What is the difference between an agreement for sale and a sale deed? I bought an apartment in Mumbai and have entered into an agreement for sale which is duly registered. Should we make a sale deed after full payment? —Jigar Shah
We are assuming that you have purchased the apartment under the provisions of the Maharashtra Ownership of Flats (regulation of the promotion of construction, sale, management and transfer) Act, 1970, (MOFA) and that you have paid 20% or more of the purchase consideration till date and that you have executed a MOFA agreement—an agreement for sale with the builder with respect to the said apartment. Further we are assuming that the said agreement for sale is adequately stamped in accordance with the relevant article contained in schedule I of the Maharashtra Stamp Act, 1958, and that the agreement for sale is registered with the applicable office of the sub-registrar of assurances.
Section 4 of MOFA requires a builder to execute an agreement for sale containing inter-alia the terms as prescribed therein with its purchasers upon receipt of consideration as stated therein with respect to the apartment agreed to be sold by the builder. Thus there is no requirement to execute a sale deed, once the agreement for sale has been executed. However, it is to be noted that in the event that you have paid only part consideration to the builder while executing the agreement for sale, you must ensure that upon payment of the balance consideration the builder gives you receipts. If you pay the balance consideration in instalments, then you must ensure that the builder issues you a receipt for every instalment.
Further you must ensure that on completion of the construction of the building and upon such number of persons as prescribed under section 10 of MOFA having purchased the flats, the builder takes steps to constitute a society or any other organization as contemplated under MOFA agreement. You must also ensure that upon formation of such organization, the builder duly executes a deed of conveyance within such time as contemplated under the MOFA agreement and if not prescribed therein then the time as prescribed under section 11 of MOFA in favour of the organization formed conveying the land on which the said building has been constructed along with the building in favour of the organization. It is also very critical not to take possession of the said apartment without an occupation certificate being obtained by the builder. You must also ensure that upon formation of the society, a share certificate is issued to you by the society stating that you are the owner of a certain number of shares. The said share certificate is to be signed by the chairman of the newly formed society.
Please note that it is only in this situation, that is upon purchase of a flat directly from the builder by executing a MOFA agreement, in accordance with the provisions of MOFA that it is not necessary for you to execute a sale deed subsequent to the execution of the MOFA agreement.
In the event that you are not purchasing a property from a builder, and are purchasing the property from a prior owner of the flat, that is either an individual or a company, it is essential that you execute a deed of transfer (or a sale deed) after the execution of an agreement for sale by the transferee and the builder. This is imperative as the deed of transfer will be your title document. In that situation, it is also advisable that you pay the full stamp duty on the deed of transfer and get the same registered with the office of the sub-registrar of assurances. It is also imperative to inter-alia take custody of the share certificates given to the owner (transferor) of the apartment and the original agreement for sale executed by the transferor and the builder and a no objection certificate from the society in which the said apartment is situated for the sale of the apartment to you and to admit you as a member of the society.
Source: www.livemint.com
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