What is a Contract to Sell vs Deed of Sale ? – Important Guide for Home Buyers – 2023

Contract to Sell vs Deed of Sale. These are the two common legal documents often used in real estate transactions.

Contract to Sell vs Deed of Sale

While both documents are important in a real estate transaction, they serve different purposes and have different legal implications. In this article, we’ll take a closer look at the differences between a contract to sell and a deed of sale.

Contract to Sell

A “contract to sell” is a legal document that outlines the terms and conditions of a real estate transaction between the buyer and the seller. It is a preliminary agreement that sets out the terms of the sale, including the purchase price, payment terms, and other important details of the transaction.

When a buyer and seller enter into a contract to sell, they are essentially agreeing to the terms of the sale, but the transfer of ownership has not yet occurred. This means that while the buyer may have made a down payment or deposit, they do not own the property until the terms of the contract have been met.

For most of the preselling projects, like the Costa Mira Beach Panglao in Panglao Bohol, you will absolutely need a contract to sell while you are paying the equity for 36 months.

In a Contract to Sell vs Deed of Sale, One of the most important features of a contract to sell is that it usually includes a provision that states that the seller retains ownership of the property until the buyer has fulfilled all the terms of the contract.

This means that if the buyer fails to make the agreed-upon payments or otherwise breaches the terms of the contract, the seller has the right to cancel the sale and retain ownership of the property.

Another important aspect of a contract to sell is that it typically includes a clause that sets out the remedies available to the parties in the event of a breach of contract. This could include the payment of damages, the right to terminate the contract or other remedies that the parties have agreed to.

To know more about Contract to Sell vs Deed of Sale please continue to read.

Deed of Sale

A deed of sale, on the other hand, is a legal document that transfers ownership of a property from the seller to the buyer. It is a formal document that must be signed by both parties in the presence of a notary public or other authorized official.

Unlike a contract to sell, a deed of sale represents the final transfer of ownership from the seller to the buyer. Once the deed of sale has been signed, the buyer becomes the legal owner of the property and assumes all the rights and responsibilities that come with ownership.

Contract to Sell vs Deed of Sale. One of the most important features of a deed of sale is that it provides legal proof of ownership. This means that if there is any dispute over who owns the property, the deed of sale can be used to prove that the buyer is the legal owner.

Another important aspect of a deed of sale is that it typically includes a warranty of title. This means that the seller is guaranteeing that they have the legal right to sell the property and that there are no liens, encumbrances, or other issues that could prevent the buyer from enjoying full ownership of the property.

To know more about Contract to Sell vs Deed of Sale please continue to read.

Differences between a Contract to Sell vs Deed of Sale

The main difference between a contract to sell vs deed of sale is that a contract to sell is a preliminary agreement that sets out the terms of the sale, while a deed of sale represents the final transfer of ownership.

In a contract to sell, the buyer and seller agree to the terms of the sale, but the transfer of ownership has not yet occurred. The seller retains ownership of the property until the buyer has fulfilled all the terms of the contract. If the buyer fails to meet the terms of the contract, the seller has the right to cancel the sale and retain ownership of the property.

In a deed of sale, the buyer becomes the legal owner of the property once the document has been signed. The deed of sale provides legal proof of ownership and typically includes a warranty of title, which guarantees that the seller has the legal right to sell the property and that there are no liens, encumbrances, or other issues that could prevent the buyer from enjoying full ownership of the property.

Like this property in Kishanta Subdivision in Talisay Cebu, you will need a contract to sell while in the process of paying off the equity if not in spot cash. Then after paying off the total amount, you will need to execute a deed of sale.

Another important difference between a contract to sell vs deed of sale is the level of legal formality involved. A contract to sell is usually a less formal document that can be prepared by the parties themselves or their lawyers. While a contract to sell must be in writing, it does not necessarily have to be signed in the presence of a notary public or other authorized official.

In contrast, a deed of sale is a formal document that must be signed in the presence of a notary public or other authorized official. This adds an extra level of legal formality to the transaction and ensures that the transfer of ownership is properly recorded.

Finally, in Contract to Sell vs Deed of Sale, it is worth noting that a contract to sell is often used in situations where the buyer needs more time to complete the purchase, such as when they are arranging to finance or waiting for certain conditions to be met. In these cases, a contract to sell allows the buyer to secure the property and ensure that it will not be sold to someone else while they are working to finalize the purchase.

In contrast, a deed of sale is typically used when the buyer has already completed the purchase and is ready to take possession of the property. It is the final step in the real estate transaction and represents the moment when ownership is officially transferred from the seller to the buyer.

The content of a contract to sell vs deed of sale will vary depending on the specifics of the real estate transaction and the requirements of the parties involved. However, in Contract to Sell vs Deed of Sale, there are some common elements that are typically included in each document.

Content of Contract to sell vs Deed of Sale

Content of a Contract to Sell

1. Description of the Property: The contract to sell will typically include a detailed description of the property, including its location, size, and any other relevant details.
2. Purchase Price: The contract to sell will specify the purchase price of the property and the terms of payment, such as the amount of any down payment, the timing of payments, and any interest rates.
3. Payment Schedule: The contract to sell will outline the payment schedule for the purchase price, including the amount of any down payment and the timing and amount of any subsequent payments.
4. Conditions of Sale: The contract to sell will include any conditions that must be met before the sale can be completed, such as the buyer securing financing or the seller completing any necessary repairs or renovations.
5. Default and Remedies: The contract to sell will specify what happens if either party fails to fulfill their obligations under the contract, including any penalties or remedies.
6. Closing and Possession: The contract to sell will outline the timing of the closing and when possession of the property will be transferred from the seller to the buyer.
7. Signatures: The contract to sell will be signed by both the buyer and the seller, and may also be witnessed or notarized.

Content of a Deed of Sale

1. Description of the Property: The deed of sale should include a detailed description of the property being sold, including its location, size, and any other relevant details. This helps ensure that the buyer is purchasing the correct property and that there is no confusion or dispute about what is being transferred.
2. Warranty of Title: The deed of sale should include a warranty of title, which is a legal promise from the seller that they are the true owner of the property and have the right to sell it. This helps protect the buyer from any claims or disputes that may arise in the future.
3. Consideration: The deed of sale should specify the amount of consideration (i.e. the purchase price) paid by the buyer to the seller in exchange for the property. This helps ensure that the terms of the sale are clear and unambiguous.
4. Granting Clause: The deed of sale should include a granting clause, which is a statement from the seller that they are transferring ownership of the property to the buyer. This is the key element that legally transfers ownership of the property from the seller to the buyer.
5. Signatures: The deed of sale should be signed by both the buyer and the seller, and must typically be witnessed or notarized to be legally valid. This helps ensure that both parties have agreed to the terms of the sale and that the transaction is legally binding.

Conclusion

In conclusion, a contract to sell vs deed of sale are two important legal documents used in real estate transactions. While they may seem similar, they serve different purposes and have different legal implications.

A contract to sell is a preliminary agreement that sets out the terms of the sale but does not transfer ownership of the property. It typically includes provisions that allow the seller to retain ownership of the property until the buyer has fulfilled all the terms of the contract.

A deed of sale, on the other hand, is a formal document that transfers ownership of the property from the seller to the buyer. It is a final and legally binding agreement that provides proof of ownership and typically includes a warranty of title.

Contract to Sell vs Deed of Sale. Understanding the differences between these two documents Contract to Sell vs Deed of Sale is important for anyone involved in a real estate transaction. By working with experienced real estate professionals and ensuring that all legal requirements are met, buyers and sellers can ensure a smooth and successful transaction.