Agreement to Sell Is Not a Conveyance: No Right in Property Without Suit for Specific Performance, Rules Supreme Court
In a landmark ruling, the Supreme Court of India has once again made it clear that an "Agreement to Sell" cannot be equated with an actual transfer of ownership or conveyance of property. Unless such an agreement is backed by a decree of specific performance, it does not give any legal title or enforceable ownership rights to the buyer.
Case
The case involved a property dispute where one of the parties relied on an unregistered agreement to sell as proof of ownership. The matter reached the Supreme Court after lower courts offered conflicting interpretations regarding the legal validity of such agreements.
The apex court was asked to decide:
Can a simple "agreement to sell" grant ownership rights in property without the buyer having first filed and won a suit for specific performance?
Supreme Court’s Ruling
The Supreme Court answered with clarity:
“An agreement to sell is not a conveyance. It does not, by itself, transfer any title in the property.”
Here’s what the Court emphasized:
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Ownership Comes Only Through Conveyance
A buyer gets ownership only when a registered sale deed (or other conveyance document) is executed and registered under the law—not just by signing a sale agreement. -
Suit for Specific Performance Is Mandatory
If the seller fails to execute the sale deed, the buyer’s only legal remedy is to file a suit for specific performance under the Specific Relief Act, 1963. Only upon succeeding in such a suit can the buyer enforce the agreement and seek actual transfer. -
Possession Alone Is Not Ownership
Even if a buyer is in possession of the property under the agreement to sell, that does not amount to ownership. Without proper documentation, such possession can be challenged.
Why This Ruling Matters
This judgment is a strong reminder to both buyers and sellers in real estate:
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For Buyers: Merely signing a sale agreement does not make you the legal owner. You must ensure that a proper sale deed is registered, or seek court enforcement if the seller backs out.
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For Sellers: You cannot be forced to transfer ownership unless the buyer obtains a decree for specific performance. But once that happens, you are legally bound.
Legal
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Section 54 of the Transfer of Property Act clearly states:
“A contract for sale does not, of itself, create any interest in or charge on such property.”
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An agreement to sell is a promise to transfer, not the transfer itself.
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Without registration and execution of a sale deed, no right, title, or interest is created in favor of the buyer.
Impact of the Judgment
This ruling is particularly significant in India, where many people buy property on the basis of unregistered sale agreements or general power of attorney (GPA)—especially in informal or rural transactions.
The Court has reiterated that legal formalities must be followed for a sale to be valid. Informal or undocumented transactions will not stand the test of law unless followed by legal action and court orders.
Conclusion
The Supreme Court’s ruling serves as a clear and timely caution to all stakeholders in property transactions:
If you want to own property, ensure it is legally conveyed—not just promised.
To protect your interests, always:
- Register the sale deed
- Avoid cash-only or undocumented deals
- Consult legal professionals
- Take timely action through courts if needed
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