1. Yes your sale agreement can be registered.
2. But since your seller does not have a registered sale deed, the stamp authority will demand for payment of stamp duty alongwith penalty for the previous sale by which your seller had purchased the property.
3. Without a valid registered document, the title of your seller to the property is defective.
4. If you intend to buy this property then I strongly suggest you issue a public notice in local newspapers informing about your intention to purchase, that your seller claims he is owner by virtue of possession, and invite objections from public against the proposed sale.
5. Also obtain a search report from the sub registrar office to ascertain if there is any document which is registered for this property.
6. If possible try and approach the builder and on his letterhead request him to state that this property was sold to your seller by him.
7. Also ask your seller to provide his bank statement showing payment of money to the builder.
8. Ask your seller to provide his IT returns in which he has declared this property as his ownership property. Take a certificate from your seller's CA stating that there is a debit entry in your seller books of account for payment made to builder towards flat purchase and that this flat is shown as your seller's flat in the IT returns which the CA has filed on your seller's behalf.
9. Check the utility bills like electric, telephone etc whether they are standing in your seller's name