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.
Written by Vikram Desai
Published 26 October 2026·6 min read
On this page8 sections
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
| Item | Details |
|---|---|
| Parties | names, parentage, addresses and ID of seller and buyer. |
| Property | full description with survey or flat number, area, boundaries and the seller’s title documents. |
| Price | total consideration and how it will be paid. |
| Advance or earnest money | the amount paid on signing, and whether it can be forfeited. |
| Timeline | the date by which the balance is paid and the sale deed executed. |
| Conditions | loan approval, society or authority NOC, clearing an existing mortgage, vacating tenants. |
| Seller’s promises | clear title, no pending dues, tax and utility bills paid to date. |
| Possession | when and how it will be handed over. |
| Default clauses | what happens if either side fails to complete. |
| Signatures | both 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:
- The buyer pays the balance, usually through the bank if a home loan is involved.
- The buyer deducts TDS where the price is ₹50 lakh or more; see our page on TDS on property sale.
- Both parties pay the stamp duty (usually the buyer) and appear before the Sub-Registrar with two witnesses.
- The Sub-Registrar registers the deed and returns it.
- 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
- Transfer of Property Act, 1882, Sections 53A and 54 — AdvocateKhoj bare act (checked 16 Sep 2026)
- Registration Act, 1908, Sections 17(1A) and 49 — IGR Maharashtra (checked 16 Sep 2026)
- Maharashtra Stamp Act, Schedule I, Article 25 — Department of Registration and Stamps, Maharashtra (checked 16 Sep 2026)
- Stamp duty and registration fees — Department of Stamps and Registration, Karnataka (checked 16 Sep 2026)
- Specific Relief Act, 1963 (as amended in 2018) — India Code (checked 16 Sep 2026)
- Jagdambey Builders, 8 October 2025 (Article 54, Limitation Act) — Delhi High Court (checked 16 Sep 2026)
- Satish Batra v Sudhir Rawal, 18 October 2012 — Indian Kanoon (checked 16 Sep 2026)
- K.R. Suresh v R. Poornima, 2 May 2025 (2025 INSC 617) — Supreme Court of India (checked 16 Sep 2026)
- Suraj Lamp & Industries v State of Haryana, 11 October 2011 — Indian Kanoon (checked 16 Sep 2026)
- Ramesh Chand v Suresh Chand (1 September 2025) — SCC Online Blog (checked 16 Sep 2026)
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