Agreement to sell

An agreement to sell fixes the deal before the final transfer: the price, the advance or earnest money, the date for the sale deed, and what each side must do before then (clear a loan, get a no objection certificate, arrange finance).

What it does and does not do

Under Section 54 of the Transfer of Property Act, 1882, an agreement to sell does not create any interest in the property. If the seller backs out, the buyer's remedy is a suit for specific performance under the Specific Relief Act, 1963, or a refund with damages, depending on the terms.

If the buyer has paid and taken possession and wants the protection of part performance under Section 53A of the Transfer of Property Act, the agreement must be registered (Section 17(1A) of the Registration Act, 1908). Some States also charge stamp duty on an agreement to sell, more so when possession is given.

Clauses to get right

• Exact property description and the seller's title documents.
• Price, advance paid, and the dates for the balance.
• What happens to the advance if either side defaults.
• Who pays stamp duty and registration charges.
• A date by which the sale deed must be signed.

Use the agreement to sell document, and read cancelling a sale deed or agreement to sell.