by what mode.
  • The time when the property title will be transferred and the certain date of possession.
  • The indemnity clause- where the buyer and seller pledge to pay for any damages inflicted in case of ownership is also a key difference between the Sale Deed and Sale Agreement.

Can a Sale Deed be terminated?

If the buyer and seller have agreed and proved their consent of termination, then the Sale Deed can be canceled on the terms as follows:

  • The Sale Deed should be a registered document under the Indian Registration Act, 1908.
  • The individual who wants the termination feels that the deed will cause them damage in any way or it is infirm for some reason.

Both Sale Deed and Agreement can be terminated, and in this case, there is no difference between Sale Deed and Sale Agreement.  It is always suggested to seek help through a lawyer online or offline to mitigate any disputes or issues beforehand.

Essential Differences between Sale Deed and Sale Agreement

There are notable differences between Sale Deed and Sale Agreement which affect the entire registration process also and hinder the transfer if not concluded properly.  Some of the differences between a Sale Deed and a Sale Agreement are as follows:

  1. The difference between a Sale Deed and a Sale Agreement is that the former implies the actual transfer of ownership of property, and the second implies the future transfer of ownership.
  2. The risk factor is immediately transferred in the case of a Sale Deed, but it remains with the seller in the case of a Sale Agreement which is the key difference between a Sale Deed and a Sale Agreement.
  3. The difference between the Sale Deed and Sale Agreement is that deed is the executed contract, and the Sale Agreement is the contract that will be executory in the future.
  4. The information mentioned in both contracts is the difference between the Sale Deed and Sale Agreement.  The Sale Deed contains every detail about both the parties involved, while the Sale Agreement signifies the terms and conditions of the transfer.
  5. The difference between Sale Deed and the Sale Agreement is that in the deed, the buyer has to pay stamp duty and the registration charges, but the Sale Agreement predates the deed and is signed on a non-judicial paper by the buyer and seller.

Conclusion

From the above difference between Sale Deed and Sale Agreement, we understand that the law provisions must be thoroughly revised and drafted for registration as it can be complicated to understand every legal expression and clause.

The Sale Deed is a vital legal document for the actual transfer of ownership of the property involved, whereas the agreement of sale is like a future promise for transfer of ownership from one person to another in which the terms and conditions are elaborated.

Drafting of Sale Deed can be technical. Therefore, seeking consultation from a lawyer will make the process proficient and prompt.

Bhavya Choudhary

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Bhavya Choudhary

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