Agreement to Sell vs Sale Deed in India – Key Differences, Legal Validity & Format
Agreement to Sell vs Sale Deed in India – Key Differences, Legal Validity & Format
When buying or selling property in India, two important legal documents come into play – the Agreement to Sell and the Sale Deed. Although people often confuse them, both serve different purposes and have distinct legal consequences.
In this article, we explain the meaning, legal validity, key differences, stamp duty requirements, and format of these documents.
What is an Agreement to Sell?
An Agreement to Sell is a preliminary contract in which the seller agrees to sell and the buyer agrees to purchase a property on specific terms and conditions.
It does not transfer ownership of property.
It records the mutual promises of both parties regarding sale.
It usually includes details like property description, sale price, advance payment, and the time frame for execution of the final sale deed.
Legal Reference: Section 54 of the Transfer of Property Act, 1882 – An agreement to sell, by itself, does not create ownership rights.
What is a Sale Deed?
A Sale Deed is the final legal document executed between seller and buyer that actually transfers ownership of the property.
Must be registered under Section 17 of the Registration Act, 1908.
Once executed and registered, the buyer becomes the lawful owner.
It is conclusive proof of ownership and can be relied upon in court.
Key Differences Between Agreement to Sell and Sale Deed
Basis Agreement to Sell Sale Deed
Nature Future promise Completed transaction
Ownership Transfer No transfer Ownership transferred
Registration Not compulsory Compulsory
Legal Effect Creates a contractual right Creates ownership right
Stamp Duty Nominal Full stamp duty payable
Example “I will sell this property to you” “I have sold this property to you”
Why Agreement to Sell is Important
Protects both buyer and seller before the actual sale.
Ensures clarity on price, possession, and obligations.
Helps in securing home loans from banks.
Acts as a safeguard if either party backs out.
Format of Agreement to Sell (Sample)
AGREEMENT TO SELL
This Agreement to Sell is made on this ___ day of ______ 2025
Between Mr./Ms. __________ (Seller) and Mr./Ms. __________ (Buyer).
The Seller agrees to sell and the Buyer agrees to purchase the property
situated at __________ for a total consideration of Rs. __________.
Advance of Rs. __________ has been paid.
The balance shall be paid at the time of execution of the Sale Deed.
Both parties agree to complete the transaction on or before __________.
Signed by:
Seller: __________
Buyer: __________
Witnesses: __________
Legal Consequences
Agreement to Sell – If one party defaults, the other can file a suit for specific performance under the Specific Relief Act, 1963.
Sale Deed – Grants absolute ownership. Disputes are decided based on registered sale deed as primary evidence.
Stamp Duty & Registration
Agreement to Sell – Only nominal stamp duty, varies by state.
Sale Deed – Full stamp duty (usually 5–7% of property value) + registration fee (~1%).
Common Mistakes to Avoid
Relying only on agreement without registering the sale deed.
Not verifying seller’s title documents.
Not paying full stamp duty.
Using vague clauses on possession and payment.
Conclusion
In property transactions, an Agreement to Sell acts as a promise for future transfer, while a Sale Deed actually transfers ownership. Both are legally important, but only a registered sale deed makes the buyer the rightful owner.
Always ensure:
? Agreement to Sell is properly drafted
? Sale Deed is registered and stamped
? Property documents are verified
This avoids legal disputes and secures your ownership rights.
