• Arun Thapa


Updated: Sep 21, 2020

In India, the ‘Property Sale Agreement’ comes under the Indian Contract Act,1872, the Registration Act,1908, and the Transfer of Property Act. This is applicable no matter who the seller is — friend,

family, acquaintance or complete stranger. A written agreement should be entered into in

order to legally establish the authenticity of the property’s ownership.

sale agreement being a technical document will have a series of terms that you need to understand thoroughly. Sale, for example, is a transaction where money is exchanged, in part or in whole, for the transferring of ownership of a particular piece of property in whole.

The property is referred to as a freehold property when it belongs to someone for a fixed price that is already paid.

Whether you are purchasing a site for construction of a home (in which case it is called the Construction Sale Agreement) or an apartment from a builder, the sale agreement is a document that you will need to scrutinize minutely before signing. Once signed, you will not be able to counter anything that is on it.

There is nothing explicitly mentioned in the law about the sale agreement being a written one. However, it is now common practice and even a practical thing to do so, especially if the document is to hold water in a court of law. An important thing to do is to get the agreement registered, as a non-registered document does not have any legal bearing and any deal made on the basis of it is considered void.


There are several inclusions or what are called clauses in the sale agreement. It will describe the property, include contact details of the seller and the buyer, the negotiated price will be mentioned and also how this payment is being disbursed. The time frame for the payment will be included. There will also be a provision for the payment of stamp duty and for the account of the property title.

The clauses in a sale agreement are important because they outline everything that will go into making this a successful.

l transaction, which is completely legally sound. The contract will tell you if the payment is to be made in cash, in part or an agreement for it to be paid partially in the future has been agreed on.

Some of the clauses will cover municipal taxes that are due by the person buying, as well as maintenance charges and in the case of an apartment being purchased payment towards the building society.

The legal basis

Should you be buying an apartment from a realty company then cross-check with the Registrar of Companies on the property being of freehold nature. The apartment should be completely free of any obligations monetarily and should not be mortgaged. It cannot be reiterated enough on the importance of having the documents looked into by a property lawyer.

Here is what should be included in your sale agreement

Payment terms: The onus is on both the buyer and seller to come to a mutual agreement on the price of the property and all other expenses that go towards the transfer of property. This has to be included and has to be agreed on by both the buyer and seller.

The time for the disbursement of the payment should also be included right up to the last installment. The document will need to be scrutinized by lawyers from both sides and then signed by both parties.

Transferring of property title: For a loan to be sanctioned, the property title is important.

This should be transferred to the buyer when the seller has got in hand the amount agreed on. The transfer is the last step in the whole process of buying the property. The property will have to be registered in the buyer’s name by the seller at the local registrar office.

Stamp duty: These rates are fixed by the relevant authorities and can vary with each State. The onus is on the buyer to ensure that the property has been registered in his name at the rate that the government has sanctioned for the transferring of the property.

Sale deed: This follows the agreement of sale and is an understanding between the seller and the buyer. Its contents need to be scrutinized by experts multiple times before you actually sign on it.

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