Sale & Purchase Agreements and Agreements to Sell
An agreement to sell is a contract in which an owner promises to sell a property to a buyer in future, on stated terms. It does not transfer ownership. Ownership passes only when a sale deed is signed, stamped and registered, as section 54 of the Transfer of Property Act, 1882 requires for immovable property worth one hundred rupees or more.
The agreement to sell fixes the price, the payment schedule, the date for completion and what happens if either side backs out. If one party defaults, the other can ask a court to enforce the sale under the Specific Relief Act, 1963. A purchase from a developer is also governed by the Real Estate (Regulation and Development) Act, 2016.
When you need it
When paying an advance for a property
Money should not change hands on a receipt alone. The agreement records what was paid and on what terms it is refunded or forfeited.
When buying with a home loan
Lenders ask for a proper agreement to sell, and the timetable has to allow for the loan to be sanctioned.
When buying commercial property
Tenancies, maintenance dues, permitted use and tax all need to be dealt with in the documents.
When buying from a developer
The developer’s standard agreement has to follow the form the real estate regulator prescribes, with limited room to change it.
When the other side has defaulted
The remedy, and the time limit for seeking it, depend on what the agreement says.
How the process works
Five stages, from the agreed terms to the registered sale deed. Timings are typical, not promised.
- 1
Agree the terms
Depends on the partiesRecord the property, the price, the advance, the payment schedule, the date for completion, who pays stamp duty and other costs, and what each party must do before completion.
Documents
- The seller’s title documents
- Identity and tax details of both parties
- 2
Review the title documents
One to two weeksRead the seller’s title deeds and the documents behind them, and check for mortgages, pending litigation, unpaid dues and the approvals for the building. The buyer may also commission a formal title search.
Documents
- The chain of earlier sale deeds
- Property tax and utility receipts
- A no-objection certificate from the society or authority, where needed
- 3
Draft the agreement to sell
Commonly about a weekSet out the description of the property, the price and payments, the seller’s statements about title and encumbrances, the conditions to completion, possession, default by either side, and how disputes are resolved.
- 4
Stamp, sign and register the agreement
At signingPay the stamp duty that applies to the agreement, sign before witnesses and, where possession is given or the parties want the protection of the law on part performance, register it.
- 5
The sale deed
On the completion dateOn completion, prepare the sale deed, pay the stamp duty and registration fee on the higher of the price and the government’s rate for the area, and register the deed before the Sub-Registrar, with payment of the balance and handover of possession.
Common questions
An agreement to sell is a promise to transfer the property in future, and creates no interest in it. A sale deed is the transfer itself. Until a sale deed is registered, the seller remains the owner.
No. In Suraj Lamp & Industries v. State of Haryana (2011), the Supreme Court held that sales by way of a general power of attorney, an agreement to sell and a will do not transfer ownership. Only a registered sale deed does.
To claim protection as a buyer in possession under section 53A of the Transfer of Property Act, the agreement must be registered. Registration is also strongly advisable in any case, because it gives public notice of the buyer’s claim.
It depends on the agreement. Earnest money given as a guarantee of performance can usually be forfeited on the buyer’s default if the agreement says so. Larger part-payments of the price are treated differently, and a court may limit forfeiture to a reasonable amount.
Sue for specific performance, asking the court to order the seller to execute the sale deed, or claim a refund with damages. The suit has to be filed within three years of the date fixed for completion, or of the refusal.
Where the price is ₹50 lakh or more, the buyer deducts tax at one per cent under section 194-IA of the Income-tax Act and deposits it with the government. Where the seller is a non-resident, a different and higher deduction applies.
Under section 13 of the Real Estate (Regulation and Development) Act, 2016, a promoter cannot accept more than ten per cent of the cost as an advance without first entering into a written agreement for sale and registering it.
Related
To discuss a property sale or purchase, write to info@ireniclegal.com or call +91 96547 47331. Written by Adv. Kanika Marwaha Bindal; last updated 7 October 2026.