Difference Between Sales Deed and Agreement of Sale

While property transaction-related matters, you may have come across the terms like agreement of sale and sales deed and found yourself in confusion. Most people don’t have an idea about these terms.

When it comes to purchasing a property like a house, flat we have to agree with the seller. A sale deed and sale agreement play a huge role here. This is why many of us think that the sale agreement and sale deed are the same. Because of the similarities in the name, confusion may occur.

Well, that’s not a problem; we will make you understand about sales deed and agreement of sale and also the difference between them.

What is an Agreement of Sale?

A sale deed and agreement of sale are two different documents often used synonymously to each other in real estate transactions. An agreement for sale is an agreement to sell the property in question in the future that specifies the terms and conditions, which the property in question will be transferred to the buyer. Normally agreement of sale is made for immovable property.

The agreement of sale is a contract that a sale of particular property that takes place after terms and conditions are settled between the parties. It is a promise to transfer a property in question to the purchaser in the future

After signing the agreement of sale by both parties, It doesn’t mean that the property gets transferred to the buyer immediately. An agreement of sale creates a right for the purchaser to purchase the property after satisfying the term and conditions. After executing the sale deed by paying the entire consideration as per the sale agreement, the purchaser will become the legal owner of the property

What is a Sale Deed?

The sale deed is the legal document by which the seller transfers their ownership over the property to the buyer in exchange for the amount or any consideration. A sale deed accompanied by a proper registration process and stamp duty transfer the absolute rights of a property to the purchaser.

It is considered valid proof of ownership of property and provides legal recognition of the transaction of property between the buyer and seller. The rights of the buyer and seller are mentioned in the sale deed. If any problems occur in the future over the property, the sale deed can be used as proof.

The Sale Deed Includes the Following Details

Details of parties
Consideration or sale
Property description
Mode of payment,
Reference of the agreement of sale,
Date of delivery of possession,
Transfer of rights over the property of the purchaser

Main Difference Between Sales Deed and Agreement of Sale

The main difference between a sale agreement and a sale deed is that it is only the sale deed that can transfer ownership of immovable property from the seller to the purchaser. It cannot be done through a sale agreement as it is just a promise to transfer the ownership in the future.
The agreement of sale is normally a promise to transfer the ownership of property in the future. Whereas the sales deed is the actual transfer of ownership of the property in question.
The agreement of sale normally contains terms and conditions under which the property will be transferred. Sales deed includes information about buyer and seller, payment details and the description of the property, etc.
Risk over the property remains within the seller until the property gets completely transferred in the future through sales deed. But after signing the sales deed risk gets transferred to the new buyer.
Agreement of sale gives a right to a purchaser to purchase the property. Whereas a sales deed gives rights over the property to the new owner.
It is not compulsory to register an agreement of sale but it is compulsory to register a sale deed to transfer the rights of the property.
Agreement of sale is not been fully implemented to transfer the ownership of property whereas sales deed is executed contract.

In Summary

Execution of the sale deed containing proper stamping and registration, the buyer can become the legal owner of the property if there is no proper stamping its rights of the property cannot be legally transferred. From this, you can understand that the transfer of ownership of immovable property can only be done by a sale deed.

Also, the buyer of immovable property should know that No right, title, or interest in an immovable property can be transferred without the stamping and registration of the sale deed.

Sale deed should be properly stamped and registered under the Indian Registration Act, 1908, which can transfer the ownership of property completely.