🧲 Introduction: One Common Mistake Most Buyers Make
Let’s say you’ve just found the perfect plot in Yelahanka, Bengaluru.
The seller says, “We’ll sign an Agreement to Sell now and register the Sale Deed after a few months.”
You agree, pay a large advance, and think you now “own” the land.
⚠️ That’s a mistake.
Many buyers believe the Agreement to Sell gives them ownership.
In reality, it’s only a legal promise — not a transfer of title.
In this blog, we’ll help you understand:
- What is an Agreement to Sell?
- How is it different from a Sale Deed?
- What should be included in an agreement?
- When is registration required?
- Key case laws to remember
- Practical risks and legal tips for buyers
📋 What Is an Agreement to Sell?
An Agreement to Sell is a contract between a buyer and a seller, where the seller agrees to sell, and the buyer agrees to buy, a specific property on a future date under defined terms.
This agreement is governed by:
- Section 54 of the Transfer of Property Act, 1882
- The Indian Contract Act, 1872
The key point is:
👉 It does not transfer ownership of the property.
It only creates a right in personam, meaning it gives the buyer the right to enforce the contract legally if the seller backs out.
It’s commonly used when:
- The buyer needs time to arrange funds or legal approvals
- The property has pending verifications or is under construction
- The seller needs time to clear encumbrances or paperwork
📜 Sale Deed vs Agreement to Sell – Key Differences
| 🔍 Feature | 📄 Agreement to Sell | 📜 Sale Deed |
|---|---|---|
| Nature | Promise to sell later | Actual transfer of property |
| Ownership Rights | No transfer | Buyer becomes legal owner |
| Registration | Not mandatory (except in RERA cases) | Mandatory under law |
| Stamp Duty | Nominal duty | Full applicable stamp duty |
| Legal Strength | Contractual right | Ownership right |
| Enforceability | Enforceable in court for specific performance | Final document of title |
📑 What Should an Agreement to Sell Include?
Here are essential elements of a legally sound Agreement to Sell:
1. Parties’ Information
Full names, addresses, PAN, and Aadhaar of the seller and buyer.
2. Property Description
Exact description of the property: location, survey number, extent, boundaries, and municipal approvals.
3. Sale Consideration
Mention the total agreed price, how much is being paid in advance, and the remaining schedule.
4. Time Frame
Date by which the sale deed should be executed and the transaction completed.
5. Title and Encumbrance
Declaration that the property is free from legal disputes, loans, or litigations.
6. Default and Penalty
If either party defaults, what is the penalty or remedy available to the other party?
7. Possession
Terms regarding possession—whether it is immediate or post-registration.
8. Witness Clause
Two witnesses should sign with full details to ensure admissibility in court.
🖋️ Is Registration of Agreement to Sell Mandatory?
This is one of the most frequently asked questions.
❓ Is It Legally Mandatory?
According to the Registration Act, 1908, specifically Section 17(2)(v), an Agreement to Sell is not required to be compulsorily registered, since it does not by itself create or transfer any interest in immovable property.
So:
✅ No, it is not mandatory — unless certain conditions apply (explained below).
🏗️ Exception: Real Estate Builders Under RERA
Under the Real Estate (Regulation and Development) Act, 2016, the rule is different.
Section 13(1) of RERA mandates:
If a builder or promoter is collecting more than 10% of the price in advance, the agreement must be registered.
Failure to comply may attract legal penalties under RERA.
This applies to:
- Apartment projects
- Layout developments under approval
- Pre-launch offers where more than 10% advance is collected
⚖️ What the Courts Say
🔹 Aloka Bose v. Parmatma Devi & Ors (2009)
The Supreme Court held:
“An Agreement to Sell is not a conveyance. It only gives rise to a right to obtain a sale deed through a suit for specific performance.”
🔹 Mahnoor Fatima Imran vs Visweswara Infrastructure (2025)
“Unregistered sale agreements cannot transfer title. Only a registered Sale Deed can do so.”
However, under Section 49 of the Registration Act, unregistered sale agreements are admissible in court to enforce specific performance.
⚠️ Common Buyer Mistakes to Avoid
❌ Believing Agreement Means Ownership
Until a Sale Deed is registered, the buyer has no legal title to the property.
❌ Not Registering in Builder Cases
If your builder has taken more than 10% advance, make sure the Agreement is registered under RERA Section 13(1).
❌ Using Downloaded Templates
Each agreement must be tailored. Using generic formats can miss essential clauses, leading to disputes.
❌ Not Mentioning Title Clarity
Never sign unless the seller declares the title is marketable and encumbrance-free.
🧾 Summary Table: Do You Need to Register Your Agreement?
| Scenario | Is Registration Mandatory? | Legal Impact |
|---|---|---|
| Buyer-Seller direct contract | ❌ No | Still enforceable |
| Builder taking 10%+ advance | ✅ Yes | Mandatory under RERA |
| For enforcing in court | ❌ Optional | Admissible under Section 49 |
| Claiming ownership | ❌ No | Not allowed unless via Sale Deed |
🧑⚖️ Why You Should Consult a Property Lawyer
A property law expert can:
- Draft a secure, customised Agreement to Sell
- Check title and encumbrance of the property
- Add legal protections for payment and delivery
- Guide you on whether registration is required in your specific case
📢 Conclusion: First Legal Step, But Not Final
An Agreement to Sell is your first legal safeguard, not the final document.
It’s a promise, not a title.
Don’t skip it. Don’t treat it lightly. And don’t try to do it on your own.
Getting this document right protects you from fraud, delays, and legal complications.
📧 Email: ranjinijayaram@rjpropertylaw.com
🌐 Website: www.rjpropertylaw.com
📱 Call/WhatsApp: 8088417193
We assist with:
✅ Property Verification
✅ Agreement to Sell Drafting
✅ Sale Deeds & Legal Opinions in Karnataka
Reach out for safe, reliable legal guidance from the comfort of your home.