Sales Agreement vs Sales Deed : Which One Secures Your Ownership?

Legal documents are the lifeblood of sales transactions. They provide formal agreements between buyer and seller, and in chains of legal rights and obligations for them. Sales Agreement and sales deed help frame the whole transaction with respect to all the terms and conditions and rights of both parties. Sales through non-registered documents can be legally disapproved. Thus, proper writing of legal documents in sales would ensure that the interests of both parties are well-defined, such as the payment options, warranties, and liabilities.

This blog will give you an understanding regarding

• The difference between Sales Agreement and Sales Deed.
• How important are sales agreements and sales deeds?

What Is A Sales Agreement?

A sales agreement is a legally binding document between the buyer and seller outlining the terms of a future sale. A promise to sell, not an immediate transfer of ownership of goods, properties, or assets. It specifies important details such as price, payment terms, delivery conditions, obligations of both parties, and any contingencies that must be satisfied before the ultimate sale takes place.

Sales agreements are commonly used in real estate, in the purchase of other businesses, and in large asset purchases that require due diligence, various approvals, and financing arrangements before the completion of the sale. While a sales agreement works as a binding commitment and protects both parties by ensuring clarity and reducing the potential for disputes, it also creates a framework for enforcement.

What Is A Sales Deed?

A Sale Deed is a legal document that conveys the transferring rights, title of property, asset, or goods from the seller to the buyer. It's a proof of sale and recognizes the buyer as a legal owner. The sales deed also acts as evidence once the sale transaction is completed. The deed in it holds the names of the parties involved, description of the property or the asset, the price agreed upon, confirmation of payment, and the conditions of sale.

Registered Sales Deed is a safety for buyers, which accords their ownership rights and shields them from possible future conflicts. Once executed, the seller could not claim the asset anymore, and the buyer, thus, has full legal possession.

Difference Between Sales Agreement And Sale Deed

Example

Suppose Mr. A (the seller) and Ms. B (the buyer) have entered into a combined sale agreement and sale deed for a flat in Viman Nagar, Pune. The agreements contain all details pertaining to the property: detailed specifications, prices, payment schedule, and possession transfer date. It is also provided that upon completion of construction and registration of the sale deed, the ownership will be transferred into Ms. B's name. If the construction is not completed by Mr. A or if the property is not transferred to Ms. B, she can take all legally enforceable remedies, including that of specific performance.

Importance Of Sales Agreement And Sales Deed In Real Estate & High-Value Sales

A Sales Agreement and Sales Deed are crucial legal documents in real estate and high-value sales, establishing the terms of the transaction and transferring ownership, respectively, thereby providing legal clarity and security for both buyer and seller.

Sales Agreement: The Laying Foundation

A Sales Agreement is intended in the world of real estate and other high-value transactions as a legally binding commitment between buyer and seller. It helps to:

• Locked the Deal: The seller cannot back out of a deal or sell to another party.
• Clarification of Terms: It states the price, method, and time of paying, contingencies, and obligations of both parties.
• Risk Management: Protects either side in case the conditions (like loan approvals, regulatory clearances, or due diligence) are not met.
• Liability: In case of a breach, any party may go to court.

Sales Deed: The Transfer Of Ownership

Sales Deed is the most prominent document used in real estate and high-value sales because:

• Legitimate Ownership Transfer: Confirms that the buyer is now the actual owner.
• Property Registration: It is ever so recommended that a registered sales deed in real estate be secured to avert dispute.
• Prohibition against Fraud: Avoids the seller making demands post-sale.
• Property Marketability: A sound sales deed will guarantee its holder possible resale and mortgage of that property in the future.

Conclusion

The Sales Agreement and Sales Deed are important documents for real estate and other high-value transactions; however, their functions are not the same. A Sales Agreement secures a deal and establishes conditions for future transfer, while a sales deed is a legal document that completes the transaction and transfers ownership.

Most importantly, they'll cause legal problems, hazy transactions, losses, and disputes. So make sure to carefully read and understand the terms and provisions before putting your signature so that the transaction can be smooth, clear, and legally sound.

FAQ’s

A few FAQs on ‘Sales Agreement vs Sales Deed’ are as follows:

Q1. In Indian property law, how is a Sale Agreement different from a Sale Deed? .

In India, a sale agreement outlines the terms and conditions of a future property sale, while a sale deed is the final document that legally transfers ownership of the property. The sale agreement is an executory contract, meaning the terms are not yet fully implemented, while the sale deed is an executed contract, finalizing the transaction. 

Q2. Is a Sales deed mandatory after the agreement for sale in Maharashtra?

Yes, a sale deed is mandatory after an agreement for sale in Maharashtra. While an agreement for sale outlines the terms and conditions of the sale, it is not the final transfer of ownership. The sale deed is the legal document that officially transfers ownership of the property and must be registered to be valid. 

Q3. What is a Sale Agreement for Property?

A sale agreement, also known as an agreement to sell, is a contract between a buyer and a seller outlining the terms and conditions under which a property will be sold. It's a legally binding document that ensures both parties understand the details of the transaction before it's finalized with a sale deed. 

Q4. What is the standard format for a Sale Agreement and Sale Deed?

A sales agreement and a sale deed are two different legal documents related to property transactions. A sales agreement (also known as an agreement to sell) outlines the terms of the sale, including price, payment terms, and other conditions, but it does not transfer ownership. A sale deed, on the other hand, is the final document that legally transfers ownership of the property from the seller (vendor) to the buyer (purchaser).