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What is a sale deed in a home loan? 

What is a sale deed in a home loan? 

Are you planning to buy a house? Are you confused with questions like what is a sale deed, why do you need a sale deed, what is the sale deed of a property, what is the sale deed of a flat, etc.? Well, buying a house isn’t easy and requires you to carefully go through a lot of important paperwork. 

One such essential document is the property sale deed. When you’re applying for a home loan, you have to submit the property sale deed, among other relevant documents, to the lender. The lender will have possession of the deed throughout the loan duration.

What is a sale deed?

If you’re new to real estate investments, you’d probably be wondering about sale deed’s meaning. A property sale deed is a legal document that serves as evidence of the transfer of property ownership from the seller to the buyer. The transfer is legally complete only after both parties sign the sale deed. 

When talking about what is a sale deed, many people confuse it with an agreement of sale. However, both these documents are different. While a sale deed is evidence of transferring ownership of the property, an agreement of sale indicates the contract between the buyer and seller to transfer property ownership in the future.

A sale deed includes all details of the transaction, like –

  • Details of the buyer and seller
  • Details of the property
  • Financial details and mode of payment
  • Details of property possession
  • Indemnity clause, etc.

Benefits of a sale deed

A sale deed is an important legal document when buying a house. To further understand what a sale deed document is, let’s look at some of its benefits.

  • It protects the interests of the parties involved and guards them against legal disputes
  • It helps the buyer get all relevant details of the property, like its location, construction area, etc.
  • It is a legally enforceable document that recognizes the property transaction
  • It serves as legal evidence in case of a property dispute

What is a sale deed in a home loan?

When you buy a house, it is important to understand what the sale deed of a property is, or what is the sale deed of a flat. You get legal ownership of the house only after you and the seller sign the property sale deed. The lender will keep the original document until the repayment of the loan and will return it within 15 days of repayment.

Documents required for a sale deed

If you’re wondering what the sale deed documentation requirement is, here is a list to get you sorted:

  • The extract
  • General power of attorney
  • Copy of the building plan
  • No objection certificates
  • Allotment letter
  • Agreement of sale
  • Possession letter
  • Receipt of payment
  • Receipt of property tax
  • Encumbrance certificate
  • Completion certificate
  • Occupancy certificate

What is the sale deed registration process?

Now that you know sale deed’s meaning and the required documents, let’s understand what the sale deed registration process is. To register for the sale deed, you can either visit the office of the sub-registrar or book an appointment online. The parties involved in the transaction will have to visit the facilitation centre for document verification. After all formalities are done, the sub-registrar will inspect the documents for any discrepancies. 

Once the sub-registrar accepts the documents and you complete all required formalities, you will receive a receipt. You can obtain the sale deed from the sub registrar’s office within 15 days of the process.

Things to consider while registering for the sale deed

Here are a few things you must keep in mind while registering:

  • The property must be free from financial or legal liabilities

Make sure you obtain a non-encumbrance certificate to ensure the property is not under any liabilities. You will also have to produce this document while applying for a home loan.

  • The seller must complete all payments before transferring the ownership

Before registering for the sales deed, make sure there are no outstanding payments for the property, like electricity bills, water bills, maintenance expenses, property tax, etc. The seller must complete all payments before transferring the ownership of the property. You must also understand what the sale deed of a property is and what is the sale deed of a flat, along with the documents required for each.

Difference between a sale deed and an agreement of sale

Most homebuyers confuse a sale deed with a sale agreement. However, it is vital to learn the difference between the two. Both documents are indispensable yet serve distinct purposes. The following pointers will help you learn the difference between a sale deed vs agreement of sale:

  1. A sale agreement reflects the terms of the asset’s sale. It is a basic document and does not legally confirm the transfer of ownership. 
  2. A sale deed legally records the transfer of the property’s possession. You will need it while applying for a home loan. 

