Mr. Rohan Verma, a software engineer in the city of Vidyanagar, was thrilled to book his first home, an under-construction apartment in the ‘Celestial Heights’ project by ‘Dream Homes Pvt. Ltd.’. He paid the booking amount and received a draft document titled ‘Agreement to Sale’. Eager to proceed, he forwarded it to his lawyer for review. His lawyer immediately flagged the title, stating it should be an ‘Agreement to Sell’. This small difference in wording left Mr. Verma confused and concerned about the legal validity of the document for a property whose possession was still a year away. This situation is common and highlights a critical legal distinction that every property buyer must understand.

Advice in such cases

Navigating property documents can be complex. The terminology used is precise and has significant legal implications. It is essential to understand the nature of the document you are signing, especially for an under-construction property.

• Scrutinize the Title and Clauses: The title of the agreement is the first indicator of its nature. An “Agreement to Sell” (or “Agreement for Sale” as commonly used under RERA) is an executory contract, meaning it outlines promises to be performed in the future. A “Sale Deed” is an executed contract that transfers ownership immediately. For a property yet to be constructed, an “Agreement to Sell” is the appropriate document.
• Understand the Legal Difference: An Agreement to Sell does not transfer ownership rights. It binds the seller to sell and the buyer to buy the property in the future, subject to the terms and conditions specified. The actual transfer of title happens later through the execution of a Sale Deed upon completion of the construction and full payment.
• Ensure Clarity on Terms: The agreement must clearly detail the payment schedule, the promised date of possession, specifications of the flat, amenities, and penalties for default or delay by either party.
• Registration is Key: Under the Real Estate (Regulation and Development) Act, 2016 (RERA), the Agreement for Sale must be in a prescribed format and registered. This provides legal sanctity to the document and protects the buyer’s interests.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The legal framework governing property transactions in India is robust. The key statutes applicable in such cases are:

• Section 54 of the Transfer of Property Act, 1882: This section defines ‘Sale’ and distinguishes it from a ‘Contract for Sale’. It clarifies that a contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property.
• The Real Estate (Regulation and Development) Act, 2016 (RERA): Section 13 of RERA mandates that a promoter shall not accept more than ten percent of the cost of the apartment as an advance payment without first entering into a written ‘Agreement for Sale’ with the buyer and registering the said agreement.
• The Indian Contract Act, 1872: This act governs the fundamental principles of the agreement, such as offer, acceptance, consideration, and the legal enforceability of the contract.
• The Registration Act, 1908: This Act mandates the compulsory registration of certain documents, including an Agreement for Sale of immovable property, to make them legally valid and enforceable.

If you are the complainant

If you are the buyer, like Mr. Verma, and have noticed an incorrect or ambiguous term in your agreement, you are in the position of a complainant who needs to ensure their rights are protected.

• Insist on Rectification: Politely but firmly insist that the builder corrects the document’s title and any related clauses to reflect its true nature as an “Agreement to Sell” or “Agreement for Sale”.
• Do Not Sign Ambiguous Documents: Refrain from signing the agreement until the necessary corrections are made. Signing a flawed document can lead to complications later.
• Document Communication: Keep a written record of all communications with the builder regarding the requested changes. Emails are an excellent way to do this.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

If you have already signed a poorly drafted agreement, you are not without recourse. You are a victim of incorrect documentation, and steps can be taken to remedy the situation.

• Seek a Deed of Rectification: If the builder agrees, both parties can execute a “Deed of Rectification” to correct the errors in the original agreement. This supplementary document is then registered to give it legal effect.
• Approach RERA: If the builder is uncooperative, you can file a complaint with your state’s RERA authority. RERA is empowered to adjudicate disputes between homebuyers and promoters and can direct the builder to make necessary corrections or comply with the law.
• Legal Notice: Your lawyer can send a formal legal notice to the builder, demanding the rectification of the agreement. This often prompts the builder to act to avoid further legal proceedings.
• Consult with a Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

Disputes over the terms of a property agreement are primarily civil in nature. Therefore, the police have a very limited role. They will not intervene in contractual disagreements or force a builder to change the wording of a document. Their involvement is warranted only if there is an element of a cognizable criminal offense, such as fraud, forgery, or cheating. For instance, if a builder took your money for a non-existent project, you could file a complaint for cheating under Section 316 of the Bharatiya Nyaya Sanhita (BNS). However, for documentation errors, the correct forums are the RERA authority and the civil courts.

FAQs people normally have

• What is the main difference between an ‘Agreement to Sell’ and a ‘Sale Deed’?
  

  An ‘Agreement to Sell’ is a promise to transfer property ownership in the future, making it an executory contract. A ‘Sale Deed’ is the actual transfer of ownership, making it an executed contract. An Agreement to Sell precedes the Sale Deed.

  
  
• Why is this distinction crucial for an under-construction property?
  

  For an under-construction property, the asset does not fully exist in its final form. Therefore, ownership cannot be transferred immediately. The ‘Agreement to Sell’ locks in the terms and conditions, and the ‘Sale Deed’ is executed only after the property is ready for possession.

  
  
• Is a registered ‘Agreement to Sell’ legally binding?
  

  Yes, a duly stamped and registered ‘Agreement to Sell’ is a legally valid and enforceable document. It protects the interests of both the buyer and the seller.

  
  
• What if the builder refuses to change the incorrect term ‘Agreement to Sale’?
  

  This is a major red flag. It could indicate incompetence or a deliberate attempt to keep the terms ambiguous. You should not proceed with the transaction without consulting a lawyer and having the document corrected.

  
  

What evidence is required?

To address the issue of an incorrectly drafted agreement, you would need the following evidence:

• The draft or signed agreement in question.
• All email, letter, or message correspondence with the builder regarding the property and the agreement.
• Receipts and bank statements proving the payment of the booking amount or any other installments.
• The project brochure, advertisements, and the RERA registration number of the project.

How long will the investigation take?

Since this is a civil matter, the term “investigation” is not appropriate. The timeline for resolution depends on the path taken:

• Mutual Agreement: If the builder agrees to make corrections, a Deed of Rectification can be prepared and registered within a few weeks.
• RERA Complaint: The resolution of a complaint filed with RERA can take anywhere from a few months to over a year, depending on the complexity of the case and the workload of the authority.
• Civil Suit: A civil lawsuit is the most time-consuming option and can take several years to reach a final verdict.

Advocate Sudhir Rao, Supreme Court of India