5 key differences between contract of sale and deed of assignment

Differences between contract of sale and deed of assignment

The contract of sale and deed of assignment are both legal documents used in property transactions, but they serve different purposes and have distinct characteristics. For definition purposes, simply put, a contract of sale is a pre-sale agreement that outlines the terms of the property sale. Once executed, both parties are bound by the terms contained therein and any breach of the terms will amount to a breach of contract actionable in law. A deed of assignment is an agreement which transfers or assigns the unexpired interest in the property to the purchaser. It connotes the transfer of ownership from the assignor (the seller) to the assignee(purchaser)

Here are the key differences between the two:

Objective:
- Contract of Sale: A contract of sale is a preliminary agreement between the buyer and seller outlining the terms and conditions of the property sale. It establishes the intention of both parties to enter into a formal sale transaction but it is not a document of transfer as it does not transfer ownership of the property. Its main purpose is to set out the terms of the sale and once it is signed, both parties are bound by the said terms and must adhere to it.
- Deed of Assignment: A deed of assignment is a legal document used to transfer ownership of property from one party (the assignor) to another (the assignee). It is used to convey the seller’s interest in the property to the buyer, thereby effecting the transfer of ownership. Its primary purpose is to transfer the unexpired interest in the property to the assignee (purchaser).
Legal capacity:
- Contract of Sale: A contract of sale is a binding legal agreement between the parties involved. However, it lacks the legal capacity to transfer ownership of the property to the purchaser.
- Deed of Assignment: A deed of assignment is a document of transfer that transfers ownership of the property from the seller to the purchaser. It acts as an evidence for the sale, evidence of payment of the consideration sum and is enforceable in Court.
Terms:
- Contract of Sale: Some of the details of a contract of sale include the full details of the parties, Particulars of the property to be transacted (location, survey plan, etc), Purchase price of the property, Payment of deposit, to whom it is to be paid, and in what capacity, Balance and interest on unpaid purchase sum where the payment is to be paid in instalments, The capacity of the vendor, Risk and insurance, Possession before completion, Completion date of the transaction, Provision for fixtures and fittings, Specific terms, risks, etc.
- Deed of Assignment: In a deed of assignment, the nomenclature of parties changes from Vendor to Assignor and Buyer to Assignee. A deed of assignment includes details such as the names of the parties involved, a description of the property being transferred, the consideration sum, and any covenants or warranties related to the transfer of title in land transactions.
Stage of transaction:
- Contract of Sale: A contract of sale is typically signed at the commencement of a land transaction. It is used prior to the actual transfer of ownership.
- Deed of Assignment: A deed of assignment is signed at the conclusion of the land transaction and it follows upon fulfilment of the conditions outlined in the contract.
Legal implication:
- Contract of Sale: A contract of sale is not a document of transfer. Both parties are under an obligation to adhere to the terms listed on the contract of sale.
- Deed of Assignment: This is the document of transfer of title and interest. A deed of assignment once executed transfers ownership of the property from the seller to the buyer.

In summary, while both are important documents in property transactions, the contract of sale establishes the terms of the sale agreement, while the deed of assignment facilitates the transfer of ownership from the seller to the buyer.