When you buy your first home, you sign two main documents with similar-sounding names: the agreement for sale and the sale deed. Many first-time buyers think they are the same paper signed twice. They are not. One is a promise to sell. The other is the sale itself. Knowing the difference helps you know when you are protected and when you are not yet.
The simple version
| Agreement for sale | Sale deed (conveyance deed) | |
|---|---|---|
| What it does | Promises the sale will happen on agreed terms | Actually transfers ownership to you |
| When you sign it | Early, after booking | At the end, usually around handover |
| Do you own the home? | Not yet | Yes |
| If the other side backs out | You can sue to enforce the contract | You already own it |
What the law says
Section 54 of the Transfer of Property Act, 1882 defines a sale as a transfer of ownership in exchange for a price. It also says, quite directly, that a contract for sale does not by itself create any interest in the property. In other words, the agreement binds two people to complete a sale later. The flat stays with the seller until then.
Section 17(1)(b) of the Registration Act, 1908 makes registration compulsory for documents that transfer an interest in immovable property. Section 49 says an unregistered document of this kind cannot affect the property. So your sale deed must be registered to work at all.
Under-construction flats: the RERA agreement
If you are buying in a project that is still being built, the agreement for sale is governed by the Real Estate (Regulation and Development) Act, 2016 (RERA).
- Section 13(1) says the builder cannot take more than ten per cent of the cost before a written agreement is signed and registered.
- Section 13(2) says the agreement must state the specifications, payment dates, possession date and default interest.
- Section 17(1) says the builder must later execute a registered conveyance deed in your favour, with your share of the common areas going to the residents' association.
So for a new flat, the registered agreement protects you during construction, and the conveyance deed makes you the owner at the end.
What the agreement does give you
Even though you are not yet the owner, the agreement gives you real rights against the seller or builder:
- It fixes the price, the flat, the timeline and what each side must do.
- If the other side refuses to complete, you can ask a court for specific performance under the Specific Relief Act, 1963.
- Section 55(6)(b) of the Transfer of Property Act gives a buyer a charge on the property for money properly paid in advance, where the buyer properly declines to accept delivery.
What it does not let you do is sell the flat on, mortgage it as an owner, or get the khata in your name.
Clauses first-time buyers should read slowly
- Payment schedule. Are the payment stages things you can see on site, like "slab of the 3rd floor cast"?
- Default, both ways. If you pay late you pay interest. Does the builder pay you interest if they are late?
- Carpet area. Is the carpet area of your exact flat stated, as RERA defines it?
- Possession date. What date is written, and what happens if it slips?
- Cancellation. How much is deducted if you cancel, and how fast is the rest refunded?
Common mistakes to avoid
- Moving in on an unregistered agreement. Since 2001, section 17(1A) of the Registration Act requires an agreement relied on for part performance under section 53A of the Transfer of Property Act to be registered. An unregistered one gives you much weaker protection.
- Letting the agreement go cold. If dates pass with no written extension, your position gets weaker. Keep everything in writing.
- Thinking the sale deed is the last step. After registration, you still need to move the khata into your name with the local body.
From booking to keys, step by step
- Booking. You pay a booking amount and get a receipt. Nothing is registered yet, so keep this amount within the legal limit below.
- Draft agreement. Ask for the full draft, with every schedule attached, before you pay more. Read it at home, not at the sales desk.
- Your own checks. Match the project name, promoter name and survey numbers in the draft with the state RERA record.
- Registration of the agreement. Both sides sign before the sub-registrar. Stamp duty and registration fee are paid at the rates in force on that day.
- Construction payments. You, or your bank, pay against demand letters as each stage is reached.
- Occupancy certificate. The local authority certifies that the building may be occupied.
- Sale deed or conveyance deed. This is registered in your name, and only now do you become the owner.
- After registration. Apply for the khata transfer and move electricity and water accounts into your name.
A worked example: the ten per cent limit
Illustrative figures only, not a Reeva price. Say the total cost of a flat in a RERA project is ₹75,00,000. Ten per cent of that is ₹7,50,000. Under section 13(1) of RERA, that is the most the builder may take from you, as an advance or application fee, before a registered agreement for sale is in place. If you are asked for ₹10,00,000 at booking with no registered agreement in sight, the request goes beyond what the law allows. Ask for the agreement first.
The same sum works for any budget. Multiply the total cost by 0.10 and you have your limit.
A checklist to keep beside the draft
- Your flat number, floor and carpet area as defined in section 2(k) of RERA.
- The RERA registration number of the project.
- A payment schedule tied to stages of work, not only to dates.
- The possession date, written as a date.
- Interest you pay if you are late, and interest the builder pays you if it is late. Section 2(za) of RERA says these rates must be the same.
- The list of specifications and amenities as a schedule.
- A copy of the floor plan of your flat and the sanctioned layout.
- The cancellation terms and refund timeline.
One more mistake: treating the brochure as the agreement
Promises you were told at the site office, on a call or in a brochure only bind the builder if they are in the agreement or a schedule to it. If something matters to you, such as a covered parking space or a particular fitting, ask for it to be written in before you sign.
For the full order of documents from booking to keys, see our first home guide.