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Decoding Contracts: What’s The Difference Between A Sale Deed And An Agreement To Sell?

Selling and buying are like breathing for the real estate business. As realtors toe the line between supply and demand in this high-ticket sector – rules, regulations, and legal processes are what lend credibility and keep the sector transparent and accountable.

The sale deed is perhaps the most important document in real estate, transferring the ownership between buyer and seller. However, most of us do not know what it covers and how it’s different from an agreement to sell.

While both the sale deed and agreement to sell are types of contract, the sale deed is an executed contract unlike the latter which is an executory contract. A lot of confusion dwells on both of these terms, so in this article – we call out the top differentiators between both.

  1. Content:

Agreement to Sell: As a precursor to sale deed, an Agreement to Sell is a memorandum of agreement in which the clauses and terms of a potential contract of sale is stated along with the proposal and payment details. A very crucial document in the entire process, it’s a valid proof and the basis of the Sale Deed.

Inclusions are:

  • Proposal to buy and agreement to sell
  • Elaborate and comprehensive description of the property
  • Proviso requirement of substantial marketable titles and no roadblocks
  • Payment details comprising earnest money
  • Delivery of authentic documents on payment
  • Drafting of sale deed and registration too, if the titles are qualified
  • Channel of delivery of property
  • Refund of earnest money if improper titles are discovered
  • Solutions for non-completion of sale on part of vendor comprising specific performance and responsibility for expense of proceedings
  • Forfeiture of earnest money, if buyer cannot complete the sale
  • Strict disciplinary action if the property is affected by notice from government authorities
  • Creation of tax related certificates
  • Slot description of the property
  • Memo of consideration for earnest money received
  • All other details/information incidental to the proposed Sale

Sale Deed: It is a document that facilitates the actual transfer of property rights from the seller to buyer.

Inclusions are:

  • Elaborate details of the ownership and property
  • Clear titles validated by the buyer
  • Reference to the Agreement to Sell and the expense details
  • Release/discharge of the property with details of amenities, measurements, privileges, easements and other rights
  • Transfer of the entire rights, interests, claim, demand and so on of the property
  • Indemnifying the buyer against losses popping out of negligence/actions of seller or heirs
  • Entire authority of vendor to sell.

2. Time period: During a sale deed, it’s always an immediate transfer of the property. But in agreement to sale, it’s an indication of future property transfer.

  1. Risk Quotient: In a sale deed, any risk associated with the property, prices or other factors are immediately transferred to the buyer. But in agreement to sale, there’s enough buffer for risk evaluation. 
  1. Legal Consequences: The protection of law for an actual sale deed is very strong compared to an agreement to sale. Any violation in sale deed can lead to a suit for price and suit for damages. However, in case of breach of agreement to sale, it’s only limited to suit for damages.
  1. Documentation: For the registration of a property, a Sale Deed is a compulsory document. In case of an agreement to sell document, it’s purely subject to rules of a particular region/state.

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