Sale Deed, Conveyance Deed and Agreement to Sell: What Sets Them Apart

A property purchase in India brings you face to face with three terms: sale deed, conveyance deed and agreement to sell. They all concern the passing of property, but each does a different job and carries different legal consequences. Buyers, sellers and lenders all need to know which is which.

This guide describes each document, says when it is used, and points out common slips that can put your ownership at risk.

Understanding the Sale Deed

A Sale Deed, also called a "deed of sale" or "transfer deed," is the main legal instrument that passes ownership of immovable property from a seller to a buyer. It comes last in a transaction and matters most.

Main Features of a Sale Deed

• Ownership passes: After execution and registration, the buyer is the legal owner
• Registration is compulsory: The Registration Act, 1908 requires it
• Stamp duty is due: The duty fixed by the state must be paid before registration
• Signed after payment: It is made only once the buyer has paid the whole sale consideration
• Full property particulars: It describes the property, its boundaries and measurements
• Both sides sign: The buyer, the seller and two witnesses must sign

Contents of a Sale Deed

A well-drafted sale deed has:

• Names and addresses of the seller (transferor) and the buyer (transferee)
• A detailed property description with survey numbers, boundaries and built-up area
• The sale price and how it was paid
• A statement that the seller has clear title and the right to sell
• A list of any encumbrances
• The seller's warranties and representations
• A clause on handing over possession
• Registration particulars and details of the sub-registrar office

Legal Validity: A sale deed is valid only if it is registered with the sub-registrar of assurances. Under Section 17 of the Registration Act, 1908, an unregistered sale deed has no legal standing.

Understanding the Conveyance Deed

A Conveyance Deed is a particular kind of sale deed. It is used when a builder or developer passes ownership to the individual flat owners of a housing society or apartment complex. It gives flat owners full ownership and not merely a right to occupy.

Occasions for a Conveyance Deed

Conveyance deeds are mainly used in these cases:

• Builder to society: the developer passes common areas and land to a cooperative housing society or an apartment owners' association
• Flat ownership: an individual flat moves from occupancy to full ownership
• Deemed conveyance: state laws let flat owners apply for it where the builder refuses to execute a conveyance

Main Features of a Conveyance Deed

• Undivided share passes: Each flat owner receives a proportionate undivided share of land and common areas
• Common areas included: Parking, gardens, lifts, corridors and other shared facilities are covered
• Registration is compulsory: It must be registered like any other property deed
• Stamp duty applies: It is payable on property value under state rules
• Society comes first: It is usually executed after a cooperative society or residents' association has been formed

Conveyance Deed Compared With a Sale Deed for Apartments

Both transfer property, but they differ:

• A sale deed covers the direct sale of property from one party to another
• A conveyance deed transfers property from the builder to the society or flat owners as a group

In Maharashtra, for instance, the Maharashtra Ownership Flats Act (MOFA) requires developers to execute the conveyance within 4 months of the society's formation. If they fail, flat owners can apply for deemed conveyance.

Understanding the Agreement to Sell

An Agreement to Sell is a preliminary contract. The seller promises to transfer ownership at a later date, once certain conditions are met. It does NOT pass ownership by itself.

Main Features of an Agreement to Sell

• A promise only: It creates a duty to transfer the property in future
• Ownership stays put: The buyer does not become owner by signing it
• Subject to conditions: It usually depends on things like completion of payment, loan approval or document verification
• Registration is optional: It is not mandatory but is advised for amounts above Rs. 100
• Sets a timeline: It states the period for completing the final sale deed
• Advance money: The buyer typically pays 10-20% as earnest money

Contents of an Agreement to Sell

• Names and contact details of the buyer and seller
• Description of the property
• Total price and the payment schedule
• Advance paid as token money
• Time limit for executing the final sale deed
• Conditions precedent, such as loan approval and document clearance
• Penalty clauses for breach
• Refund terms if the deal does not complete

Rights the Buyer Has Under an Agreement to Sell

• Seller stays owner: The seller remains the legal owner until the sale deed is executed
• Possession: It may or may not be given, depending on the terms
• Specific performance: If the seller refuses to sell after taking money, the buyer can sue for specific performance under the Specific Relief Act, 1963
• Advance may be lost: If the buyer backs out, the seller may keep the advance as the agreement provides

Note well: an agreement to sell gives rise to a contractual duty and not to a right in the property. On this paper alone the buyer can neither claim ownership nor sell the property on to anyone else.

