Understanding Sale Deed in Bihar: A Comprehensive Guide

Know the essential aspects of a sale deed in Bihar, including its significance, key components, and required documents.
Home Loan
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2 min
17 July 2024

When it comes to real estate transactions in Bihar, a sale deed is one of the most crucial documents you’ll encounter. It acts as proof of the sale and transfer of property from one party to another. Understanding the nuances of a sale deed in Bihar is essential for both buyers and sellers, ensuring a smooth and legal transfer of property ownership.

What is a sale deed?

A sale deed is a legal document that signifies the transfer of ownership of a property from the seller to the buyer. In Bihar, the sale deed must be executed on a non-judicial stamp paper, which is available in various denominations. This document serves as proof of ownership and is vital for any future transactions related to the property.

Importance of a sale deed in Bihar

  1. Legal proof of ownership: The sale deed acts as a primary document that establishes the buyer's legal ownership of the property. Without it, claims to ownership may not hold in legal disputes.
  2. Transfer of rights: The sale deed transfers not just the property but also any rights associated with it. This includes the right to use, lease, or sell the property in the future.
  3. Facilitates home loans: For buyers looking to secure financing, a valid sale deed is often a requirement by banks and financial institutions. When applying for a home loan, having a properly executed sale deed can significantly ease the approval process.
  4. Basis for property registration: A sale deed is essential for registering the property in the buyer's name with the local authorities, making it a crucial step in the property purchase process.

Importance of Conducting a Deed Search in Real Estate

A deed search is an essential process in real estate transactions, allowing buyers and sellers to verify property ownership and its history. This process involves examining public records to confirm the legitimacy of the title and identify any encumbrances or liens on the property. Conducting a thorough deed search ensures that there are no legal disputes or hidden issues that could affect the transaction. It is a critical step for anyone looking to invest in real estate, providing peace of mind and safeguarding their investment for the future.

Key components of a sale deed

A well-drafted sale deed typically includes the following components:

  1. Parties involved: Names, addresses, and details of the seller and buyer are essential parts of the document.
  2. Property details: A detailed description of the property being sold, including its location, boundaries, and any identifying features.
  3. Sale consideration: This refers to the amount agreed upon for the sale of the property, which must be mentioned clearly in the document.
  4. Payment terms: Details regarding the payment method (whether full payment was made upfront or if it was in instalments) should be clearly outlined.
  5. Possession clause: The deed must state when the possession of the property is transferred to the buyer.
  6. Indemnity clause: This protects the buyer from any legal issues that may arise post-purchase, ensuring that the seller takes responsibility for any claims against the property.
  7. Signatures and witnesses: The sale deed must be signed by both parties and should have witnesses to validate the agreement.

Steps to execute a sale deed in Bihar

  1. Drafting the sale deed: This is usually done by a lawyer or a real estate expert who ensures that all legal aspects are covered and the document is drafted in accordance with local laws.
  2. Stamping the sale deed: The deed needs to be executed on a non-judicial stamp paper, and the stamp duty varies based on the property value and local regulations.
  3. Registration of the sale deed: After execution, the sale deed must be registered with the local sub-registrar office to make it legally binding. Both parties must be present during registration.
  4. Possession transfer: After registration, the seller hands over the possession of the property to the buyer, completing the transaction.

Common mistakes to avoid

  1. Incomplete details: Ensure all necessary details are included in the sale deed. Missing information can lead to disputes later on.
  2. Not registering the deed: Failing to register the sale deed can render it invalid. Always complete the registration process.
  3. Ignoring stamp duty: Not paying the correct stamp duty can lead to legal complications. It's crucial to calculate the duty based on the property value accurately.
  4. Not seeking legal advice: It's always advisable to consult with a legal expert while drafting or executing a sale deed to avoid future issues.

Documents required for sale deed in Bihar

  1. Sale deed draft: Properly drafted sale deed on non-judicial stamp paper.
  2. Identity proof: Aadhar card, voter ID, or passport of both parties.
  3. Address proof: Utility bills or rental agreements to verify addresses.
  4. Property documents: Original title deed and previous sale deeds.
  5. Encumbrance certificate: To confirm the property is free from legal dues.
  6. Tax receipts: Latest property tax receipts to verify payment status.
  7. Photographs: Passport-sized photos of both buyer and seller.
  8. Witness Details: Identification and details of witnesses present during execution.

Home loans and sale deeds

When purchasing property in Bihar, many buyers opt for home loans to facilitate their purchase. The sale deed plays a significant role in this process, as financial institutions, like banks and housing finance companies, require a duly executed sale deed to process home loan applications. A clear and valid sale deed assures lenders that the property is legally owned by the buyer and can be mortgaged.

Explore Bajaj Housing Finance Home Loan

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Frequently asked questions

What is the process of registering a sale deed in Bihar?
The process involves drafting the sale deed, getting it stamped on non-judicial stamp paper, and registering it at the local sub-registrar's office. Both parties must be present with all required documents for verification and signing, followed by the issuance of a registration certificate.
What documents are needed for sale deed registration in Bihar?
Required documents include the drafted sale deed on stamp paper, identity proofs (Aadhar, voter ID, or passport), address proofs (utility bills or rental agreements), original property documents, encumbrance certificate, latest property tax receipts, passport-sized photographs, and witness identification details.
How much is the registration fees for a sale deed in Bihar?
The registration fee for a sale deed in Bihar is typically 2% of the property's market value. Additionally, there are stamp duty charges which generally range from 5% to 7% of the property's market value, depending on the property's location and type.
What are the common issues faced during sale deed registration in Bihar?
Common issues include incomplete documentation, incorrect calculation of stamp duty, delays due to verification of property records, disputes over property boundaries, and non-compliance with local laws. Additionally, bureaucratic delays and the need for both parties to be physically present can complicate the process.
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