An agreement to sell is a promise to transfer the property later on agreed terms; it does not by itself make you the owner. The sale deed is the document that actually transfers ownership once it is stamped and registered. Most purchases have both: the agreement first, the sale deed at completion.
Side by side
Factor
Sale deed
Agreement to sell
Effect
Transfers ownership
Creates a contract to transfer later
Ownership passes
Yes, on registration
No
When signed
At completion, after full payment
Early, often with an advance
Registration
Compulsory
Required in some states and for RERA projects' agreements for sale
Stamp duty
Full duty on the conveyance, set by the state
Set by the state; some charge substantial duty on it
If a party backs out
Transfer is complete; remedies are limited
Sue for specific performance or refund under the terms
Used by lenders
Title document for the mortgage
Basis for sanctioning the loan
When Sale deed matters
You are not the owner until the sale deed is registered. Pay the balance only against registration.
When Agreement to sell matters
The agreement fixes price, payment schedule, timelines and penalties. Read it before paying a significant advance; it governs everything until the sale deed.
In more detail
Section 54 of the Transfer of Property Act says a contract for sale does not, of itself, create any interest in or charge on the property. That is why the sale deed must follow.
For a new flat in a RERA-registered project, the builder cannot take more than 10% of the cost as an advance or application fee before entering into a written agreement for sale and registering it. States have their own model agreement forms.
Stamp duty on an agreement to sell varies a great deal by state; in some it is a small fixed sum, in others it is close to the duty on a sale, especially when possession is handed over.
No. Under section 54 of the Transfer of Property Act, a contract for sale does not by itself create any interest in the property. The registered sale deed does.
Is an agreement to sell compulsory to register?
It depends on the state and the kind of agreement. A RERA project's agreement for sale must be registered before the builder takes more than 10% of the cost.
Can I get a home loan on an agreement to sell?
Lenders sanction loans on the agreement and disburse against it, but they take the registered sale deed as security once it is executed.
Sources
Transfer of Property Act, 1882, section 54
Real Estate (Regulation and Development) Act, 2016, section 13
State stamp acts
A plain-language summary, not legal or tax advice. Rules set by states differ and change; check the current position for your property.