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<p class="banner-heading-text-two-line"><span>How to Draft a Sale Deed?</span><br><span class="banner-sub-heading">Sale Deed</span></p>
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<p><span class="padded-dropcap">D</span><body class="c24 doc-content"><p class="c15"><span class="c2 c1">rafting a sale deed is a critical legal process that requires attention to detail, thorough verification, and compliance with applicable laws. Below are the essential steps to ensure the sale deed is drafted like a pro. </span></p><p class="c15"><span class="c2 c1">The first step in drafting a sale deed is to confirm that the seller has a clear and marketable title to the property. This involves conducting a title search to review the ownership history and verify that there are no disputes, encumbrances, liens, or mortgages on the property. Obtaining a certified copy of the title deed from the sub-registrar’s office is crucial to ensure the property’s legal standing. A thorough title search protects the buyer from potential claims or issues that may arise post-sale.</span></p><p class="c15"><span class="c2 c1">Different states have unique laws regulating the transfer of immovable property, and it is essential to understand these laws before drafting the sale deed. For example, in Himachal Pradesh, restrictions exist on selling land to individuals who are not natives of the state. Special permissions may be necessary in certain states, depending on the property’s nature and location. Identifying these legal requirements ensures that the transaction is valid and complies with local laws. </span></p><p class="c15"><span class="c2 c1">The type of land being sold significantly impacts the drafting process. If the land is agricultural, it is essential to check state laws regulating agricultural land transfers, as many states restrict non-farmers from purchasing such land. For non-agricultural land, ensure that the necessary conversion certificates are available if the land was previously designated for agricultural use. Additionally, verify zoning regulations to confirm the permissible use of the land, whether for residential, commercial, or industrial purposes.</span></p><p class="c15"><span class="c2 c1">Ensure that the parties are competent to contract. As per Section 7 of TOPA, every person who is legally capable of entering into a contract and entitled to transferable property, or who is authorised to dispose of transferable property not belonging to them, is competent to transfer such property. This transfer can be made either wholly or in part, and either absolutely or conditionally. It must be carried out in the circumstances, to the extent, and in the manner allowed and prescribed by any law currently in force.</span></p><p class="c15"><span class="c2 c1">There are certain other laws which govern the transfer of immovable property in India. For example, Foreign Exchange Management (Non-debt Instruments) Rules, 2019: </span></p><p class="c15"><span class="c1">Non-resident Indian and Overseas Citizens of India can acquire the following kinds of immovable property and the payment for immovable property has to be received in India through banking channels and is subject to payment of all taxes and other duties/ levies in India. The payment can also be made out of funds held in NRE/ FCNR(B)/ NRO accounts of the NRIs/ OCIs. Payments should not be made through travellers’ cheque and foreign currency notes.</span><span class="c1 c10"> </span><sup class="c1 c10"><a href="#ftnt1" id="ftnt_ref1">[1]</a></sup></p><table class="c17"><thead><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c19">Particulars</span><sup class="c19 c10"><a href="#ftnt2" id="ftnt_ref2">[2]</a></sup></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c19">NRI/ OCI (NDI Rules, 2019)</span></p></td><tbody></tbody></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Purchase (other than agricultural land/ farmhouse/ plantation etc) from</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident/ NRI/ OCI [24(a)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Acquire as gift (other than agricultural land/ farmhouse/ plantation etc) from</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident/ NRI/ OCI [24(a)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Acquire (any IP) as inheritance from</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1"><br>a. Any person who has acquired it under laws in force [24(c)];</span></p><p class="c7"><span class="c2 c1">b. Resident [24(c)]</span></p><p class="c7 c23"><span class="c2 c1"></span></p><p class="c7 c23"><span class="c2 c1"></span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Sell (other than agricultural land/ farmhouse/ plantation etc) to</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident/ NRI/ OCI [24(e)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Sell (agricultural land) to</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident [24(d)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Gift (other than agricultural land) to</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident/ NRI/ OCI [24(e)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Gift (agricultural land) to</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident [24(d)]</span></p></td></tr><tr class="c16"><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Gift residential/ commercial property to</span></p></td><td class="c4" colspan="1" rowspan="1"><p class="c7"><span class="c2 c1">Resident/ NRI/ OCI [24(e)]</span></p></td></tr></thead></table><p class="c12 c23"><span class="c2 c1"></span></p><p class="c12"><span class="c2 c1">As per the NDI Rules, the Foreign Embassy/ Diplomat/ Consulate General, can purchase/ sell immovable property (other than agricultural land/ plantation property/ farm house) in India provided –</span></p><ol class="c11 lst-kix_fd89lgronexh-0 start" start="1"><li class="c12 c22 li-bullet-0"><span class="c2 c1">Clearance from the Government of India, Ministry of External Affairs is obtained for such purchase/sale, and</span></li><li class="c12 c22 li-bullet-0"><span class="c1">The consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through banking channels.