Two documents, two jobs

The agreement for sale is the promise. It records what is being sold, at what price, on what schedule, with what specification, by what date, and what happens if either side fails. For an under-construction flat it is the document that will govern the next two to four years of your life, and it is signed long before there is anything to hand over.

The sale deed is the transfer. It is the document that conveys the property from the seller to you, and it becomes effective on registration at the sub-registrar's office. When people say 'we registered the property', this is usually the document they mean. After it is registered, you are the owner on the record.

The reason the distinction matters practically: almost every term you care about is negotiated into the agreement, not the deed. By the time the deed is drawn up, the terms are settled and the money is mostly paid. If you skim the agreement and read the deed carefully, you have read the wrong document carefully.

What belongs in the agreement for sale

• The unit, precisely — Tower, floor, unit number, facing, carpet area, and the balcony and terrace areas separately.
• The full price break-up — Every head, named: base, floor rise, PLC, car park, club, maintenance deposit, taxes, and what is excluded.
• Payment schedule — Ideally tied to construction milestones, with each stage defined clearly enough that you can check it.
• Possession date — A date, not a quarter and not 'subject to'. Compare it to the date filed with the RERA authority.
• Delay compensation — What the promoter pays you per month of delay, and from which date. Compare it with what you are charged for a late instalment.
• Specification list — Flooring, fittings, doors, windows, electricals — annexed to the agreement, so the sample flat is not the only record.
• Common areas and amenities — What is committed, and when. An amenity 'planned for a later phase' is not an amenity you are buying.
• Cancellation and refund terms — What is deducted, over what period the refund is made, and what happens if your loan is declined.

Registration, stamping and the advance limit

Whether an agreement for sale must be registered, how it is stamped, and whether the stamp duty paid on it is adjusted against the sale deed later, varies by state. Some states treat the agreement much like a conveyance for stamping purposes; others charge a nominal duty. This is exactly the kind of question to put to a property lawyer or the sub-registrar's office in your state, because getting it wrong is expensive and the general internet answer is often about a different state.

One rule is nationwide and worth knowing: under RERA, a promoter cannot accept more than ten per cent of the cost of the apartment, plot or building as an advance or application fee without first entering into a registered agreement for sale. If you are being asked for a much larger payment before any agreement is registered, ask for the reason in writing.

Reading the deed before you sign it

After registration, pull a fresh encumbrance certificate. It should now show your purchase, and your lender's charge if you took a loan. That is your confirmation that the registration actually landed on the record.

• Names and spellings exactly as in your identity documents — a mismatch is corrected only by another registered document.
• The schedule of property: boundaries, survey numbers, extent, and the undivided share of land.
• The recital of payments — every instalment you have paid should be reflected.
• That the seller is the same entity as in the agreement, and that any power of attorney is valid and produced.
• That the encumbrance position is as your lawyer found it, and that any existing loan on the property is being cleared at or before registration.
• That the possession or handover position is stated correctly.

Related documents people confuse with these two

• Allotment letter — Issued by a developer on booking. It identifies the unit and the price, but it typically refers to the terms of an agreement you may not have seen yet. Ask for the draft agreement before you sign an allotment letter.
• Construction agreement — In some structures the land and the construction are contracted separately, giving you two documents instead of one. Have a lawyer explain the consequences for stamping, taxation and your loan before you accept the structure.
• Power of attorney — Authorises someone to act for a party. A sale executed under a general power of attorney is not a substitute for a registered sale deed in your name.
• Possession letter — Records handover of the physical property. It is not proof of ownership either.

Frequently asked questions