Drafting, Pleading and Conveyance

(1-6)(Conveyance)

● Sale Deed

Introduction:

Sale deed is defined under Section 54 of the Transfer of Property Act, 1882 as; “Sale” is a
transfer of ownership in exchange for a price paid or promised or part-paid and part-promised
A deed is a signed legal document that transfers ownership of an asset to a new owner.
Deeds are most commonly used to transfer ownership of property or vehicles between two
parties. The purpose of a deed is to transfer a title, the legal ownership of a property or asset,
from one person or company to another.

Elements of a Sale Deed

When creating the sale deed draft, several essential components are included in the document.
Following are the things that must be a part of the sale deed draft.

● Details of Both the Parties: Details in terms of the name of both parties, contact numbers, and
age are recorded in the sale deed draft.
● Property Details: This section includes the property’s details, such as its complete address, area
of the property, including the dimensions, details of construction.
● Indemnity Clause: This particular clause is added to the property to ensure that the seller frees
the buyers from all the previous taxes, loans, and charges related to the property. Also, the seller
will pay up any mortgages and loans before finalizing the sale of the property.
● Payment Details: The price at which the owner will sell the said property should be specified in
the sale deed. Along with the sale price of the property, the information related to the advance
payment made by the buyer must be stated clearly in the sale deed. Information on the amount
paid in instalments, date of each instalment should also be mentioned in the document.
● Mode of payment: The method of payment, i.e., how the amount will be made for the property
purchase, must be recorded explicitly in the sale deed. The standard modes of payment, such as
bank transfer, cheque, and cash, are clearly stated in the sale deed.
● Possession of Property: The sale deed will record the date the buyer will get possession of the
property.
● Witnesses of the Property: The testimonium clause of the property includes that two witnesses
are mandatory for attending the sale deed. At least one witness from both sides, i.e., buyer and
seller, should sign the sale deed. The witness has to share their complete name, address, and
age.

What is the Process For Getting a Sale Deed?

A sale deed must be prepared by a buyer of a property after obtaining the required documents

from the seller. The buyer may consult an advocate or legal professional to ensure that the seller

is the owner of the property and the seller has the title deeds to sell the property.

The advocate will prepare the sale deed containing all the clauses/elements of the sale deed.

Once, the sale deed is prepared by the buyer or buyer’s advocate, the sale deed is forwarded to

the seller. When the seller approves the contents of the sale deed, it is finalised and the parties

can proceed to register it in the sub-registrar office.

Difference Between Sale Deed and Sale Agreement

Following are the significant differences between the sale agreement and the sale deed.

Sale Deed Sale Agreement

A sale deed is a document that refers to the A sale agreement is a document that indicates
immediate and complete sale of the property. the sale of the property sometime in the
future.

Under the sale deed, any risk borne or Until the sale of the property, the responsibility
associated with the property is the of bearing the risk is taken care of by the
responsibility of the buyer. seller.

A sale deed is a contract that has been A sale agreement is a contract that is yet to
executed. be executed in the future.

It is mandatory to register a sale deed. Also, Based on the rules of state related to the sale
during the registration process, the buyer is agreement, it may or may not be registered.
liable to pay the stamp duty.

Under the sale deed, the rights and claims of The sale agreement only gives the person the
the property are handed over to the new right to purchase a property in the future.
owner.

The sale deed includes information related to The sale of the agreement only includes terms
both the parties involved, property and and conditions based on which the sale of the
 payment details, along with other information. property will be executed.

Is It Possible to Cancel a Sale Deed?

The cancellation of the selling deed is equivalent to the loss of the right to purchase a property. It
can only be canceled in certain circumstances, though. One of the parties involved in a selling
deed may cancel it if they are not happy with the terms of the agreement. The alleged party must
consent to the complaint of discontent in a court of law. A valid reason must also exist for one of
the parties’ desire to revoke the sale deed. Once the cause has been proven, the petitioner must
obtain a civil court order and deliver it to the registrar in order to have the sale deed revoked.
Sections 31 and 33 of the Special Relief Act of 1963 allow for the cancellation of the sale deed.

A sale deed can be cancelled for the following reasons:

● The deed was created under undue influence

● The deed is void if a minor has executed it
● Fraudulent activity in the creation of the deed or transfer and transaction
● Misinterpretation of facts to get a deed signed
● If the execution of the sale deed can cause harm or injury to the petitioner.