</span><sup class="c1 c10"><a href="#ftnt3" id="ftnt_ref3">[3]</a></sup></li></ol><p class="c15 c28"><span class="c2 c1">Further the NDI Rules specifies the following in relation to foreign nationals acquiring property in India.</span></p><ol class="c11 lst-kix_z7ys91i9dx3r-0 start" start="1"><li class="c25 c26 li-bullet-0"><span class="c2 c1">Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or Democratic People’s Republic of Korea (DPRK), irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding five years. This prohibition shall not be applicable to an OCI. </span></li></ol><p class="c23 c25"><span class="c2 c1"></span></p><ol class="c11 lst-kix_z7ys91i9dx3r-0" start="2"><li class="c15 c22 li-bullet-0"><span class="c2 c1">Foreign nationals of non-Indian origin resident in India (except 11 countries listed at (a) above) can acquire immovable property in India.</span></li></ol><ol class="c11 lst-kix_fd89lgronexh-0" start="3"><li class="c22 c27 li-bullet-0"><span class="c1">Foreign nationals of non-Indian origin resident outside India can acquire/ transfer immovable property in India, on lease not exceeding five years and can acquire immovable property in India by way of inheritance from a resident.</span><sup class="c1 c10"><a href="#ftnt4" id="ftnt_ref4">[4]</a></sup></li></ol><p class="c15"><span class="c2 c1">Following is a checklist to draft a sale deed. </span></p><table class="c17"><thead><tr class="c16"><td class="c14 c21" colspan="1" rowspan="1"><p class="c3"><span class="c2 c19">Sl. No.</span></p></td><td class="c6" colspan="1" rowspan="1"><p class="c3"><span class="c2 c19">Title of the clause</span></p></td><td class="c9 c21" colspan="1" rowspan="1"><p class="c3"><span class="c2 c19">Details</span></p></td><td class="c0 c21" colspan="1" rowspan="1"><p class="c3"><span class="c2 c19">Expanded Explanation</span></p></td><tbody></tbody></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0 start" start="1"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Names and Identification</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Full names of the seller and buyer. <br>- Address and identification details (e.g., Aadhaar, Passport). <br>- Contact details</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Clearly identifying the parties is essential to avoid future disputes. Use full names as they appear on legal documents. Include permanent and correspondence addresses along with verified identification numbers like Aadhaar or Passport. This ensures that there is no ambiguity about the parties to the transaction, especially if the property is later contested in court or by a third party.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="2"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Recitals</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Ownership history of the property. <br>- Details of how the seller acquired the property. <br>- The property description.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Recitals set the context for the sale by detailing the origin of the seller’s ownership. Include prior sale deeds, gift deeds, or inheritance details. This Section also summarises the purpose of the transaction and serves as an introduction to the sale deed, providing a brief narrative to explain the property and its ownership chain to a third-party reader or legal authority.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="3"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Description of the Property</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Exact measurements and metric system (e.g., hectares, acres). <br>- Location, including landmarks, survey numbers, and cadastral references. <br>- Adjoining properties or roads. <br>- Compliance with Section 21 of the Registration Act, 1908.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Precision is critical in property description. Ensure the same metric system is used consistently (e.g., don’t switch between hectares and acres). The Registration Act mandates sufficient property details for identification. Include references to government maps, survey records, and territorial divisions. For urban properties, specify streets and house numbers; for rural properties, list village names, boundaries, and significant landmarks. This Section is crucial for establishing the legal identity of the property being sold.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="4"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1"> Consideration</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Agreed sale price. <br>- Mode of payment (e.g., cash, bank transfer). <br>- Payment schedule if structured payments are agreed upon. <br>- Timeline for handing over possession.