Main Difference Between Sale Deed And Agreement To Sell
Sales and purchasing are two practises that keep the economy running by maintaining the money flow. It brings about development and growth by providing multifarious opportunities for direct and indirect jobs. Because sale or purchase includes transfer of movable and immovable property titles, such activities are well controlled by government agencies that pass, enforce and safeguard various laws for the protection of the properties involved in economic activities. Properties of all types can be bought / sold-whether mobile or immovable. are of higher value and requires stricter measures for protection. Let us observe some legal terminology related to sale agreements as applicable to movable and immovable properties.
Movable Property
Movable properties include tangible goods not being land, buildings and other immovable properties. For instance, machinery, tools, vehicles, raw materials, consumer goods, etc. In India, sale of goods is regulated by the Sale of Goods Act, 1930.
If the property described is transferred through the contract immediately- it is called Sale.
If the property’s transfer is on a future date and subject to further terms and conditions – it is called Agreement to Sell. An Agreement to Sell becomes a Sale when the conditions are fulfilled or when the time elapses for the property to be transferred. Thus, we may conclude that a Sale deed is created if it is subject to an immediate transfer of property. If not, it is an agreement to sell.
Immovable Property
Because sale or purchase includes transfer of movable and immovable property titles, such activities are well controlled by government agencies that pass, enforce and safeguard various laws for the protection of the properties involved in economic activities. Properties of all types can be bought / sold-whether mobile or immovable.
What Is An Agreement To Sell?
A Agreement To Sell is by default a memorandum of understanding in which the terms and conditions of a prospective selling contract are enumerated along with the agreed consideration and payment details. It is a significant document in a sale of immovable property. That is the document which is based on the Deed of Sale. It helps the sales process to proceed smoothly by explaining the steps in detail. This helps to create deeper communication between the participants in the transaction and their individual roles.
An Agreement to Sell includes matters like:
- Proviso requirement of good marketable titles and no encumbrances
- Detailed description of the property
- Proposal to purchase and agreement to sell
- Drafting of sale deed and registration of the same if titles found good
- Delivery of original documents on payment
- Payment details including earnest money
- Remedies for non-completion of sale on part of vendor including specific performance and bearing of expense of proceedings
- Refund of earnest money in case of improper titles
- Method of delivery of property
- Production of tax related certificates
- Action if the property is affected by notice from government authorities.
- Forfeiture of earnest money, if purchaser fails to complete the sale
- All other matters incidental to the proposed Sale
- Memo of consideration for earnest money received
- Schedule description of the property
An Agreement to Sell thus shows the willingness of the parties to sell/buy a property in question and culminates in creation of the actual sale deed. It cannot be called a Sale Deed because it does not create any rights on the property for the buyer.
What Is A Sale Deed?
A deed of sale may be a document that truly transfers the rights related to a property from one party to a different. it's usually drafted as a continuation of the agreement to sell. All the terms and conditions mentioned within the former would be fulfilled and observed in an exceedingly deed of sale. Following are a number of the points that are mentioned in a very Sale Deed.
- Clear titles verified by the purchaser
- Description of the ownership and property
- Release/discharge of the property with description of facilities measurements, privileges, easements and other rights
- Reference to the Agreement to Sell and the price details
- Transfer of all rights, interests, claim, demand whatsoever of the property
- Facilitating peaceful enjoyment of the property without hindrance
- Indemnifying the purchaser against losses arising out of negligence/actions of seller or heirs
- Full authority of vendor to sell.
In short, a Sale deed mentions more of the transfer of property and rights which forms the crux of it. All other terms and conditions are mentioned in the agreement to sell. Therefore, the Sale Deed can be drafted briefly.
Key Differences Between Sale And Agreement To Sell
- A Sale is an executed contract, while an Agreement to Sell is an executory contract.
- Breach of Sale may result in a very suit for price similarly as damages, while any breach of terms of an Agreement to Sell may result only in suit for damages.
- A Sale Deed may be a compulsorily registrable instrument whereas an Agreement to Sell is subject to laws of the actual state.
- A sale implies immediate transfer of property. it's accomplished through a buying deal Deed, while an agreement to sell implies future transfer.
- Risks are transferred immediately in Sale, whereas they continue to be with the vendor just in case of Agreement to Sell.