2. Mortgage Deed

What is a Mortgage?
● In India, Mortgage is governed under Section 58 to 104 of the Transfer of Property
Act, 1882. A Mortgage can be defined as the transfer of interests in a specific
property to secure the loan advanced or to be advanced in the future. In other
words, we can say that when any person takes a loan from anyone, some security is
required to be kept with the lender to have the assurance that in case of default in
the repayment of the loan, the lender can recover his money from that security.
● The person who mortgages his property against the loan is called “Mortgagor.”
Whereas the person to whom the property is mortgaged is called Mortgagee” and the
terms and conditions related to mortgages are contained in the “Mortgage Deed”.

What is a Mortgage Deed?

 ● Section 55(2) of the Act, talks about some relevant covenants or agreements which
the parties are required to enter into for the conveyance of immovable property such
as lease, sale, Mortgage, gifts etc. The mortgage deed is an instrument or a legal
document containing terms and conditions relating to the Mortgage. The deed
provides the lender with the interest and legal rights over the property. All the rights
and interests over the property that the borrower has pledged as collateral are
legalized in the Mortgage Deed. In case of any default or failure to pay the loan
amount, the lender can claim his legal rights over the property.

Registration of Mortgage Deed

● Registration of mortgage deed is essential to give legal validity to the document. In
case of Mortgage by Delivery of Title Deed, registration is not required. Following are
the conditions which need to be fulfilled for a valid registration:
● The deed must be signed by the Mortgage.
● At least two witnesses must attest to the deed.
● Stamp duty must be paid accordingly; otherwise, the document is not
enforceable.

When is the Mortgage Deed required?

● It is generally required when you are loaning money from another person or
business and want to transfer the interest of the property to another person.
● When you want to borrow money and are required to mortgage your property as
a collateral. The deed helps you secure your rights and interest over the property.

Why is the Mortgage Deed required?

● The first and foremost requirement of the mortgage deed is to determine the
parties to the deed, i.e. the Borrower/Mortgagor and the lender/Mortgagee.
● The deed enforces the rights of the lender in the Court. It ensures that in case of
the default or delay in repayment of the loan, the lender will get paid by selling
the property.
● The mortgagee has the right to foreclose on the property in case the mortgagor
stops paying or breaches the terms of the Contract.
● The deed gives a thorough investigation as to the interest and title over the
property. It helps to determine the rightful owner of the mortgaged property.
● The mortgage deed helps to determine the loan amount and the rate of interest.
● The mortgage deed also gives the right to the mortgagee to take possession of
the property, if specified in the Contract.
● The mortgage deed acts as evidence that the property is transferred to the lender.

Essential elements of Mortgage Deed:

Parties
It is essential to specify the name of the mortgagor and the mortgagee in the
mortgage deed. The person who transfers the interest of his property as collateral
to take a loan is called mortgagor, whereas the person to whom such interest is
transferred is called the mortgagee. It must be noted that the mortgagor must be
competent to enter into a contract as per under the Indian Contract Act, 1872
whereas the mortgagee may be a minor. He may not be competent as per the
Contract Law.

Description of the Deed

● It is essential to specify the title of the deed in capital letters for example “THE
DEED OF MORTGAGE.”

Details of the property

● In this clause, all the material description of the mortgaged property should be
specified. For e.g.: the location of the property, the value of the property, its
specification and all the material facts which need to be disclosed should be
mentioned.

Recital
● Recitals in a contract are the introductory statements disclosing the intention of
the parties to enter into the Contract. The recital is also called the preamble
containing a few characteristics of the agreement. It usually starts with a
sentence like “Whereas the mortgagor has agreed” or “whereby the
mortgagor has the rights”.

Habendum
This particular clause determines the quality or extent of the interest of the
mortgagee and the mortgagor over the mortgaged property. The provision defines
the rights that the mortgagee is going to enjoy over the property. It also restricts the
rights of the mortgagee as per the agreement.

Covenant for repayment

This clause specifies the modes and conditions for the repayment of the loan
amount. The clause also recites the consideration and tenure for the repayment of
the mortgaged money. It also specifies what are the conditions when the mortgagor
wants to pay the loan before the stipulated time period.