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Clearly specify the total sale consideration and breakdown payment schedules if applicable (e.g., advance payment, instalments). Document whether payments will be made by cheque, bank transfer, or other means. Specify if possession is delivered at the time of signing the deed or after full payment. Properly documenting the payment structure and possession timeline reduces the chances of disputes between parties regarding financial obligations or timelines.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="5"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Rights and Liabilities</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Rights and obligations of the seller and buyer. <br>- Reference to Section 55 of the Transfer of Property Act for implied rights.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Refer to the rights and duties outlined in Section 55, including seller’s obligation to disclose material defects and deliver possession, and buyer’s duty to pay consideration and take possession. Modify or exclude any rights by mutual agreement. For example, if there is a shared liability like unpaid property taxes, clarify who will bear it. Clearly defining rights and obligations ensures that both parties understand their legal responsibilities before, during, and after the sale.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="6"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c1 c2">Conditions Precedent</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Any obligations to be fulfilled before the sale is completed. <br>- Clearing encumbrances (e.g., loans, mortgages). <br>- Obtaining approvals from government authorities.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Specify any conditions that must be fulfilled before the sale is finalised. For example, the seller must clear all encumbrances, such as mortgages or pending loans, before transferring the property. If the property requires specific government approvals, like land use change permits or NOCs, mention them explicitly. This Section protects the buyer from inheriting any liabilities or legal complications post-sale and ensures the seller meets their obligations.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="7"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Representations and Warranties</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Seller guarantees clear title and no defects. <br>- Seller confirms no pending legal disputes or encumbrances. <br>- Buyer assures payment is from lawful sources.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Representations and warranties provide legal assurances about the property’s condition and the transaction. The seller must confirm they have clear and marketable title, free from defects or encumbrances, and disclose all material information about the property. The buyer warrants that the purchase consideration is from lawful funds. These statements provide a basis for legal recourse if any misrepresentation is discovered after the sale.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="8"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Indemnity</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Seller indemnifies buyer against claims arising from title defects.</span></p><p class="c3"><span class="c2 c1">- Buyer indemnifies sellers against financial defaults or fraudulent payment.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">An indemnity clause protects both parties from future liabilities. The seller indemnifies the buyer against any losses from title defects, legal disputes, or hidden encumbrances. Conversely, the buyer indemnifies the seller against issues arising from payment defaults or unauthorised transactions. This clause is critical to safeguard both parties’ interests after the sale is concluded.</span></p></td></tr><tr class="c16"><td class="c14" colspan="1" rowspan="1"><ol class="c11 lst-kix_t1uhdqwl8ogn-0" start="9"><li class="c5 li-bullet-0"><span class="c2 c1"></span></li></ol></td><td class="c13" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Dispute Resolution</span></p></td><td class="c9" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">- Specify mechanism (e.g., arbitration, mediation). <br>- Jurisdiction or arbitration venue.</span></p></td><td class="c0" colspan="1" rowspan="1"><p class="c3"><span class="c2 c1">Clearly outline how disputes will be resolved. Arbitration clauses are common for private and faster resolutions, while mediation allows for negotiated settlements. Specify the governing jurisdiction to avoid ambiguity about where legal proceedings would occur. This ensures both parties are aware of the agreed process for handling disputes, reducing unnecessary litigation and confusion.</span></p></td></tr></thead></table><p class="c12 c23"><span class="c2 c1"></span></p><hr style="page-break-before:always;display:none;"><p class="c12"><span class="c1">A detailed sale deed along with the explanation is available in the paid course. </span></p><hr class="c18"><div><p class="c8"><a href="#ftnt_ref1" id="ftnt1">[1]</a><span class="c20">. https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=1855.</span></p></div><div><p class="c8"><a href="#ftnt_ref2" id="ftnt2">[2]</a><span class="c20"> https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=1855.</span></p></div><div><p class="c8"><a href="#ftnt_ref3" id="ftnt3">[3]</a><span class="c20"> https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=1855.</span></p></div><div><p class="c8"><a href="#ftnt_ref4" id="ftnt4">[4]</a><span class="c20"> https://www.rbi.org.in/Commonman/English/Scripts/FAQs.aspx?Id=1855.</span></p><p class="c8 c23"><span class="c20"></span></p></div></body>
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