Selling and buying are two activities that keep fuelling the economy by ensuring the flow of funds. It brings about development and growth by giving direct and indirect employment opportunities of diverse nature. Since selling or buying concerns the transfer of titles (Sale Deed or Agreement to sell ) of movable as well as immovable property, such activities are well regulated by the government agencies who enact, implement and safeguard various laws for the safety of the resources involved in economic activities.

Properties of all forms may be purchased or sold – whether movable or immovable. The protection granted to such sales also depends upon their category, in as much as immovable properties, for instance, are of higher value and requires stricter measures for protection.

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, the 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 converts to a Sale when the requirements are fulfilled or when the time elapses for the property and land to be transferred. Hence, we may conclude that a Sale deed is created if it is subject to an immediate transfer of ownership. If not, it is an agreement to sell.

Immovable Property

Immovable Property has greater importance for an agreement to sell, generally because such sales are complicated affairs requiring various documents and legal procedures. This requires detailed understanding and description of the whole procedure and roles of the parties. Hence, for a sale of immovable property, the primary step is to draft an agreement to sell document.

What is an Agreement to Sell?

An Agreement to sell is a memorandum of agreement wherein the terms and condition of a prospective contract of sale are enumerated along with the proposed consideration and details of payment. It is a document of vital importance in a sale of immovable property.  It is the document on which the Sale Deed is based on. It permits the process of sale to happen smoothly by explaining the steps in detail. This helps in creating a better understanding between the parties and their individual roles in the sale of the property.

An Agreement to Sell Covers matters like:

1. Proposal to purchase and an agreement to sell
2. The detailed description of the property
3. Proviso requirement of good marketable titles and no encumbrances
4. Payment details including earnest money
5. Delivery of original documents on payment
6. Drafting of sale deed and registration of the same if titles found good
7. Method of distribution of property
8. Refund of earnest money in case of an improper title of a property
9. Remedies for non-completion of sale on the part of a vendor including specific performance and bearing of the expense of proceedings
10. Forfeiture of earnest money, if the purchaser fails to complete the sale
11. Action if the property and land are affected by notice from government authorities.
12. Production of tax-related certificates
13. Schedule description of the property
14. Memo of consideration for earnest money received
15. All other matters related to the proposed Sale

An Agreement to Sell hence shows the willingness of the parties to sell and buy a property in question and culminates in the 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 sale deed is an essential document that transfers the rights associated with property and land from one party to another. This document is drafted as a continuation of the agreement to sell. Moreover, all the terms and conditions defined in the former would be fulfilled and observed in a sale deed document. Below are few of the critical points that are mentioned in a Sale Deed.

1. Description of the ownership and property
2. Clear titles verified by the purchaser
3. Reference to an agreement to Sell and the cost details
4. Release/discharge of the property with a description of facilities measurements, privileges, easements and other rights
5. Transfer of all rights, interests, claim, demand whatsoever of the property
6. Facilitating peaceful enjoyment of the property without any hindrance
7. Indemnifying the purchaser against losses arising out of negligence/actions of seller or heirs
8. 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 specified in the agreement to sell. Therefore, the Sale Deed can be drafted briefly.

Significant Differences Between Sale and Agreement to Sell

1. A sale indicates an immediate transfer of property. It is accomplished by a Sale Deed, while an agreement to sell implies the future transfer.
2. Risks are transferred immediately in Sale, whereas they remain with the seller in case of Agreement to Sell.
3. A Sale is an executed contract, while an Agreement to Sell is an executory contract.
4. Breach of Sale can happen in a suit for a price as well as damages; however, any breach of terms of an agreement to Sell can appear just in the suit for damages.
5. A Sale Deed is a compulsorily registrable instrument whereas an Agreement to Sell is subject to laws of the particular state.