Sale – A transfer of Immovable Property can be affected in many ways, sale being one of the significant manners of such transfer.
Definition
Glossary Definition of the term sale says that – Sale is a transfer of ownership in exchange for a price paid or promised, or part-paid and part-promised.
It means it is a transfer of ownership in exchange for which a price is paid or promised or for which the price partly paid or partly promised.
Essentials and Prerequisites for a valid Sale-
1. Transfer of ownership: Transfer of ownership is very important for the sale of an Immovable Property that the ownership of the property must be transferred. It is the intention of the parties to the sale to have it into effect so that the real transfer of ownership takes place.
2. Price: In order to have an effect of a valid sale, it is obligatory that the transfer of ownership takes place in exchange for a price. Any such price may be fully paid or promised, or it may be partly paid or promised. The term price has the significance when it is in the form of money. If the transfer of Property takes place in return for any other thing that the price in terms of money, then such transfer is not a sale but it is an Exchange.
3. Subject Matter: The subject matter of the sale must be an immovable property. The immovable property for the sale includes tangible immovable property, such as a house, land, thing attached to earth, or permanently fastened to anything attached to the earth. It also includes intangible immovable property such as benefits derived from land i.e. right of way, right to ferry, right to fisheries, etc.
4. Parties to the Sale: For a sale to be called a valid sale, there must be at least two parties in the form of seller and purchaser. The seller must be competent to sell, and the purchaser must be qualified to be a transferee.
5. Conveyance: Conveyance is very important for a valid sale to get into effect, because unless, the property is conveyed by the seller to the purchaser, it will not be a valid sale. Therefore, the property should be conveyed by the seller to the buyer.
Difference between a Sale and a Contract for Sale in Real Estate Transactions
| Basis | Sale | Contract for Sale |
| Definition | A sale is an absolute and final transfer of ownership of Real Property from seller to the buyer. | A contract for sale is an agreement between the seller and buyer to transfer the real property ownership at a particular time in the future. |
| Transfer of ownership | Ownership of the Real Property in case of a Sale is immediately transferred to the buyer. | When a Contract for the sale of a real property is made, it is an agreement to transfer the ownership from the seller to the buyer, not immediately but at a particular time in future. |
| Possession Aspect | Possession of the Real Property in case of an absolute sale is typically given along with the transfer of ownership of the Real Property from seller to the buyer. | Possession of the Real Property in case of a Contract for sale may or may not be given till the actual sale is made in future. It is completely dependent on the mutual understanding of the parties (i.e. the buyer and the seller). |
| Nature of Agreement | A sale is a completed transaction and its nature is absolute. The term “Sale” means it is final and executed transfer of ownership. | A Contract for Sale is a promise to perform, it means, the seller and the buyer have agreed to perform the future respective actions within sale transaction in future. |
| Requirement of Title Deed | It is mandatory in case of transfer of the ownership of a Real Property to have it executed via a Title Deed which is the evidence of Transfer from seller to the buyer, and also to have it Registered with the appropriate office. | The Title Deed is not executed in case of a Contract for Sale but such an agreement for the future sale can be made in writing and could be even registered to have it legal binding and to protect the interest of the parties. |
| Risk and Responsibility involved | Just after an absolute sale of the Real Property is made, the risk and responsibility of the Real Property immediately passes from the seller to the buyer. | The Contract for sale is an agreement for future transfer of ownership, since it is subject to future transfer, risk and responsibility of the Real Property remains with the Seller till the actual transfer is made to the buyer. |
| Legal Status and enforceability | It is immediate transfer of ownership of Real Property from seller to the buyer and hence it immediately confers on the buyer the legal rights appurtenant to the Real Property. | If the Contract for Sale is made between the buyer and the seller, then to get the legal right on the Real Property passed on to the buyer, the parties to the contract must perform the obligations on their part within the contract for sale in future so that it becomes an absolute sale. |
| Payment aspect | It is only when the agreed amount as a price or consideration is fully paid by the buyer to seller within the sale, such an action leads to the absolute sale. | Within a Contract for Sale, the arrangements for the payment in parts by the buyer to the seller for the purpose of absolute Sale may be made and the full payment may be deferred until the mutually understood conditions under the Sale are met. |
| Registration | Registration of the sale is mandatory; it is what gives it a legally binding effect and makes it conclusive. | A Contract for Sale require registration to bind the parties to perform their parts of the contract, it is not enough for absolute Sale. It is only when the full amount is paid by the buyer to the seller and it is mentioned in the Registered Title Deed, it becomes an absolute Sale. |
| Example | Mr. A being buyer has paid the agreed consideration amount to Mr. B being the seller and both the parties executed and got a Title Transfer Deed registered declaring transfer of ownership of Real Property form the seller to the buyer and thereby effected an absolute Sale. | Mr. A being the intended buyer and Mr. B being the intended Seller, both have signed Contract for Sale to get a Real Property transferred from Mr. B to Mr. A via Sale at a particular time in future. |
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