Mortgage Clause

This clause highlights the type of Mortgage the parties have agreed. It is the most
important clause of the mortgage deed as all the rights and duties of both the parties
are dependent on the type of Mortgage by which the property is being mortgaged.
Say for example, in the English Mortgage the mortgagee has the absolute right to
sell the property. While the simple mortgage possession of the property is not
necessary.

Possession

The clause decided whether the mortgagor has the right to exercise possession over
the mortgaged property or not. It also depends upon the type of Mortgage you are
choosing to mortgage the property. E.g., in the simple Mortgage, the possession may
remain with the mortgagor. On the contrary, in the Usufructuary Mortgage, the
possession of the mortgaged property must be delivered to the mortgagee.

Title deeds

The above clause clarifies as to what title deeds need to be transferred to the
mortgagee. If it is given in the clause that all the title deeds related to the
mortgaged property must be given to the mortgagee, then the mortgagor shall
transfer all the documents of the title deed to the mortgagee.

Insolvency
This clause is an essential clause in the mortgage deed as it specifies the treatment
of mortgaged property in case the mortgagor is declared insolvent.

Required Documents

In this clause, all the documents which are necessary for making the deed valid and
identifying the parties are specified. For e.g.: PAN card, Adhar card, Passport, Bank
passbook, Property Documents, Voter’s ID, Driving License.

Redemption clause
Redemption is again the most important and fundamental right possessed by the
mortgagor. It is an essential attribute of the transaction of the Mortgage. It’s a
statutory right given to the mortgagor under Section 60 of the Act. The clause
specifies the tenure of the mortgage deed as to when the mortgagor is entitled to get
his property back. The clause says that on payment of the principal and interest after
the expiry of the due date for the repayment of money, how the property is supposed
to go back to the real owner of the mortgaged property.

Amendment clause
Such clauses may completely go against the interest of the mortgagor as it gives
power to the mortgagee to alter the clauses of the agreements in the event of the
default of the party.

Lease Clause
This clause allows the mortgagor to lease the mortgaged property with the prior
permission of the mortgagee. This clause is beneficial for the mortgagor.

Possession
You must check carefully whether you have to give the possession of the property to
the mortgagee or not. Sometimes this clause creates legal issues if not read properly
as there can be loopholes in this clause.

3. Lease Deed

A lease deed is a document or a written contract between the property owner or a landlord also
known as lessor and the tenant or lessee, which contains all the terms and conditions, including
the rent to be paid, security deposit to be made, etc. A lease deed is usually required, when the
property is rented out for a long period of time. A deed has to be registered, if the lease period is
for more than 11 months. In addition, registration of a lease deed is mandatory under Section 17
(D) of the Registration Act, 1908.

Essentials of Lease Deed :

1. Name of the parties: The names of both the parties- the lessor, as well as the lessee needs
to be included as mentioned on legal documents. Both the parties must make sure that there is
no error in names of either party.

2. Lease Deed Period: This is the total period for which the lessee is allowed to lease the
property. This is generally a larger time period, usually more than one year.

3. Lease Consideration: The lease consideration refers to the financial terms associated with
the lease contract. This includes the lease amount payable by the lessee to the lessor at regular
intervals (monthly/ quarterly/ bi-annually/ annually) as specified.

The Security Deposit paid to the lessor is also to be mentioned in the deed. This amount has to
be returned by the lessor to the lessee at the end of the lease period.

4. Notice Period and Exit Clause: In case the lessor or the lessee feels the need to terminate
the lease agreement before the lease period mentioned, they can do so by giving advance notice
to the either party. This notice period may vary from one month to several months, or as desired
by the lessor or lessee through mutual consideration.It also has the provision to compensate the
lessor/ lessee for any loss incurred if the deed is terminated before the mentioned period.

5. Lease Deed Renewal Terms: This includes the terms and conditions for renewing the lease of
the property after the mentioned time period. Usually, a renewal fee is charged by the lessor for
lease renewal.

Difference between lease deed and Rental agreement

An agreement to lease generally covers the broad aspects of the lease, such as the duration, the
rent payable, the rights of renewal of the lease, etc., while a lease deed also includes detail about
the day-to-day operations of the lease.

