Sale Agreement Vs Sale Deed

Sale Agreement is akin to ‘Engagement’ and Sale deed is like ‘Marriage’.

And of course, purchase of immovable property is as tough as arranging the marriage and aptly an adage in Kannada says ‘Maduve madi nodu; Mane katti nodu’, means both, arranging a marriage or acquiring a house is a grueling job.

Just imagine, you have decided to marry off your dear daughter. What all efforts, preparations and precautions you undertake in finding the right man for your daughter, you need to undergo similar strenuous efforts, preparations and precautions in finalizing the ideal property for your family.

Once you decide on the property, you need to engage a well versed Property Advocate to verify the title flow and ensure the seller (vendor) has marketable property, there are no encumbrances (charges) on the property and the seller is legally competent to sell the same to you.

Since the sale consideration would be a huge amount, normally the purchaser needs time to arrange the sale price and at the same time seller needs time to arrange for balance documents if any, and to arrange for vacant possession of the property. Normally timeline is between 30 days to 180 days, mutually acceptable to both seller and purchaser.

To keep the deal (offer for sale) effective and enforceable by both seller and purchaser throughout the agreed timeline and to complete the deal, it is necessary to expressly agree the terms and conditions of sale in writing. It is also a legal necessity to execute an agreement, which attracts stamp duty. This agreement is known as Sale Agreement or Agreement to Sell.

Once a sale agreement is executed, the purchaser will have a right to purchase the property from the seller, but he will not become the owner (title holder) until Sale Deed is executed and registered in his name. During the Sale Agreement period, the purchaser will not be able to mortgage the property to avail a home loan. This is the reason Banks will create mortgage soon after sale deed is registered in favor of borrower and collect original registered sale deed directly from Sub Registrar’s office.

So, Sale Agreement precedes the Sale Deed. It may be noted that it is not mandatory to have a sale agreement for purchasing a property. If Purchaser has sufficient amount to purchase and both purchaser and seller agree, the seller can directly execute the sale deed in favor of the purchaser.

Now let us have some more details on Sale Deed.

On fulfilling all terms and conditions of sale agreement, the seller has to execute the sale deed in favour of purchaser and it is mandatory to register the sale deed at jurisdictional Sub Registrar’s Office. The purchaser has to pay applicable stamp duty and registration charges as applicable.

The sale deed contains the details of seller, purchaser, schedule of property with size and measurements of property, its boundaries, sale consideration, details of payments made, note on title flow, reference to sale agreement, all approvals from Government authorities, khata certificate and up to date taxes paid, indemnity from seller regarding marketable title, no encumbrances or any charges on the property, handing over peaceful possession of the property to the purchaser and any other related information on the schedule property.

The sale deed, which conveys title, transfers full ownership rights to purchaser. The original registered sale deed needs to be preserved at all costs. If loan is availed, lending Bank will collect the original document and create a mortgage as security for the loan amount advanced/to be advanced. After the loan is repaid, the Bank will return sale deed along with all linked documents.

Thus sale transaction gets completed by the execution and registration of the sale deed in favor of the purchaser.

The famous proverb ‘Marry in haste, repent at leisure’ applies to buying a property also.


Rajendra Deshpande, Managing Director, PropSeva®

Chartered Engineer                          Mortgage Banker