Buying a home is a detailed process that demands lots of patience and awareness too. The final stage of this process is signing the document elaborating all the conditions agreed upon. The sale or purchase of the property is said to be complete when the transfer of title of property is done within the legal framework. Thus, the legalities of the process involve some documents one should know about. The buyer may come across legal terms like conveyance deed, sale deed, agreement for sale and so on.
What Is an Agreement for Sale?
The agreement to sale is the framework within which the process of selling a property will be carried out. This agreement defines the terms and conditions of the sale. The consenting parties include details like price at which the property transaction is finalized, the agreed upon payment plan and the final date by which the payment would be completed. Thus, this agreement is more like a token of consent between the parties taking part in property purchase.
What is sale deed?
A sale deed is a legal document that confirms the transfer of title of property from the seller to the buyer. This document is drafted in continuation with the agreement for sale. The terms and conditions of the sale as described in detail in the sale agreement are actually observed in the sale deed. To elaborate precisely, one can find following points in a sale deed:
- Details of the property (location, landmark, size of the property, position in a MDU, ownership details, etc.).
- The titles mentioned clearly and verified too by the buyer.
- A brief reference to the agreement for sale mentioning the agreed upon price clearly.
- Mention of all the facilities, rights and other easements accompanying the release of the property.
- The complete transfer of claim, rights, liability attached to property and all types of demands related to it.
- Indemnifying of the buyer against losses occurring due to negligence or any action of the seller or their heirs.
- Offers the vendor the full right to sell.
Precisely speaking, the sale deed executes the terms and conditions explained in sale agreement. This, therefore, is quite smaller and less detailed as compared to the agreement to sale. The sale deed can come into force as an immediate effect of intention of sale. If there is lapse between the intention of sale and actual transaction, the agreement to sale seals the deal.
Conveyance deed – how is it different from sale deed
The laws governing the transaction of movable and immovable properties are different. The deed of sale can be called as a type of conveyance deed. The latter is a broader term and is applicable to deeds considering transfer of ownership of assets having monetary as well as emotional value attached to them.
Procedure of sale (or conveyance) deed
The conveyance deed is executed using a stamp paper of non-judicial nature. This deed is then registered at the Registrar’s office where certain registration fee, as applicable under Indian Registration Act, is remitted to the concerned authorities.
The official culmination of the conveyance deed procedure is marked by the transfer of property to the public domain with the payment of stamp duty and fees for registering the property.
The legal heirs of the builder can execute the deed of conveyance if the owner/builder of the property is dead. With the help of a legal expert, the conveyance deed is drafted and applied prior to the registration.
So, the deed of conveyance forms an important document of the whole property transaction process. The ownership of the property can become challengeable if the sale deed is not formed and executed properly.
Stamp duties in different cities
The total cost of property varies from city to city. The buyers and sellers should be aware of the terms like circle rate, stamp duty, etc and get accustomed to Indian Registration Act thoroughly to ensure that the execution of sale deed is done correctly and as per the laid down norms.
Stamp duty levied on real estate transactions is a charge that needs to be levied on the total on-paper value of the property when it changes hand from the seller to the buyer. This charge or fee is different from one city to another. One needs to factor in the stamp duty and registration fee too, to arrive upon the total expense figure that one requires to manage during the transaction of a property. The Indian Stamp Duty Act came into force in 1899 and ascertains the stamp duty value across the cities. It varies from 4 to 10% from city to city. The stamp duty differs for male and female owners accordingly. Some states charge the stamp duty of a total of 8% of the total property cost if the buyer is male and the same is 6% for the females.
Stamp duty is prerogative of Stamp Acts introduced in different states of the country. For example, the property transactions taking place in the state of Maharashtra attract stamp duty and registration fees as per the regulations laid down in Maharashtra Stamp Act.
Stamp duty data for different cities is tabulated as under:
- Mumbai and Pune: 6%
- Ahmedabad: 4.9%
- Chennai: 7%
- Bengaluru: 5.6 percent urban areas and 5.65 per cent rural areas
- Gurgaon: Urban female: 6%, Urban Male: 8%, Rural Female: 4%, Rural Male: 6%
- Hyderabad: 7.5%
- Kolkata: Urban – 6%, Rural – 5%, for properties above 40 lakhs, 6% and 7% in rural and urban Kolkata respectively.
Registration fee is another component that is to be paid for getting the transfer of property done. While stamp duty varies from region to region, the registration fee is kept one percent of the total property value throughout the country.
Thus, when you finalize the property and are all set to sign on the dotted lines, keep the additional costs apart from the property’s total value in mind. These additional costs such as stamp duty and registration fee cannot be ignored and may sabotage the budget badly if not taken into account.