Unregistered Sale Agreement and its validity

Meaning of Unregistered Sale Agreement 

All of the terms and conditions of the sale of a piece of property—movable or immovable—to the buyer are contained in a sale agreement. An agreement for the transfer of immovable property rights with a value greater than Rs. 100 must be registered under the Indian Registration Act, 1908. According to Section 54 of the Transfer of Property Act, 1882, a sale is defined as a transfer of ownership for a fee. A registered instrument must be used to transfer any immovable property with a value greater than one hundred rupees.

Section 54 only requires the sale deed, or the document that assisted in the sale of the property, to be registered. It does not require the registration of the agreement to sell the property (ATS). Without the delivery of the property, an unregistered sale deed will not be sufficient. This is because the document needs to be registered. Thus, despite being legitimate under the Registration Act, an unregistered sale deed cannot grant the buyer the title under Section 54.

Validity of the Unregistered Sale Agreement

Unregistered Sale Agreements are legally binding, and any unpaid stamp fees may be paid by court order. Such a contract will be enforceable for three years following the date of execution. If the contract contains a negative provision. Such as, a requirement that the buyer register the property within three months, the restriction period will be extended by that amount of time. The party shall comply with any anti-party provision in the contract which may be to his best advantage.

Such as the following:

  • Even when the agreement has been cancelled due to a change in the period of time required to cancel the agreement legitimately, a revocation notice must be issued in an unregistered sale deed.
  • Depending on the terms of the agreement, it may be advisable to return the advance paid.

It is essential that the document be registered if it is signed solely for the purpose of transferring property. In this instance, it is not clear what the person receiving the property will rely on. Whether the handover of possession or on the unregistered instrument. Prior to the completion of the oral, unregistered agreement to sell and the transfer of possession, the buyer may have a claim on the title. The registered sale deed can be a surplus, and the transfer of possession will be sufficient to confer the title, as it is regarded to be a part of the selling transaction.

Requirements to be satisfied for a Sale Agreement

Before property is delivered, the requirements outlined in Section 54 must be satisfied. These are:

  • The sale deed must be registered when an immovable property with a value of Rs. 100 or more is sold.
  • A registered deed or the delivery of property may be used if the value is less than Rs. 100 because the goal is to publicize the relevant transaction.

It is not sufficient to consider a transaction invalid just because there was no proof of an oral agreement. Which supported the transfer of ownership before the conclusion of the unregistered sale deed in which the property is given. The transaction is said to be complete if both the oral sale and the delivery of possession are present.

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