Documents required for Rental agreement registration

 The registration of a lease agreement is vital as it protects the landlords and tenants against any
disputes in the future. One can register a rent agreement by approaching the sub-registrar’s
office. One should note that the registration should be done at least four months before the date
of deed expiration. After that, a fresh lease deed must be created.

The following documents are required for lease deed registration:

● Identity proof, such as Aadhaar Card, Driving Licence, passport, etc., of the landlord and tenant.
● Address proof of the authorised signatory, from both the parties.
● Passport-sized colour photographs of the authorised signatory, from both the parties.
● Company PAN Card and company seal/stamp, if it is a commercial property.
● The original proof/evidence of ownership or title of the property.
● Property documents, such as Index II or tax receipt of the property to be leased.
● Route map of the property leased out.

Lease Deed Format

The lease deed format is a standard proforma for executing a lease deed between a Lessor and
a Lesse. The Lease Deed format contains the details such as-

● Name of the Lessor

● Name of the Lessee
● Term of Lease
● Norms of Violation
● Terms and Conditions
● Notice Period
● Details of the Property
● Market Value of the Property
● Lease Terms

4. Gift Deed

Definition as per the Act

As per Sec-122 of the Act, “Gift” is the transfer of certain existing moveable or immoveable
property made voluntarily and without consideration, by one person, called the “Donor”, to
another, called the “Donee”, and accepted by or on behalf of the donee.
Essential Key Elements
There are some essential key elements to make a gift deed valid:

1. The Donor shall transfer the ownership to the Donee;

2. The property which must be transferable as per the Sec-5 of the Transfer of
Property Act, 1882;
3. The transfer must be done without any compensation or consideration in
monetary value.
4. Also such transfer must be made voluntarily, with the free consent of the Donor;
5. The acceptance must be made during the lifetime of the Donor and while he is
still capable of giving.
6. A gift that is made shall be of any specific movable or immovable property, that
must be in existence while transferring the same;
7. The gift must be tangible;
8. Delivery of possession shall be the important aspect of transfer of the gifted
property;
9. If at any situation the Donee dies before the acceptance, it shall become void.

Procedure for Gift Deed Registration

In pursuance with the Registration Act, 1908, these are the steps to follow while registering
a Gift Deed:

1. First, the property which is to be gifted shall be valued by an approved valuation

expert at the office of Sub-Registrar;
2. The Donor and the Donee shall both sign in the Gift Deed in the presence of
minimum 2 witnesses;
3. Then the signed gift deed shall be submitted in the District Sub-Registrar which
shall come within the jurisdiction of the gifted property;
4. Engage a Lawyer to calculate the registration charges, which shall include the
stamp duty and other charges;
5. Pay the stamp duty and other registration charges as per the valuation;
6. Finally, get the gift deed attested.

Income tax on Gift Deed

As per the Income Tax laws in India, the value of the gifts received by a Donee in a financial
year is fully exempted, as long as the total valuation of such gift is not exceeding Rs.
50,000/-If the valuation exceeds 50,000/-, then it will become taxable without any
threshold exemption.
However, if a gift of any movable or immovable property is between two close relatives, it
shall be fully exempted from tax, without any upper limit. It is also specified in the list of
close relatives, which includes parents, siblings, spouse, siblings of the spouse, lineal
ascendants and descendants of any person and his/her spouse. It shall also include the
spouse of the above-listed persons.

Is it possible to suspend or revoke a Gift Deed?

Yes, it is possible, but such conditions must be considered and included promptly in the
registered Gift Deed. As per the Sec-126 of the Transfer of Property Act, 1882 revoking the
gift deed shall not be possible, unless the Donor specifies the same in the registered
contract that he/she wants to keep with himself such right to take back the gift at any point
of time. So in pursuance with the sec-126 of the Act, it specifies two way of revocation of a
gift:

1. Revocation by mutual agreement between the Donor and Donee;

2. Revocation by rescission as a contract.

5. Promissory Deed

What Is a Promissory Note?

A promissory note is a written promise by one party (the note's issuer or maker) to pay another party (the
note's payee) a definite sum of money, either on demand or at a specified future date. A promissory note
typically contains all the terms involved, such as the principal debt amount, interest rate, maturity date,
payment schedule, the date and place of issuance, and the issuer's signature.

