• Agreement for sale

Sir, I am purchasing a home in Lucknow on which finance is to be done.the seller wants me to give an amount of rs 10 lakhs and that he will mention that in agreement for sale.
My questions are-
1) since the builder is unknown to me is it fine to give such amount before the loan is approved.
2) is agreement for sale also required to be processed at registrar office or it is a simply made on a paper.
I am unknown to this field.
Kindly help.
Asked 4 years ago in Property Law
Religion: Hindu

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14 Answers

Hello sir,

Before making the payment, search the status of builder and property . If all is good then execute an agreement and register it before the concerned registrar. For detailed opinion contact me .i'll Online from 8pm to 10 pm.

Shitanshu Kumar Gaur
Advocate, New Delhi
44 Answers

Not rated

1. Dont give a big amount of 10 lacs

2. Give some small token amount to lock the deal. Have it recorded in written

3. Dont believe on the assurances of the builder

4. Ask him to provide you with a copy of draft agreement

5. Also before you give any money to builder first check his legal title to the property which he is selling

6. Are yoy buying a flat from builder? Is it under construction project or ready possession?

7. Agreement has to be registered

8. Hire a good local lawyer

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

1) YOu can tell builder first made registration that you have to submit the paper in the bank. Without flat is registered on your name bank wont proceed with loan.

2) You can given token amount to the builder and take receipt which flat you have booked.

Ganesh Kadam
Advocate, Pune
12335 Answers
191 Consultations

4.9 on 5.0

1) don’t pay Rs 10 lakhs

2) agree to pay only Rs 1 lakh

3) agreement for sale need not be registered

4) get agreement for sale vetted by Lawyer before you sign it

Ajay Sethi
Advocate, Mumbai
87898 Answers
6207 Consultations

5.0 on 5.0

1. You and builder can enter into agreement to sale co.plete detail of property can be mentioned along with the amount given with the mode of payment and the agreement can be registered at local subregistrar office then it is safe to give the amount.

2. The sale agreement need to be registered with subregistrar office under section 17 of registration act every document concerning to transfer of immovable property needs to be duly registered. So make an agreement of sale on stamp paper register it at sub registrar office the identity proof the details of property signatures and the parties will be verified at time of registration so it will be a secured transcition.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

My answers are:

1) since the builder is unknown to me is it fine to give such amount before the loan is approved.

Ans: You may give 5 to 10% total sale consideration as advance as loan is not approved so that you are within safer zone.

2) is agreement for sale also required to be processed at registrar office or it is a simply made on a paper.

Ans: It may be on Rs.200/- Stamp Paper but when problem arise you have to pay 10 time of actual stamp duty required to turn it into legal document otherwise you can file any suit on such document.





wherever the agreement holder is not in possession of the property under agreement of sale, even though there is a recital in the agreement as to delivery of possession, he need not pay proper stamp duty as required. It shall be treated as a simple agreement of sale falling outside the scope of Explanation I to Article 47-A of Schedule I of the Indian Stamp Act.

posted 26 Mar 2011, 06:55 by advocatemmmohan Mandagaddi murali mohan

"followed by or evidencing delivery of possession". These

expressions cannot be read in isolation and one has to find the true meaning by

reading the entire Explanation and more so in conjunction with the earlier

expression i.e., "agreement". Even if these two expressions are looked

independently, it means an agreement to sell followed by delivery of possession

and an agreement to sell evidencing delivery of possession. In the first case,

i.e., "followed by delivery", possession cannot be disjuncted from the basic

source i.e., agreement to sell. Therefore, the expression followed by delivery

of possession should have a direct nexus to the agreement and should be read in

juxtaposition to the word 'agreement' and it cannot be independent or outside

the agreement. Therefore, the delivery of possession should follow the agreement

i.e., through the agreement. It takes in its sweep the recital in the agreement

itself that delivery of possession is being handed over. It will also cover

cases of delivery of possession contemporaneous with the execution of agreement,

even if there is no specific recital in the agreement. In other words, the

delivery of possession should be intimately and inextricably connected with the

agreement. And in the second type, i.e., agreements evidencing delivery of

possession, if the document contains evidence of delivery of possession by a

recital in that behalf, that is sufficient. Such delivery of possession can be

prior to the date of agreement and need not be under the agreement. If the

Agreement records the fact that the possession was delivered earlier and such

recital serves as evidence of delivery of possession, though prior to the

Agreement, it falls under the second limb. Therefore, on a proper interpretation

of the said expressions, it would follow that an agreement containing specific

recital of delivery of possession or indicating delivery of possession even in

the past is liable for stamp duty as a 'sale' under the said Explanation.

wherever the agreement holder is not

in possession of the property under agreement of sale, even though there is a

recital in the agreement as to delivery of possession, he need not pay proper

stamp duty as required. It shall be treated as a simple agreement of sale

falling outside the scope of Explanation I to Article 47-A of Schedule I of the

Indian Stamp Act. Various situations may arise for consideration on this aspect.

