India and its metropolitan cities are a booming market for real estate. Everyone with a decent earning capacity wants to invest in an asset which gives surety of high returns. Generally, the most prominent and vital document concerning the property is the sale agreement. Such sale agreement needs to be registered in a specified registered office of the city. Today we will discuss the validity of an unregistered sale agreement and does it count as a valid document without registration.
Meaning of Sale Agreement
A Sale Agreement is a legal document which constitutes the terms and conditions by which sale of the property is made from seller to the buyer. It also contains the details of consideration for which the property is sold. The agreement mentions all the essential terms and a schedule of future payments to be made by the buyer towards the property. It is the most crucial document as it facilitates the entire flow and process of sale and transfer of property.
Section 53A, Transfer of Property Act, 1882
The Transfer Of Property Act, 1882 which extends to the whole of India states in Section 53A, that if a purchaser has paid the part of the consideration and has taken possession of the property as per the terms of the contract, and if such transfer deed or conveyance is not registered, the transferee is debarred from claiming his rights on such property against the purchaser. While this stands true even if the document is not registered, it does come with its stipulations such as
- The contract of consideration exists in writing with the signature of the transferee.
- The contract should be for the transfer of immovable property and also has clarity about the certainty of the terms constituting the transfer.
- The purchaser should have taken the possession and has done something to further the contract on his behalf and is also ready to complete his part of the contract.
If these conditions are met the purchaser even without the registration of the agreement or deed acquires total right on the property, and the seller cannot claim any rights other than the ones expressly mentioned in the agreement.
Section 17 of Registration Act, 1908
Section 17 of the Registration Act, 1908 clearly states that all the documents which contain contracts to transfer any immovable property such as land, buildings, hereditary allowances, fisheries, ferries, lights, right to way for consideration for Section 53A of the Transfer Of Property Act, must be registered. To simplify this, we can say that an unregistered agreement is not valid evidence for the claim on the property.
It also clarifies that the documents which have been executed on or after the commencement of the Registration Act and other related laws such as the Amendment Act, 2001 are to be compulsorily registered.
Effects of Non-Registration as per Section 49 of Registration Act
Section 49 of the Registration Act 1908, deals with the effect and validity of a non-registered document which shall be registered. It states that ‘No document required by section 17 (or by any provision of Property Act, 1882 to be registered shall)
- Affect any immovable property comprised therein
- Confer any power to adopt or
- Be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered.
This means that any agreement to sell or sale deed which is not registered does not have validity and cannot be considered as valid evidence in the court of law affecting any such property. It also does not confer any power over the property or any right. Hence it is of prime importance to register an agreement to sell or sale deed to complete the transaction of sale or transfer of immovable property.
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