Difference between Agreement of Sale and Sale Deed


  • Are Agreement of Sale and Sale Deed exactly the same thing?
  • Get the answer to this question by knowing the differences between these two in this post!

Everybody needs a home for themselves. And almost every individual opts for a home loan to purchase the home they want. Why? Because of the soaring prices of real estate, not everybody can afford to purchase the home by paying the price in one go. Lenders provide you the loan amount and with this amount, you can purchase the home you want. Also, there are many people who sell their property. So, in the process of purchasing the home you want or selling your home, you will come across two terms – Agreement of sale and Sale Deed. Both of them are very crucial when it comes to the selling and purchasing of your home.

You must be thinking about the reason behind our focus on these two terms. Well, the reason is most of the people think that these two terms are the same, which is not true. Both these terms are poles apart from each other and it is important to know the difference between Agreement of sale (also known as Sale Agreement) and Sale Deed. If we were to say the basic difference between these two, you can understand by the fact that the Agreement of sale is the Promise of property transfer while Sale Deed is the actual transfer of the property.

In this article, we will be telling you about the difference between the Agreement of Sale and Sale Deed in a detailed way so that you could know that these two aren’t the same thing. So, keep reading!

Key Differences between Agreement of Sale and Sale Deed

We are showing you some of the key differences between these two so that you don’t have any doubt left in your mind about how an agreement of Sale is different from Sale Deed. Have a look!

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Property Ownership

While an agreement of Sale promises of transfer of property ownership in the future, a sale deed is an actual transfer of the property ownership.

Information Included

An agreement of Sale usually has all the terms and conditions related to the situation when the property will be transferred to the buyer from the seller, whereas a Sale Deed consists of information about both parties (seller and buyers), their ages, addresses, etc.

What does it Transfer?

An agreement of sale or Sale agreement doesn’t give you any rights or interest over the property that you are going to buy. On the other hand, a Sale Deed gives you (buyer) all the rights and interests in the property. Also, a sale deed transfers all the risk associated with the property immediately, while the risks remain with the seller in the case of a Sale Agreement.

Stamp Duty and Registration Fee

A Sale Agreement happens on a non-judicial stamp paper signed and executed by both the seller and buyer. On the other hand, in the case of a Sale Deed, you (buyer) will need to pay all the charges related to stamp duty and registration fees that are essential to execute a Sale Deed.

Let’s know about the Agreement of Sale in Detail!

After knowing some of the key differences between the Agreement of sale and Sale Deed, it is important to know about them individually. This would help you in understanding them in a better way. So let’s start with the Agreement of sale.

As you can see from its name, Agreement of sale, it is basically an agreement between the buyer and seller. Agreement of Sale is one of the major important documents in the sale of immovable property. Let’s understand this in a simple way. Suppose you want to buy a property from the seller. After showing your interest, both parties (you and the seller) will get into an agreement regarding the future sale of the property.

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This agreement will have all the terms and conditions related to the sale of the property which will be transferred to the buyer from the seller. This contract comes under The Transfer of Property Act, 1882. If you are a buyer, you need to keep this in mind that the Agreement of Sale does not give you any right or interest in the property. It just consists of the terms and conditions related to the sale in the future on which the buyer and the seller both agree upon.

With the Agreement of Sale, you, the purchaser, will have all the right to purchase the property only when you fulfill these conditions as mentioned in the agreement. Similarly, the seller also has the right to receive the consideration from the buyer on fulfilling all the terms and conditions as on the Agreement of Sale from his or her side. Both seller and buyer enter into an agreement of sale only when the actual sale of the property is to happen at a later point in time. If you are going to opt for a home loan, this agreement will be required as it also reflects the money paid by you i.e. the down payment amount. Other details that the Agreement of Sale consists of are as follows.

  • The Parties in the Agreement
  • Property Location and its detailed Description
  • Further Payment Schedule (if any)
  • Specifications of the property to be developed
  • Timeline for the construction
  • Penalty Clauses in case of Default by any of the parties
  • Witness Signatures from both the parties

Let’s Understand the Sale Deed in Detail!

As we told before that Sale Deed is executed only when the final transfer of the property happens. With the help of a Sale Deed, rights of the property transfer from the seller to the buyer. So while the agreement of sale is the promise of the transfer, Sale Deed is when this promise comes into reality. Also known as the Final Deed or Conveyance Deed, this is the biggest proof of property ownership.

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Let’s understand this in a simpler way. Suppose if you have bought a property under the Agreement of Sale, and you are thinking that this will give you the title of the immovable property then this is not true. Only a proper Sale Deed can give you the right over a property. Without a Sale deed, you cannot give any proof that the said property belongs to you.

In short, it is a legal document that proves in writing the transfer of the ownership rights of the property from one individual to another in return for the price paid. Without having an original sale deed, it is almost impossible to purchase or sell any land or do any construction on it. The person who will be paying the price is known as the Buyer or Transferee and the person who is transferring the property is known as the Seller or Transferor. The Sale Deed will have a few details that are showing below. Have a look!

  • Details of Both Parties (Buyers and Sellers) such as Name, Age, Addresses, etc.
  • Detailed Description of the Property (Total Area, Surroundings, etc)
  • Sale amount including Advance Payment made by the buyer
  • Mode of the Payment
  • Time Frame within which the property title will be actually transferred to the buyer
  • Actual Date of the Home Possession
  • Full Authority of Buyer to Sell

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