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Stamp Paper & Legal Documents

Agreement to Sell vs Sale Deed: Contents, Stamp Duty and Legal Effect

An agreement to sell is a promise to transfer property later; a sale deed is the transfer. Only a registered sale deed makes you the owner.

VD

Written by Vikram Desai

Published 26 October 2026·6 min read

On this page8 sections
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An agreement to sell is a promise to transfer property later, on terms both sides have settled. A sale deed is the transfer itself. Section 54 of the Transfer of Property Act, 1882 says a contract for sale does not by itself create any interest in the property, so ownership passes only when the sale deed is registered.

Key facts

Point Agreement to sell Sale deed
What it does Records a promise to sell on set terms Transfers ownership
Title passes? No (Section 54, TPA) Yes, on registration
Registration Needed to rely on Section 53A, for agreements signed on or after 24 September 2001 Compulsory for property worth ₹100 or more
Stamp duty, Karnataka 0.5% (minimum ₹500) without possession; 5% with possession 5% plus surcharge and additional duty
Stamp duty, Maharashtra Full conveyance duty if possession is given or agreed to be given Conveyance duty; earlier duty adjusted
If a party backs out Suit for specific performance within 3 years, or refund and damages Setting aside a registered deed needs a court case

What an agreement to sell contains

ItemDetails
Partiesnames, parentage, addresses and ID of seller and buyer.
Propertyfull description with survey or flat number, area, boundaries and the seller’s title documents.
Pricetotal consideration and how it will be paid.
Advance or earnest moneythe amount paid on signing, and whether it can be forfeited.
Timelinethe date by which the balance is paid and the sale deed executed.
Conditionsloan approval, society or authority NOC, clearing an existing mortgage, vacating tenants.
Seller’s promisesclear title, no pending dues, tax and utility bills paid to date.
Possessionwhen and how it will be handed over.
Default clauseswhat happens if either side fails to complete.
Signaturesboth parties and two witnesses.

Run the seller’s papers through our property legal due diligence checklist before you pay the advance.

Stamp duty on the agreement, and why possession matters

Each state sets the rate, and handing over possession often changes the duty.

State Agreement without possession Agreement with possession
Karnataka 0.5% of market value, minimum ₹500; registration fee ₹200 5% of market value; registration fee 2%
Maharashtra Depends on the article that applies; ask the Sub-Registrar Treated as a conveyance: full duty on market value

Explanation I to Article 25 of the Maharashtra Stamp Act treats an agreement to sell as a conveyance if possession is transferred, or agreed to be transferred, before, at or after signing. The duty paid is adjusted when the sale deed is executed. If a registered agreement already paid full duty and the conveyance follows without changes, the conveyance pays ₹100. That is why flat agreements in Maharashtra are usually stamped and registered at full rates.

Other states differ. Estimate the amount with the stamp duty calculator and confirm with the Sub-Registrar.

Section 53A part performance and registration

Section 53A of the Transfer of Property Act protects a buyer who has signed a written contract, taken possession, and paid or is willing to pay. The seller cannot then use the lack of a completed transfer to throw the buyer out.

Two limits apply:

  • Registration: Section 17(1A) of the Registration Act, 1908 requires contracts to transfer property for consideration to be registered, for Section 53A purposes, if signed on or after 24 September 2001. Unregistered ones have no effect under Section 53A.
  • It is a shield, not title: in Suraj Lamp (2011), the Supreme Court said Section 53A protects the buyer only against the seller, not against third parties. In Ramesh Chand v Suresh Chand (1 September 2025), it repeated that an agreement to sell does not transfer title.

An unregistered agreement is not worthless. Section 49 of the Registration Act lets it be used as evidence of the contract in a suit for specific performance.

Sale deed: when title actually moves

Section 54 says a sale of tangible immovable property worth ₹100 or more can be made only by a registered instrument. The sale deed is that instrument. You become the owner when it is registered, not when you pay the advance or get the keys.

At the sale deed stage:

  1. The buyer pays the balance, usually through the bank if a home loan is involved.
  2. The buyer deducts TDS where the price is ₹50 lakh or more; see our page on TDS on property sale.
  3. Both parties pay the stamp duty (usually the buyer) and appear before the Sub-Registrar with two witnesses.
  4. The Sub-Registrar registers the deed and returns it.
  5. The buyer applies for mutation in municipal or land records.

Our sale deed guide covers its contents, registration steps and the mutation that follows.

What happens if either party backs out

If the seller refuses to complete

The buyer can sue for specific performance. Since the Specific Relief (Amendment) Act, 2018 took effect on 1 October 2018, Section 10 says courts “shall” enforce specific performance, subject to the Act’s exceptions. Under Article 54 of the Limitation Act, 1963, you must sue within three years from the date fixed for performance. If no date was fixed, the three years run from when you learn the seller has refused. The buyer can instead claim a refund of the advance with damages.

If the buyer fails to pay

The seller can usually keep the earnest money if the agreement says it is forfeitable. In Satish Batra v Sudhir Rawal (18 October 2012), the Supreme Court upheld forfeiture of an amount paid as earnest money. In K.R. Suresh v R. Poornima (2 May 2025), the Court said an advance or part-payment of the price cannot be forfeited unless it was paid as a guarantee that the contract would be performed.

Write the earnest money amount and the forfeiture terms in plain words. For a disputed deal or a large advance, ask a property lawyer to draft or review the agreement.

Frequently asked questions

Does an agreement to sell make me the owner?

No. Section 54 of the Transfer of Property Act says a contract for sale creates no interest in the property. Ownership passes on registration of the sale deed.

Is registration of an agreement to sell compulsory?

To rely on Section 53A, yes, for agreements signed on or after 24 September 2001. Some states, such as Maharashtra, also charge full duty and routinely register agreements where possession is agreed.

How much stamp duty is payable on an agreement to sell?

It depends on the state. Karnataka charges 0.5% (minimum ₹500) without possession and 5% with possession.

Can the seller forfeit the advance if I back out?

The seller can keep the earnest money if the agreement allows it. A part-payment of the price generally cannot be forfeited unless it was paid as a guarantee of performance.

How long do I have to sue if the seller refuses to register the sale deed?

Three years from the date fixed for performance, or from when you learn of the refusal if no date was fixed.

Is stamp duty paid twice, on the agreement and on the sale deed?

Maharashtra adjusts duty paid on an agreement treated as a conveyance against the sale deed. Check your own state’s rule before you sign.

Sources

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