Sale Deed and Conveyance Deed: Analysis and Comparison

Key Takeaways

• Sale is defined under Section 54 of the Transfer of Property Act, 1882.
• A sale deed is a legal document that proves that the seller has given the purchaser absolute ownership of a property.
• A conveyance deed is a legal document between a transferor and a transferee that proves ownership of property and states that all related rights have been transferred.
• All sales deeds are conveyance deeds; however, all conveyance deeds are not sale deeds.

Introduction

Purchasing or selling a home has always been one of the most common financial transactions. However, the rising number of frauds and property scams in India has become a source of concern for many. Having a written document that defines the transaction between the seller and the buyer when buying or selling a home has become critical. The terms "conveyance deed" and "sale deed" are frequently used in real estate transactions. This article defines such deeds, the parties, documents, and registration in India while exploring the differences.

What is a Sale

To understand the concepts of sale and conveyance deeds, it is crucial to understand the concept of sale. Sale is defined under Section 54 of the Transfer of Property Act, 1882. According to this Section, a sale is a transfer of ownership in exchange for a price paid or promised, or a price paid in part and promised in part. The Section further states that a registered instrument or delivery of the property can be used to transfer tangible immovable property with a value of less than one hundred rupees. When the seller places the buyer, or whoever he directs, in possession of the tangible immoveable property, it is called delivery in the cases of tangible immoveable property.

What is a Sale Deed

A sale deed is a legal document that proves the seller has given the purchaser absolute ownership of a property. The rights and interests in the property are defined in the Deed of Sale, and it states that the rights and interests are now transferred to the new owner.

In India, a sale deed is only considered valid if both the seller and the buyer sign it and both parties have agreed to abide by the sale deed's terms and conditions. A sale deed must be registered under the Registration Act, 1908.

What is a Conveyance Deed

A conveyance deed is a legal document between a transferor and a transferee that proves ownership of property and states that all related rights have been transferred. It is signed by both parties and can be used in court if a dispute arises in the future.

However, a conveyance deed is a broad term that includes gifts, exchanges, leases, mortgages, relinquishments, and other transfers. It can be signed for both movable and immovable property. The Transfer of Property Act, 1882, the Registration Act, 1908, and the Indian Stamp Act, 1899, all govern the execution of a conveyance deed.

Points of Comparison

• Term: Frequently, the terms "sale deed" and "conveyance deed" are used interchangeably. It is important to note that all sales deeds are conveyance deeds because they are related to sales; however, conveyance deeds can also include gift, exchange, mortgage, and lease deeds, among other things. Hence, all conveyance deeds are not sale deeds.

• Formation – The most significant distinction is that, in the event of only a sale, the sale deed transfers the legal title of property from one person to another.

A conveyance deed, on the other hand, can be used to legally transfer property ownership from one person to another in the case of a gift, an exchange, a lease, a mortgage, or other circumstances.

• Parties – In essence, a conveyance deed is a legal document that transfers property ownership from one person to another. Furthermore, it may also refer to granting an encumbrance, such as a mortgage or a lien, to a property.

On the other hand, a sale deed establishes a valid and legal title to the property in favour of the purchaser. It is signed after the transaction has been completed. It is the process by which the property is transferred to the buyer.

• Registration – For a sale deed to be considered valid, both parties must sign it (the seller and the buyer). Otherwise, it will be deemed invalid. To complete the transaction, both parties must adhere to the terms and conditions outlined in the sale deed. Under the Registration Act, 1908, a sale deed must be registered within four months from the date of execution. The registration of a sale deed will be done by the Sub Registrar of the jurisdiction, wherever the property is purchased.

In the case of Jasvir Singh v. Mohan Singh, 2010 (3) R.C.R. (Civil) 654, it was held that the Registrar's endorsement on the sale deed proves that the executor of the sale deed presented the sale deed to the Registrar and admitted its execution while receiving the consideration in lieu thereof.

A conveyance deed is executed under the legal provisions of various statutes, including the Transfer of Property Act 1882, the Registration Act 1908, the Indian Stamp Act, 1899, and other applicable laws. As per the provisions, the date on which the property will be handed over to the buyer should be specified in the conveyance deed.

All original documents related to the property sale must be produced for registration before the local Registrar within four months of the deed's execution. Also, at least two witnesses must witness the signing of the deed for it to be valid.

• Contents – The parties' complete details are listed in a sale deed. The deed also contains the stamp duty payment, price, and terms and conditions under which the two parties executed an agreement to sell a property. When the property is immediately transferred, a sale deed is considered completed. The sale deed is the document that states that the sale was successful, that the property now belongs to the purchaser legally and rightfully, and that the seller relinquishes any right of title to the property in exchange for the agreed-upon remuneration.

The conveyance deed, on the other hand, contains all of the information required to complete the transfer of property ownership. This includes the buyer's and seller's full names, addresses, and other pertinent information. The actual delineation of the property in question, the chain of title of the owners, and the method by which the property will be delivered are all detailed in the document. This should be specified in the conveyance deed and the precise date on which the property will be transferred to the buyer. The deed may also include any future, additional terms and conditions that apply to the complete transfer of ownership rights.

In Mst. Ranjit Kaur v. Harbal Singh (1963, 65 P.L.R. 1023), it was held that where the conveyance deed expressly stated that the property would be transferred with effect on a specific date, the property would be deemed to have been transferred with effect on that date, even though the conveyance deed had been executed much later.

• Documents Required – The sale deed necessitates documents such as extracts from the Rights and Tenancy Corps (R.T.C.); Power of Attorney; Joint Development Agreement; original loan documents; Sale Agreement with the seller; original property title documents; the building or property's sanction plan; N.O.C. from the Electricity, Pollution Control Board, Water Works; etc.

The Conveyance Deed requires the following: Registered Agreement for Sale with the seller; location plan; city survey plan; layout plot plan approved by the local authority; building/ structure plan approved by the appropriate authority; Certificate of Commencement and Completion; proof of registration; draft conveyance deed / declaration proposed to be executed in favour of the applicant; and so on.

In Duncans Industries Ltd. v. the State of U.P. (2000) 1 SCC 633, it was held that it is essential to ascertain the parties' intentions from the material on record and that the contents of the agreement pursuant to which the conveyance deed came into existence could not be excluded while doing so.

Conclusion

It is imperative to know the meaning and differences of such basic terms. However, it is usually challenging for those not regularly dealing with real estate and transferring immovable properties to know the same. Hence, this article has aimed to differentiate between the terms "Sale Deed" and "Conveyance Deed".