What is agreement to sell?
Also called: ATS, agreement for sale, bayana agreement, ikrarnama
A signed promise by the seller to transfer the property on a later date, once conditions such as full payment are met. It fixes the price and timeline, but the buyer doesn't become the owner until the sale deed is registered.
The whole difference between an agreement to sell and a sale deed sits in one line of Section 54 of the Transfer of Property Act: a contract for sale 'does not, of itself, create any interest in or charge on' the property. The seller remains the owner. What the buyer gets is a right to insist on the sale, enforceable through a suit for specific performance if the seller backs out.
A resale ATS in Delhi or Gurugram typically records the agreed price, the bayana already paid, the date for the balance (often 60 to 90 days, so the buyer can arrange a loan), who bears which costs, and what happens on default. The customary clause makes the seller refund double the bayana if he backs out, while the buyer forfeits it if he fails to pay. Banks want a signed ATS before they sanction a resale loan.
How it's stamped and whether it's registered depends heavily on the state. Maharashtra treats an agreement for sale of a flat almost like a conveyance, which is why Mumbai buyers pay full stamp duty when the agreement is registered and only nominal duty later. In many northern states an ATS goes on modest stamp paper and is notarised. If possession is handed over under the agreement, though, it has to be registered for the buyer to claim protection under Section 53A, the part-performance rule.
Since the Supreme Court's 2011 judgment in Suraj Lamp & Industries v State of Haryana, careful buyers no longer treat an ATS plus a GPA as a completed purchase. The agreement is a promise to sell, and it has to be followed by a registered sale deed within the time it sets.
Rakesh agrees to buy a ₹95 lakh builder floor in Sector 46, Gurugram, pays ₹5 lakh as bayana and signs an ATS giving him 75 days for the balance. If the seller takes a better offer in week six, the usual double-refund clause lets Rakesh claim ₹10 lakh, or he can sue to enforce the sale.
Buyers often accept a vague 'balance at the time of registry' clause with no date. Write in a firm date, a loan-approval condition and the exact refund terms, or the bayana turns into a dispute.
Questions people ask about agreement to sell
Can a seller cancel an agreement to sell?
Only on grounds the agreement allows, such as the buyer missing the payment deadline. Otherwise the buyer can sue for specific performance, and the Limitation Act gives three years from the date fixed for the sale or from when the seller refused.
Does an agreement to sell need stamp duty?
Yes, under the state's Stamp Act. It ranges from a small fixed amount in some states to nearly the full conveyance rate in Maharashtra, or wherever possession is handed over with the agreement.