What is an agreement? Let’s not bore you with legal definitions, an agreement in layman terms simply means when you agree to do something with or without something in return.
What is a Deed? A deed as the name suggests simply means when you have done something i.e. completed certain action.
Agreement to Sale vs Agreement for sale: is there really any difference?
Short Answer is YES. The differences are presented to you below:
Agreement to sell: This document is a promise that you will sell in the future. In this document, duration within which a seller will complete the sale is mentioned. Additionally, any grace period for sale or any advance amount which the purchaser might have given to the seller as token amount is mentioned. The document might also contain any other conditions or terms which the purchaser and seller may have agreed upon. An example of this document could be where X agrees to sell his property to Y within three months from that day and has accepted 50,000/- Rs as advance payment for the same.
Memorandum of agreement and Memorandum of Understanding are similar documents. Registration of this document is not mandatory however it is recommended the document notarised before a notary public by using adequate stamp paper.
Cancellation: This document can be cancelled by creating a cancellation document and notarising the same.
Agreement for sale: This document is executed (signed by all concerned parties) when atleast a part of sale is completed. This document is to be registered and adequate stamp duty has to be paid to the government for the same. An example of this document could be where X sells his property to Y for an amount of 45,00,000/- Rs, but will give possession of the property to Y within 30 days from the date of sale. In this scenario the sale is not completed as transfer of possession is pending however X has received the full amount. Title of the property will get transferred to Y even though possession will be transferred to Y after 30 days. Which means that even though Y is not the owner actually since he has not received the possession, he will be legally considered as the owner and the government records will show that the property has been successfully transferred in Y’s name since the document has been registered.
Cancellation: This document can be cancelled by creating a cancellation document and registering the same. The title of the property will be transferred back to the seller.
Sale Deed: This document is executed when the sale is completed. This document is generally registered after the sale agreement. In the agreement to sale example Y was yet to receive possession, imagine that Y has received possession of the property. After that X and Y will register sale deed to signify that the sale transaction is 100% completed. It is not necessary to enter into an Agreement to sell or Agreement for sale before entering into Sale Deed, you could directly register the sale deed if you wish. If you have already registered agreement for sale and have paid stamp duty for the same then while sale deed registration you will be required to pay a nominal amount of Rs 500 to 1000 Rs. If you are directly registering the sale deed without registering any of the agreement’s then you will have to pay adequate stamp duty which you are expected to pay while registering Sale agreement/s.
Cancellation: This document cannot be cancelled in Maharashtra. If the purchaser after registration decides to return the property then they are expected to pay the entire stamp duty to the government which they have paid already for the sale and treat the transaction as a new one.
Pro tip: Always try to register an agreement for sale before registering a sale deed because if you have only registered an agreement, it can be cancelled and you can receive the refund of stamp duty paid to the government. However, if you directly register a sale deed then it cannot be cancelled and all you stamp duty will stand forfeited.
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