Agreement to sell a flat: what to check before you sign

Agreement to sell a flat
Agreement to sell a flat

Quick answer: An agreement to sell is a promise to sell and buy on agreed terms in the future; ownership passes only when the registered sale deed is signed. Before signing, check the seller's title documents, the exact property, price and payment schedule, the advance and what happens to it if either side backs out, the possession date, who pays which charges, and stamp duty and registration rules in your state.

Most disputes in resale property deals start with a vague agreement to sell.

Agreement to sell vs sale deed

• Agreement to sell: sets the terms of a future sale. It doesn't make you the owner.
• Sale deed: transfers ownership, and must be stamped and registered (Section 54 of the Transfer of Property Act, with the Registration Act).

Check the title first

Before paying an advance, ask for the title chain (previous sale deeds), encumbrance certificate, property tax receipts, society no-objection or share certificate, approved plans, and identity of every owner. A lawyer's title search is worth the fee.

What the agreement should say

1. Parties: every owner, with ID details.
2. Property: flat number, floor, building, survey or CTS number, area, parking.
3. Price and payment schedule, including the home loan disbursement.
4. Advance: amount, and whether it is refundable if the deal fails.
5. Timeline: date for the sale deed and possession.
6. Clear title: the seller's promise that the property is free of loans and claims, and will be cleared before sale.
7. Charges: society dues, transfer charges, stamp duty and registration fees: who pays.
8. Default: what happens if the buyer doesn't pay or the seller doesn't sell.

Stamp duty and registration

Many states require stamp duty on an agreement to sell, and some require registration, especially where possession is given. Under Section 53A of the Transfer of Property Act, protection of part-performance generally needs a registered agreement. Check your state's rules.

New flats from builders

For under-construction flats in a registered project, the Real Estate (Regulation and Development) Act, 2016 adds protections. See [buying a flat under RERA](/blog/buying-a-flat-rera-checklist).

Frequently asked questions

Does an agreement to sell make me the owner?

No. Ownership passes by a registered sale deed.

Is an agreement to sell required to be registered?

It depends on the state and the terms. Many states require stamp duty, and registration is needed for some protections. Check locally.

What if the seller backs out after taking an advance?

Your remedies depend on the agreement: refund, damages, or a suit for specific performance. Clear default clauses help.

Check yours

Upload the draft to April's [review](/features/review) to see unclear terms in plain words before you pay an advance.

This article is general information, not legal advice.