How Promissory Notes Work

Promissory notes can lie between an IOU's informality and a loan contract's rigidity. An IOU merely
acknowledges a debt and the amount one party owes another. A promissory note includes a promise to

pay on demand or at a specified future date, in addition to steps required for repayment (like the
repayment schedule)
Although financial institutions may issue promissory notes—for instance, you might be required to sign
one to take out a small personal loan—they also allow companies and individuals to get financing from a
non-bank source. This source can be an individual or a company willing to carry the note (and provide the
financing) under the agreed-upon terms. In effect, promissory notes can enable anyone to be a lender.

In its simplest form, a promissory note might be a written promise to repay a family member. State or
federal securities entities may regulate more complicated promissory notes.

Secured vs. Unsecured Promissory Notes

A promissory note can be secured or unsecured. A secured promissory note describes the
collateral—typically property—that secures the debt or amount borrowed. For example, if the borrower
owns property, the lender can use the car as collateral until the debt is repaid. If the borrower doesn't
repay the loan, the promissory note permits the lender to take possession of the property.1

An unsecured promissory note doesn't involve collateral. In this case, if the borrower doesn't repay the
loan, the lender can try to use standard debt-collection procedures.

In either case, the lender holds the promissory note until the debt is repaid. Typically, those drafting a
promissory note will consult with an attorney to make sure the note follows any state or federal laws
around loans or investments.

What's Included in a Promissory Note?

A promissory note should include all the details about a loan and the repayment terms. In addition to the
names of the borrower and the lender, a promissory note may also include:3

● Name and address of borrower and lender

● Maturity date
● Sum borrowed
● Payment schedule
● Interest rate and how interest is calculated
● Prepayments process
● Overdue payment interest charged
● Default
 ● Waivers, amendments, and governing law for the promissory note

What Does a Promissory Note Contain?

● A form of debt instrument, a promissory note represents a written promise on the part of the
issuer to pay back another party. A promissory note will include the agreed-upon terms between
the two parties, such as the maturity date, principal, interest, and issuer’s signature. Essentially, a
promissory note allows entities other than financial institutions to provide lending services to other
entities.

● What Is an Example of a Promissory Note?

● One example of a promissory note is a corporate credit promissory note. For this type of
promissory note, a company will typically be seeking a short-term loan. In the case of a growing
startup that is low on cash as it expands its operations, the terms of the agreement could state
that the company pays back the loan once its accounts receivable are collected.
● There are several other types of promissory notes, including investment promissory notes,
take-back mortgages, and student loan promissory notes.

What Are the Pros and Cons of a Promissory Note?

● A promissory note can be advantageous when an entity is unable to secure a loan from a
traditional lender, such as a bank. However, promissory notes can be risky, as the lender may not
have the same means and scale of resources as traditional financial institutions. At the same
time, legal issues could arise for both the issuer and payee in the event of default. Because of
this, getting a promissory note notarized can be important

6. Power of Attorney

What is Power of Attorney?

A Power of Attorney is a legal document that allows one person (the Principal) to grant another person
(the Agent or Attorney-in-Fact) the authority to make decisions and act on their behalf in legal, financial,
or health matters.

Types of Power of Attorney

1. General Power of Attorney: Grants broad authority over various acts, like financial transactions
and property management.
2. Special Power of Attorney: Limited to specific tasks or transactions, such as selling a particular
property.
3. Durable Power of Attorney: Remains valid even if the Principal becomes incapacitated, covering
decisions during incapacity.
4. Non-Durable Power of Attorney: For specific transactions or periods; invalid upon Principal’s
incapacitation.
5. Medical Power of Attorney: Allows decision-making in healthcare matters if the Principal is unable
to do so.
6. Financial Power of Attorney: Specifically for managing the Principal’s financial affairs, including
banking and investments.

Benefits of Power of Attorney

● Provides flexibility to the family members
● Cannot be transferred
● Avoids non-utilization of wealth in needy times
● Not valid after death

Procedure to Make Power of Attorney

1. Draft the Power of attorney whether special or general, by a documentation lawyer or through a
website
2. Submit the power of attorney with the Sub-Registrar.
3. Attach the supporting documents with the power of attorney.
4. Attest the power of attorney before the Registrar.
5. Attest of a power of attorney by 2 witnesses.

6.