How to Read a Sale Deed Before Signing: A Guide for Bangalore Buyers

The sale deed is the document that makes a buyer the owner of a home or a site. Once it is signed and registered, a mistake in it takes a second registered deed, fresh fees and the seller's cooperation to correct. This guide goes through a sale deed part by part, for buyers of new and resale property in Bangalore, so that the draft is read properly before the appointment at the sub-registrar's office.

What the sale deed does

Section 54 of the Transfer of Property Act, 1882 says a sale of immovable property worth Rs. 100 or more is made only by a registered instrument. An agreement for sale is a promise to transfer and does not, on its own, create ownership. Title passes when the sale deed is executed and registered under the Registration Act, 1908.

The deed must be presented for registration within four months of signing. In Karnataka the process runs on the Kaveri 2.0 system, where the draft and the parties' details are entered online before the visit. Ask for the final draft at least a week ahead. That leaves time for a lawyer to read it and for corrections to be made.

Parties and their authority

The opening names the seller and the buyer, with age, address and identity numbers. Each name should match the PAN, the Aadhaar and the earlier title deeds letter for letter, since a spelling difference causes trouble with the khata and the bank later. Every owner on record must sign as a seller. For inherited property, all legal heirs join or give a registered release.

Where someone signs for another person, check the paper that gives the authority. Three situations come up often:

• A power of attorney holder: the power should be registered, still in force and specific to this property.
• A company or firm: a board resolution or partnership authority should name the signatory.
• A joint development project: the landowner and the developer both sign, or the developer signs under a registered power of attorney from the landowner.

Recitals: how the seller came to own it

The recitals tell the history of the title in order. They begin with the earliest deed and move through each sale, gift, partition or inheritance to the present seller. For a flat, they go on to the land purchase or joint development agreement, the plan sanction and the building's construction.

Compare each recital with the copies in hand: the mother deed, the link deeds, the conversion order, the plan sanction and the occupancy certificate. Document numbers, dates and sub-registrar offices should agree exactly. A gap in the chain, or a recital that mentions a document the seller cannot produce, is settled before signing.

Schedule of property

The schedule is the legal description of what is being bought, and it deserves the slowest reading. A deed for an apartment usually carries three schedules:

• Schedule A describes the whole land: survey or site number, village or ward, khata number, extent and the boundaries on four sides.
• Schedule B gives the undivided share of that land sold to the buyer, in sq ft and as a percentage.
• Schedule C describes the apartment: number, floor, block, carpet area and super built-up area, with the car parking space.

Check every figure against the agreement for sale, the sanctioned plan and the khata. The carpet area should equal the area in the agreement and the area declared to RERA. The parking space should be identified by number and level. For a site, the measurements on each side and the boundaries should match the approved layout plan and what is seen on the ground.

Consideration and how it was paid

The consideration clause records the full price and the seller's acknowledgement that it has been received. The deed should list each payment with its date, amount, bank and reference number, including the amount released by the home loan lender. The total should equal the price actually paid.

Stamp duty in Karnataka is charged on the price or the guidance value, whichever is higher. A deed that records less than the real price exposes both sides to tax and penalty, and it weakens the buyer's own cost record for a later resale. Where the price is Rs. 50 Lakhs or more, the buyer deducts 1% tax at source and reports it in Form 141. The deed normally mentions that deduction.

Covenants that protect the buyer

The seller's promises come after the price. Section 55 of the Transfer of Property Act implies several of them, but a well-drawn deed writes them out. Look for each of the following:

• Title: the seller is the absolute owner with full right to sell.
• Encumbrances: the property is free of mortgages, charges, court cases, acquisition notices and tenancies, or the loan being closed is named.
• Dues: property tax, electricity, water and maintenance charges are paid up to the date of sale.
• Possession: vacant possession is handed over on the date of the deed.
• Indemnity: the seller will make good any loss caused by a defect in title.
• Further assurance: the seller will sign later papers needed to perfect the title or transfer the khata.
• Documents: the original title deeds are handed to the buyer or the lender.

Read the indemnity with care. It should cover claims from the seller's family members and earlier owners, without a cap that makes it worthless. In a resale with an open home loan, the deed or a separate letter should record the lender's release of the original documents.

Extra checks for a new apartment

A deed from a developer follows the agreement for sale filed with RERA, so read the two side by side. Section 17 of the Real Estate (Regulation and Development) Act, 2016 requires a registered conveyance in favour of the allottee. It also requires the undivided title in the common areas to pass to the association of allottees. The deed should refer to the occupancy certificate by number and date.

Watch for clauses that were absent from the agreement. Common examples are a right for the developer to build further floors, exclusive rights over terraces or open areas, and waivers of the five-year defect liability. Ask for such clauses to be removed or explained in writing.

Stamp duty, registration fee and the day of registration

Stamp duty in Karnataka is 2% up to Rs. 20 Lakhs, 3% above Rs. 20 Lakhs up to Rs. 45 Lakhs, and 5% above Rs. 45 Lakhs. A 10% cess and a 2% surcharge are added on the duty, so the 5% slab works out to 5.6%. The registration fee is 2%. Our EMI calculator adds these charges to the upfront cash needed for a purchase.

On the day, both parties appear with original identity proof, and the sub-registrar records photographs and thumb impressions. Read the printed deed once more before signing each page, because last-minute edits are a common source of errors. The registered deed is returned with the registration number, book and date endorsed on it.

After registration

Three steps complete the transfer. Collect the registered deed, or confirm that the lender has received it. Apply for the khata transfer in the buyer's name with the local authority. After a few weeks, take a fresh encumbrance certificate and confirm that the sale appears on it.

Keep certified copies of the deed and the earlier title documents together, as the next buyer and every lender will ask for them. Buyers who want help reading a developer's draft for a project we market may reach our team through the contact page.