Legal importance of a sale deed in property transactions 

The legal importance of a sale deed is crucial. It serves as proof of property ownership. So, if there is any dispute related to the ownership of a property, a sale deed can help with the resolution. However, a sale deed is considered legally binding only after registration. Registration involves recording the deed at the local sub-registrar’s office. 

The sale deed’s significance is more for the buyer as it is conclusive evidence of ownership. It comprises details about the current and past owners and any legal encumbrances. You must check the information on the sale deed to avoid potential legal complications.

Also,Read-  Home Loan from Bank vs NBFC: Which is better?

Common mistakes to avoid when registering a sale deed 

Registering a sale deed is necessary. However, many individuals make errors in the sale deed registration, which can lead to legal or financial complications in the future. All property details mentioned in the sale deed must be accurate and should match the official records. Moreover, you must never underpay stamp duty, as it can attract penalties. 

One of the other sale deed registration mistakes you must avoid is signing documents without reading every clause carefully. If a clause doesn’t suit your interest, you must negotiate it or get it rectified. You must also ensure that all parties and witnesses are present during registration. 

How does a sale deed ensure risk mitigation for home loan buyers? 

A sale deed legally establishes property ownership. It confirms that the seller has transferred all rights, title, and interest to the buyer. As a result, your risks are mitigated as you have proof of ownership.

You must also recognize the sale deed’s importance for a home loan. When you apply for the loan, you must submit the registered document for banks to verify a clear title. Lenders also need to check that the property details are accurate and all legal requirements are fulfilled. 

A registered sale deed is part of the public property records and safeguards the borrower and the lender from legal and financial risks in the future. 

Also,Read-  What is Repo Rate and Reverse Repo Rate?  

Get an easy home loan with Tata Capital   

Whether you’re buying a house or a flat, a sale deed is one of the most vital documents you must obtain. Now that you understand what the meaning of a sale deed is, why is it important and what is a sale deed in property and flat, you must read all the terms and conditions mentioned in the deed carefully before signing it.

Are you ready to act on your dream of owning a home? Get an instant home loan from Tata Capital and enjoy a seamless loan application process. With a wide range of home loans, you get attractive home loan interest rates, flexible repayment plans, longer loan tenures, higher home loan eligibility, and much more. You can also visit our website and calculate your potential EMIs in seconds with our home loan EMI calculator.

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FAQs

What is the meaning of a sale deed in a property transaction?

A sale deed is a legal document that confirms the transfer of ownership of a property from the seller to the buyer. It includes the property’s description, such as area, address, etc. It also records sale value, buyer and seller information, and the transfer of rights.

How does a sale deed affect home loan approval?

A sale deed is crucial for home loan approval because it proves legal ownership of the property. Lenders review the registered sale deed to ensure the seller has a clear title. Your loan will not be approved if the transaction isn’t legal.

What is the step-by-step process for sale deed registration?

The process for sale deed registration includes the following steps:

  1. Drafting the sale deed
  2. Paying stamp duty and registration charges
  3. Scheduling an appointment at the sub-registrar’s office 
  4. Signing of the deed by the buyer and seller in the presence of witnesses
  5. Completing biometric verification and registration

Can the sale deed be transferred if the home loan is still active?

No, it isn’t easy to transfer the sale deed if the home loan is still active. You need to have the lender’s consent. The property is mortgaged; thus, you must either close the loan or formally transfer it. You also need the bank’s no-objection certificate. 

What happens if the sale deed is not registered?

If a sale deed is not registered, the property transfer is not legally valid. You may not get legal ownership rights, face difficulties in selling or mortgaging the property, and encounter issues during disputes or loan applications.

How to verify the authenticity of a sale deed?

You can verify a sale deed’s authenticity by checking its registration details at the local sub-registrar’s office. You can also go through the online land records portal. Make sure you check the stamp duty payment, signatures, property details, and chain of ownership to ensure the deed is genuine.

What role does the sale deed number play in property ownership?

The sale deed number is a unique registration reference that helps identify the property transaction in government records. It is essential for tracking ownership history, verifying documents, applying for loans, and resolving legal or property-related disputes.

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