Side-by-Side Comparison

• Purpose · Sale Deed: To pass ownership · Conveyance Deed: To pass the flat and shared areas from builder to society · Agreement to Sell: To record a promise of future transfer
• Ownership moves? · Sale Deed: As soon as it is registered · Conveyance Deed: As soon as it is registered · Agreement to Sell: It does not
• Used at · Sale Deed: The closing of the deal · Conveyance Deed: Handover of title by the builder to flat owners · Agreement to Sell: Booking or early stage
• Registration · Sale Deed: Must be done · Conveyance Deed: Must be done · Agreement to Sell: Not compulsory (advised where the amount exceeds Rs. 100)
• Stamp duty · Sale Deed: Full duty · Conveyance Deed: Full duty · Agreement to Sell: Reduced duty (usually 0.1-0.5% or a flat amount)
• Payment timing · Sale Deed: Once the price is paid in full · Conveyance Deed: Once paid in full or once the society exists · Agreement to Sell: Once a token or advance is paid
• Legal nature · Sale Deed: Gives title and ownership · Conveyance Deed: Gives title and an undivided share · Agreement to Sell: Gives a contractual obligation
• Resale by the seller? · Sale Deed: Not possible, as ownership has passed · Conveyance Deed: Not possible, as ownership has passed · Agreement to Sell: Possible unless registered or possession was handed over
• Possession · Sale Deed: Goes to the buyer · Conveyance Deed: Goes to the flat owners · Agreement to Sell: Might or might not be given
• Duration · Sale Deed: Lasting (subject to its terms) · Conveyance Deed: Lasting (subject to its terms) · Agreement to Sell: Valid until the time set for the sale deed lapses
• Kind of instrument · Sale Deed: A deed that takes effect at once · Conveyance Deed: A deed that takes effect at once · Agreement to Sell: A contract to be performed later
• Law that applies · Sale Deed: Transfer of Property Act, 1882 · Conveyance Deed: Transfer of Property Act plus MOFA/state laws · Agreement to Sell: Indian Contract Act, 1872

Which Document Do You Need, and When?

Using the right document at the right time avoids legal complications:

Choose a Sale Deed When

• You are buying or selling land, plots or standalone buildings
• The transaction is fully executed
• Ownership is moving between family members (a gift deed is a form of sale deed)
• The deal is complete and all payments are made
• You want ownership to pass fully and at once

Choose a Conveyance Deed When

• The builder has not yet transferred your flat to you
• Your housing society is applying for deemed conveyance
• Occupancy rights are to be converted into full ownership
• Common areas are being handed by the builder to the residents' association
• An undivided share in the land under the building must be established

Choose an Agreement to Sell When

• You are booking a property under construction
• Documents are still being verified before the final purchase
• The buyer needs time to arrange finance or a home loan
• Conditions such as obtaining NOCs must be met before the final sale
• You want to secure the property while due diligence continues
• You are paying a token amount to hold the property

The usual order of events is: Agreement to Sell, then due diligence and loan processing, then full payment, and finally execution and registration of the Sale Deed.

