Sale of immovable property has been defined as a transfer of ownership in exchange for a price paid or promised or partly paid and partly promised by the Transfer of Property Act.
Essential Elements of Sale:
a) Parties: in a sale there has to be a seller and buyer. The seller has to be competent to transfer the immovable property to the buyer. Both parties i.e. the seller and the buyer have to be competent to contract under the Indian Contract Act.
b) Subject Matter of Sale: subject matter of a sale should be immovable property
c) Transfer of ownership: there has to be a transfer of ownership by the seller to the buyer.
d) Price: price is the essence of the contract of sale. It may be paid in a lump sum or in installments as agreed between the parties. Duties of Seller:
i. To disclose any material defect: a seller is bound to inform the buyer of any material defect in the property or the title of the property.
ii. To produce documents of title: a seller has to provide for the examination of all documents of title that are in his possession.
iii. To answer questions about the property or title thereto: a seller is bound to give relevant information and satisfy the buyer on any questions raised by the buyer or his advocate.
iv. To execute conveyance: The seller is bound to execute the sale deed after sale price is paid to him
v. To pay outgoings: the seller is bound to pay all public charges, tax and rent that may be due on the property before date of sale.
vi. Lis pendens: a seller is bound to inform the buyer of any legal proceedings that are pending on said property and that may come in the way of the sale or transfer on said property.
vii. To deliver possession of the property: a seller is bound to hand over the possession of the property at the time of the execution of the sale. Generally before the execution of the sale deed the buyer and seller enter into an agreement of sale either orally or in writing. After entering into this agreement to sell, the buyer would be advised to take all the necessary information that has been listed above.
It is advisable that the buyer’s advocate should investigate the title of the property after entering into an agreement for sale. The title should be traced for at least 30 years. Besides, the title deed search should be also done in the office of the Sub Registrar or relevant revenue authority to investigate whether there is any encumbrance on the property whether there is any defect in the title and whether the property stands in the name of the seller in the land revenue and municipal records.
It is also advisable that the buyer’s advocate should enquire from the relevant authorities and gather information on whether a notification has been issued for acquisition of the property.
In major property deals the buyer through his advocate should give a public notice in the newspaper stating his interest in purchasing the property.
The sale deed is chargeable with stamp duty under Article 23 of Schedule 1 to the Indian Stamp Act and it has to be executed on stamp paper equal to that of conveyance or else attracts duty penalty of 10 times that of actual stamp duty.
The sale deed transferring immovable property of the value of 100 or more requires registration under Indian Registration Act 1908.