Security Deposit Transfer Letter (Sale of Tenanted Premises)

स्टाम्प ड्यूटी

This Letter records, between the Seller and the Buyer, how the Deposit Amount already held under the Lease is dealt with on the sale of the Premises. It does not itself sell, convey or lease the Premises, and creates no interest in immoveable property beyond what the Sale Instrument itself creates, so it is not chargeable with the ad valorem duty charged in Punjab and in Chandigarh on a conveyance or on a lease of the Premises — that duty is a matter for the Sale Instrument, and, separately, was already a matter for the Lease when the Lease was executed, and neither is affected by this Letter. What this Letter does create is a written agreement between the Seller and the Buyer about the Deposit Amount, and an agreement not otherwise specifically provided for is chargeable under Article 5 of Schedule I-A to the Indian Stamp Act, 1899 as applicable in the State of Punjab and as applicable in the Union Territory of Chandigarh, at a fixed duty rather than one computed on the Deposit Amount or on the Sale Consideration. Neither the Punjab Department of Revenue, Rehabilitation and Disaster Management's own published stamp duty table nor the Chandigarh Sub-Registrar's own table lists a plain agreement of this kind by name — both list only the major named instruments — so confirm the current Article 5 figure with the Collector of Stamps, or at a Stock Holding Corporation of India Ltd e-stamping counter (shcilestamp.com), before this Letter is signed; see lawyerShouldCheck for why no rupee figure is printed here. Where clause 2.1 and clause 3 record that the Seller pays the Buyer a sum equal to the Deposit Amount, the Buyer's acknowledgement of that payment in clause 3.3 is additionally a receipt for money under Article 53 of Schedule I to the Indian Stamp Act, 1899: for a sum exceeding Rs 5,000 — which a commercial security deposit almost always is — a revenue stamp of one rupee is affixed over the Buyer's signature against that acknowledgement and cancelled by that signature, under section 30 of that Act. That requirement is the same wherever in India the payment is acknowledged, so it does not turn on whether the Premises are in Punjab or in Chandigarh. Where the Deposit Amount is instead adjusted against the Sale Consideration, or the Buyer simply assumes the obligation to the Tenant, no separate payment is acknowledged under this Letter and no revenue stamp is needed on that account — the Sale Instrument's own stamping covers the Sale Consideration, adjusted or not.

रजिस्ट्री

Not compulsorily registrable, in Punjab or in Chandigarh. Section 17 of the Registration Act, 1908 reaches a document that itself creates, declares, assigns, limits or extinguishes a right of Rs 100 or more in immovable property, or a lease. This Letter does neither: the Deposit Amount is a personal, monetary obligation owed to the Tenant, not an interest in the Premises, and clause 4 records that the Buyer's assumption of that obligation is an arrangement between the Seller and the Buyer about who answers for it, not a dealing in the Premises themselves. That is so whichever of the three mechanisms in clause 2.1 is chosen. The Sale Instrument is a different matter. Where it is a Sale Deed, or an Agreement to Sell that itself transfers possession, it is very likely compulsorily registrable in both jurisdictions under section 17(1)(b)-(c) of the Registration Act, 1908 read with section 54 of the Transfer of Property Act, 1882, and this Letter does not stand in its place, and does not need to be presented for registration alongside it or annexed to it, to take effect. Keep the signed original of this Letter with the papers for the sale, and confirm the Sale Instrument's own registration position separately.

नोटरी

Not required by law, in Punjab or in Chandigarh, and this Letter takes effect once both Parties sign it. A Party that wants extra evidentiary comfort — not unusual where a sum of this kind changes hands, or a liability of this kind is being assumed for the years remaining on the Lease — may still have its signature notarised; that is a choice available to either Party and not a condition of this Letter binding them. Notarisation does not cure a stamp duty shortfall.

गवाह

Not compulsory, in either jurisdiction, for a letter of this kind. Because real money can change hands under clause 3, and the Buyer is assuming a liability that will only actually fall due when the Lease ends — sometimes years after the Seller has moved on — two adult witnesses who are not parties are worth having for the evidentiary comfort that gives if the Deposit Amount, or the fact that the Buyer assumed it, is ever disputed. The signature block below provides for them; the fields may be left blank if the Parties decide to sign without witnesses.