Validity and Registration Rules

Registration Rules

Sale Deed and Conveyance Deed:

• Registration must happen within 4 months of execution (Section 17, Registration Act)
• The sub-registrar office with jurisdiction over the property does it
• Both parties, or authorised representatives holding a valid POA, have to appear
• 2 witnesses are required at registration
• Stamp duty is paid before registration, online or through physical stamps
• A registration fee is levied additionally (usually 1% of property value, capped)

Agreement to Sell:

• Registering is voluntary, though it is very much worth doing
• Even unregistered, an agreement needs stamp duty when its value is over Rs. 100
• As a contract an unregistered agreement stands, yet it is weaker in law
• It is no primary evidence of ownership or title
• Registration protects you and makes the document admissible in court

Stamp Duty Differs by State

Stamp duty rates are very different across Indian states:

• Maharashtra · Duty on sale or conveyance deed: urban 5-6% and rural 3% · Duty on agreement to sell: 0.1% of the property value
• Karnataka · Duty on sale or conveyance deed: women 5% and men 5.6% · Duty on agreement to sell: Rs. 100 or 0.1%
• Tamil Nadu · Duty on sale or conveyance deed: 7% · Duty on agreement to sell: 0.1% or Rs. 100
• Delhi · Duty on sale or conveyance deed: 4-6% · Duty on agreement to sell: Rs. 500 or 0.5%
• Telangana · Duty on sale or conveyance deed: 4-5% · Duty on agreement to sell: 0.1%
• Gujarat · Duty on sale or conveyance deed: 4.9% · Duty on agreement to sell: 0.2%

Check current rates with your state's registration department, since they change from time to time.

Consequences of Not Registering

• Sale deeds and conveyance deeds: They cannot be admitted as evidence in court, and the transfer of property is legally invalid
• Penalty: A fine of Rs. 100-5,000 plus 10 times the stamp duty deficiency
• Late registration: Extra charges (10-25% more stamp duty) after 4 months
• Title disputes: An unregistered deed leaves the property open to fraud and disputes

Frequent Mistakes With Property Deeds

1. Treating an Agreement to Sell as Ownership

Mistake: Thinking that signing an agreement to sell makes you the legal owner.

Reality: You own nothing until the sale deed is registered. If the agreement is not registered and possession has not been given, the seller can still sell to someone else.

Solution: Execute and register the sale deed promptly once the conditions are met. If there is a delay, register the agreement to sell.

2. Signing Before Checking the Title

Mistake: Paying advance money under an agreement to sell with no proper title verification.

Reality: A defective title can cost you your money even though you hold an agreement.

Solution: Complete the due diligence before signing. Verify all property documents, check encumbrances and confirm the seller's ownership.

3. Skipping Registration to Save Money

Mistake: Avoiding registration of the sale deed, or using an unregistered document to cut stamp duty costs.

Reality: An unregistered deed has no legal validity. In court you cannot claim ownership on it, and you cannot get the property mutated.

Solution: Register every sale or conveyance deed. Stamp duty and registration fee are essential expenses, not optional ones.

4. A Vague Property Description

Mistake: A sale deed or conveyance deed with loose details, such as "flat in XYZ building" with no survey numbers or floor plan.

Reality: Incomplete descriptions lead to boundary disputes and an uncertain title.

Solution: See that the deed gives the full legal description: survey numbers, plot numbers, built-up area, boundaries and, for apartments, floor plans.

5. Overlooking the Conveyance Deed for Flats

Mistake: Flat owners assuming the builder's sale deed is enough and ignoring the conveyance deed.

Reality: Without a conveyance, you hold no share in the common areas and land. The society cannot obtain property tax receipts or redevelop.

Solution: If the builder has not executed the conveyance in the stipulated time, apply with your housing society for deemed conveyance.

6. Accepting Sale Deeds Signed Under a POA

Mistake: Buying property when someone holding a power of attorney (POA) from the owner executes the sale deed, without checking that the POA is genuine.

Reality: A POA can be revoked, forged or limited in scope, and many property frauds rest on fake POAs.

Solution: Insist that the original owner is present at registration. If a POA cannot be avoided, check it thoroughly with registrar records and make sure it is irrevocable and specific.

7. Ignoring Encumbrances Mentioned in the Deed

Mistake: Failing to check whether the sale deed refers to existing mortgages, liens or easements.

Reality: You take on all encumbrances unless they are cleared specifically before the sale deed is executed.

Solution: Get an encumbrance certificate before finalising. The sale deed should say "free from all encumbrances" or list the cleared encumbrances together with satisfaction deeds.