The purpose of the Act is to see that a person, who is in physical possession

and enjoyment shall not avoid to pay proper stamp duty as required under

Explanation I to Article 47-A of the Stamp Act. Otherwise, the document shall

not be admissible in evidence as required under Section 35 of the Stamp Act.

For the above reasons, impugned order dated 14.6.2007 passed by the trial Court

is liable to be set aside and is accordingly set aside and the document -

agreement of sale - is ordered to be admitted in evidence.


Civil Revision Petition No. 3337 of 2007
B. Bhaskar Reddy

Bommireddy Pattabhi Rami Reddy (died)

Per L.Rs., and others.

Counsel for petitioner: Sri M. Ravindranath Reddy

Counsel for Respondents: Sri M.V. Suresh Kumar


Sale Agreement – Flat/Apartment– ESSENTIAL CLAUSES

Property Sale Agreement is most important document. It is different from Sale Deed though in some cases Sale Agreement is registered as Sale Deed. Sale agreement contain agreed upon Terms & Conditions between Seller & Buyer for the sale of property. It is legally binding on both the parties. It also specifies the date by which the transaction will be completed. In laymen terms, Sale agreement is a road map how the property transaction will be completed. On the other hand Sale deed is executed at the time of actual transfer of property i.e. transfer of ownership from seller to buyer.

In any property transaction, maximum risk is carried by the borrower. Even experts will agree that all property transactions carry certain degree of risk. From buyers perspective, It is very critical to safeguard your interests before signing below the dotted line. I am listing down 5 most critical clause, which should be incorporated in Property Sale Agreement to safeguard the Buyer’s Interest.

Indemnity Clause in Sale Agreement

Due to sudden rise in property/land prices specially in metro cities, lot of properties are under legal litigation. These legal cases go on for decades. Some of the most common reasons for legal disputes are

(a) Property was transferred under force/influence/coercion

(b) Legal heirs of Seller claim their right on property.

Almost 40% properties in bangalore are under legal dispute. The indemnity clause in Sale Agreement indemnifies the buyer against any legal dispute / legal defect in the property. Also mention that in case of any legal dispute in future, the seller will compensate the buyer for any loss incurred by the buyer at the then prevailing market rate. This clause should be drafted carefully & should include all possible scenarios.

Penalty Clause

At the time of signing Sale Agreement, Buyer pay X amount as token money. Standard clause is put in agreement that if buyer will back out from the deal then entire token amount will be forfeited by seller. I would suggest to add another line in this clause that in case seller will back out from deal then Seller will return the token amount paid by buyer along with equivalent amount as penalty. If this clause is not put then seller will keep searching for new buyer who can pay extra. He will call off the deal, if he gets new buyer at higher rate before execution of Sale Deed.

Right to Call off the deal

As a buyer you should reserve the right to call off the deal under certain circumstances without being penalized financially. Some of these circumstances are as follows

(a) If Seller fails to provide legal/statuatory property documents required by the Buyer

(b) If the Buyer find out any legal defect in property before execution of sale deed

(c) If Buyer’s home loan is rejected by bank due to some legal/statutory issue in property/property documents

(d) If the seller fail to provide all original documents at the time of execution of sale deed. You may check my post on List of Documents required for Property Purchase

(e) If the seller fail to provide vacant possession of property at the time of execution of sale deed.

Outstanding Dues

It is critical to mention in Sale Agreement that Seller will clear all the dues accrued in respect of the property prior to the date of registration.

Transfer of Deposits / Membership of Owner’s Association

The clause should clearly mention that scope of agreement also include transfer of all deposits paid by seller for Electricity connection, Water connection, to apartment owners association, Club house membership, Gym Membership, contribution towards sinking fund of association etc . In the absence of this clause, the seller might demand extra money at the time of sale deed against all the deposits paid by him.

I have listed down 5 important clause which must be included in sale agreement. These are over and above the standard Sale Agreement clauses. It is always advisable to hire good property lawyer to draft Sale Agreement & Absolute Sale Deed. If you need any specific input from my end on these clauses then you may post your query through following comments section.


Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

1. First of all you shall have to make thorough search about the property at the office of the Registrar and also make court search to see whether there is any litigation in connection with the property/land or not.