How to Check That a Property Deed Is Genuine

Checking authenticity is critical to prevent fraud:

1. Check the Registration Details

• Confirm the deed is registered at the sub-registrar office
• Note the registration number, date and book or volume details
• Cross-check against registrar office records, online or in person
• Make sure registration took place in the correct jurisdiction

2. Verify the Seller's Title Chain

• Trace ownership back at least 13-30 years
• Confirm an unbroken chain of title from the root document to the present seller
• Examine each earlier sale deed, inheritance, gift deed and so on
• Check that the seller's name matches exactly with previous title documents

3. Get and Check the Encumbrance Certificate

• Obtain the EC for the past 13-30 years from the sub-registrar office
• Confirm there are no mortgages, liens or pending transactions
• Match the property description in the EC to the sale deed
• Look for adverse entries or other red flags

4. Search for Pending Litigation

• Look on the eCourts portal for pending cases about the property
• Search for cases involving the seller, the property address or the survey numbers
• Look for civil suits, criminal cases and revenue disputes
• Consider getting court search reports from lawyers

5. Verify Property Tax Receipts

• Get the latest property tax receipt from the municipal corporation
• Match its property details with the sale deed
• Confirm there are no unpaid dues or penalties
• See whether the property is recorded in the right owner's name

6. Check Revenue Records

• Verify the property in revenue records such as the Pahani, 7/12 extract or ROR
• Confirm the nature of the land: residential, commercial or agricultural
• Look for government acquisitions or disputed entries
• Match survey numbers with the sale deed

7. Visit and Verify Boundaries

• Visit the site and check the physical boundaries
• See whether possession matches the deed's description
• Look for encroachments or unauthorised construction
• Confirm access to public roads

How LegiScore Verifies Property Deeds

LegiScore's AI-powered platform automates and speeds up the verification of sale deeds, conveyance deeds and related documents. You get a full risk assessment in minutes and not in weeks.

What LegiScore Does

1. Title Chain Verification

• AI extracts and analyses the 13-30 year title chain from sale deeds and revenue records
• It finds gaps, breaks or inconsistencies in the ownership history
• It flags suspicious transactions and irregular transfers of title
• It tests the seller's right to sell against historical records

2. Document Authentication

• It checks registration details against sub-registrar databases
• It confirms that stamp duty was paid and registration rules were followed
• It detects forged, tampered or duplicate documents
• It cross-references government property records

3. Encumbrance Analysis

• It fetches and analyses encumbrance certificates automatically
• It identifies mortgages, liens, charges and pending transactions
• It checks for satisfaction deeds and clearances of encumbrances
• It highlights hidden or undisclosed encumbrances

4. Litigation Search

• It scans the eCourts database for pending cases involving the property
• It searches for disputes, foreclosures and possession battles
• It finds lis pendens, meaning notices of pending lawsuits, filed against the property
• It supplies summaries of court cases and an assessment of risk

5. Compliance Check

• It verifies the property tax payment status
• It checks municipal approvals, occupancy certificates and building permissions
• It identifies illegal construction and deviations from approved plans
• It flags non-compliance with local zoning laws

6. Risk Rating (LPS Score)

• It generates a Legal Property Score from AAA (lowest risk) to C (highest risk)
• It gives ratings for each dimension: Title Chain, Encumbrance, Litigation, Compliance and Revenue Records
• It provides practical insights and recommendations for reducing risk
• It issues a detailed PDF report that lenders, lawyers and buyers can use

The Case for LegiScore in Deed Verification

• Speed: Verification in 24-48 hours, against 2-4 weeks for a manual legal opinion
• Accuracy: AI cuts human error in document analysis and data extraction
• Coverage: All 5 risk dimensions in one platform
• Price: The first LPS rating includes a full title search report, and detailed reports cost a fraction of a traditional legal opinion
• Transparency: A clear scoring method and findings backed by evidence
• Scale: Suited to banks, NBFCs and developers who handle high volumes

See your property's legal health with a free LPS rating today.