2. If it is a ready made house owned by the seller, then check the original mother deed to ensure that he has not taken loan from some bank by depositing the mother deed (as is mandatory fort taking loan) and thereafter selling off his said mortgaged property and in that case your sale deed registered after creating mortgage on the said house will become invalid.

3. It is strange that he is asking Rs.10 lakhs while making the agreement. Generally it is a paltry sum of Rs. 1 lakh as token advance while executing the agreement for sale.

4. After executing the agreement for sale, which may or may not be registerd but notarised), you can apply for the bank loan and in that case the Bank's lawyer will make thorough search about teh said property and based on his legal opinion, the loan will be granted in your favour.

5. After the loan is sanctioned, arrange to get the sale deed registered and pay the vendor the Draft being the sale proceeds at the office of the Registrar while registering the sale deed.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

Sir, sale deed must be at registrar's office. It must be registered. Contact at adv.jaswantsinghkatariya at gmail.com for more information.

Jaswant Singh
Advocate, Gurugram
926 Answers
2 Consultations

4.8 on 5.0

It is not advisable to pay Rs. 10 Lakhs upfront. try and negotiate for Rs. 1-3 lakhs. and Wait it your loan is approved. Further, usually the agreement of sale is not required to be processed at any registrar office but you may get it notarized and the agreement be written on a stamp paper after duly vetted from a qualified lawyer.

Shaveta Sanghi
Advocate, Chandigarh
914 Answers
111 Consultations

5.0 on 5.0

Firslty, sir, I would like to make you aware about that you should first try to inquire about the previous details of transactions of the builder if possible.

Secondly, it depends upon the total amount to be paid, generally it is good to give only 5 percent of the total amount in the agreement.

Thirdly, no, agreement to sell is not mandatory to be registered before the registrar.

Fourthly, put such conditions in the agreement which should support your case also not just builder’s Case as it plays an important role in any dispute if arises.

Rest you are welcome to take any assistance in further.

Sanjay Baniwal
Advocate, South Delhi
5464 Answers
13 Consultations

5.0 on 5.0

A buyer should exercise utmost caution while buying property in India. Buying a flat that is under construction is often very risky. On the other hand, it sometimes offers price benefit.The agreement for sale need not be registered .So better to identify the profile of the builder and then give the advance amount . But 10 lakhs is not advisable one. Agree to pay only one or two lakhs.Legal right of the holder of the land in government records, Tenure, etc. are important thing in a property. If you are applying for a loan; most of the banks send the documents to their legal advisers for legal opinion. If the Title deed is not clear then no bank will offer the loan against the property. Documents relevant to the Land / Project / Building / Apartment are important documents for scrutuny.

Ajay N S
Advocate, Ernakulam
3990 Answers
93 Consultations

5.0 on 5.0

1) since the builder is unknown to me is it fine to give such amount before the loan is approved.

Answer: It is ok to give the amount to him. Make sure he mentions in the Agreement to Sell;

Also make sure he gives you a receipt for the advance payment made by you.

2) is agreement for sale also required to be processed at registrar office or it is a simply made on a paper.

Answer: The Agreement to Sell need not be registered, but it is advisable to do on stamp paper and also notarize it;

It is also better that the clauses are well read and the possession date etc. are mentioned in the agreement.

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

Dear Sir, Sale agreement is safer for both parties buyer and seller, regarding advance sale consideration, fixed the sale consideration, time is mentioned as time is essence of contract. You do not worry about this, you are safe in this regard because of seller if denied his promise to sell the said property to you at the time you have entitled to claim the said property by way of filing a civil suit for specific performance for the same sale consideration which was fixed at the time of sale agreement and there is no question arise demand more sale consideration from you. All ;the best.

C. V. Jadhav
Advocate, Bangalore
545 Answers
18 Consultations

4.7 on 5.0

1. The seller will not be concerned with the sanction of your loan.

If he is imposing condition to make payment to the extent what is told to you, you may have to pay that or else he may not be willing to enter into a sale agreement or willing to sell the property to you.

If you are concerned about the sanction of loan, you may pay a token advance, obtain photo copies of the property documents, refer the same to a local lawyer, get his opinion about the property, you can proceed only if it is recommended for purchase, otherwise there is no use of entering into a sale agreement also.

2. An unregistered sale agreement is not valid and not admissible as evidence in court of law, hence it is always suggested that the sale agreement has to be registered so that it is enforceable in law.

T Kalaiselvan
Advocate, Vellore
78057 Answers
1543 Consultations

5.0 on 5.0

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