Agreement for Sale vs Sale Deed: The 10 Percent Rule Every Buyer Must Know

The most expensive misunderstanding in Indian home buying fits in four words: "we have an agreement." A Bengaluru buyer hands over 15 percent of a flat's price on a booking form and a promise, believing they have bought something. Legally, they may have bought almost nothing. The difference between an agreement for sale and a sale deed, and the protections the Real Estate (Regulation and Development) Act, 2016 wraps around the first of them, decides what you actually own at every stage of a property transaction. It is also where Section 13 of RERA draws one of the brightest lines in the law: no promoter may accept more than 10 percent of the cost of a flat without first executing a registered agreement for sale.

The short answer. An agreement for sale is a registered contract in which the promoter promises to sell and you promise to buy, on stated terms, by a stated date; ownership has not yet transferred. A sale deed (conveyance) is the document that actually transfers title to you, typically at possession and full payment. Under Section 13 of RERA, a promoter cannot take more than 10 percent of the property's cost as advance or application fee before entering into a written, registered agreement for sale. The trade-off buyers must respect: registration of the agreement costs time and stamp charges upfront, and many builders informally push larger "booking amounts" to skip it. Paying beyond 10 percent without the registered agreement is not a convenience; it is surrendering your statutory protection exactly when you have the least leverage.

What does each document actually do?

The agreement for sale is the rulebook of your purchase. It fixes the price, the carpet area, the payment schedule, the possession date, the penalties for delay on both sides, and the project specifications the promoter is bound to deliver. As legal explainers such as Redlaw's guide to booking and agreement under RERA set out, RERA requires this agreement to be registered under the Registration Act, 1908, which is what gives it evidentiary force. The sale deed comes later and does the single thing the agreement cannot: it conveys ownership. Until the deed is registered, the flat is not yours, however much you have paid. Between the two documents stretches the entire construction period, which is why the agreement's quality, not the deed's, determines how protected you are for the years that matter most.

What exactly does Section 13 of RERA require?

Two things, in strict sequence. First, the 10 percent cap: a promoter may not accept more than 10 percent of the cost of the apartment, plot, or building as an advance payment or application fee from a buyer without first entering into a written agreement for sale. Second, registration: that agreement must be registered under the applicable registration law. The sequence is the point. The law forces the moment of contractual commitment, with all terms disclosed and recorded, to arrive before your money crosses the 10 percent line. Everything the promoter promised verbally in the sales gallery must be reduced to a registered document while you still hold 90 percent of the price as leverage. A promoter who asks for 20 percent on booking "to confirm the unit" before any registered agreement is asking you to finance the project illegally and unprotected.

Why does the 10 percent cap exist at all?

Because the pre-RERA market financed itself on buyers' unsecured money. Builders collected 20, 30, sometimes 40 percent against allotment letters and booking forms that committed the builder to almost nothing: no fixed possession date, no penalty for delay, no recorded specifications. When projects stalled, buyers discovered their receipts were not contracts and their contracts, where they existed, were unregistered and one-sided. Section 13 rebalanced the opening move of the transaction. By capping pre-agreement collections at 10 percent and forcing registration, the law ensures the promoter's obligations crystallise early, in a document a regulator and a court can enforce. The cap is not a technicality; it is the difference between being a protected counterparty and being an involuntary, unsecured lender to a construction company. In practice, market workarounds persist: some builders split the demand into a "booking amount" plus parallel charges for amenities, club membership, or preferential location, hoping the pieces individually slip under the buyer's attention. The test to apply is total money out of your pocket against the registered agreement's existence. If the sum of everything demanded before registration exceeds 10 percent of the all-in price, the structure violates the spirit and usually the letter of Section 13, whatever labels the receipts carry.

What should you scrutinise inside the agreement for sale?

The possession date and the delay clause first, because timeline risk is the dominant risk in under-construction purchases; the date should be specific, and the penalty for the promoter's delay should mirror, not be a fraction of, the interest charged for your payment delays. The carpet area next, stated per RERA's definition, with the adjustment mechanism for variations. Then the payment schedule: it should be construction-linked, tying your instalments to verifiable building milestones rather than calendar dates, so your money follows progress. The specifications schedule deserves a slow read, since "premium fittings" in a brochure becomes enforceable only when itemised here. Finally, the exit clauses: what you forfeit if you withdraw, and what you receive if the promoter defaults, including the refund-with-interest route RERA provides. A one-sided draft is negotiable more often than buyers assume, and the registered agreement is the only version of events that will ever matter.

How does the endgame work, from agreement to deed?

Through the construction years, you pay instalments against milestones, and the registered agreement governs every dispute. At completion, the promoter obtains the occupancy certificate, you pay the final instalment, and the sale deed is executed and registered, transferring title, with stamp duty and registration charges payable on the transaction per Karnataka's prevailing rates. Two cautions at this stage. Do not let the deed's contents drift from the agreement's promises; the schedule of property, the car park, and the common-area rights should match what you contracted for. And do not accept possession or keys as a substitute for the registered deed, because in Indian law it is registration, not occupation, that makes the flat yours. The agreement protected you while the building rose; only the deed ends the journey. Keep the entire paper trail together afterward: the registered agreement, every payment receipt, the occupancy certificate copy, and the registered deed form a single file that your bank, your khata application, and your eventual resale buyer will each want to see in full, and assembling it years later is far harder than maintaining it now.

Your seven point agreement and deed checklist

1. Pay no more than 10 percent of the price before a registered agreement for sale exists.
2. Verify the agreement is actually registered, not merely signed or notarised.
3. Check the possession date is specific and the delay penalty is symmetrical with yours.
4. Confirm the carpet area, payment milestones, and specifications are itemised in schedules.
5. Have a lawyer mark every one-sided clause and negotiate before signing, not after.
6. At completion, insist on the occupancy certificate before the final payment and deed.
7. Match the sale deed's schedules to the agreement, and register it without delay.

What is the bottom line for Bengaluru buyers?

The sequence written into Section 13 is a gift most buyers never unwrap: the law has arranged for your maximum leverage, 90 percent of the money still in your hands, to coincide with the negotiation of the document that will govern years of construction. Builders who respect the sequence are signalling compliance habits that tend to extend to escrow, RERA filings, and delivery. Builders who pressure you past 10 percent on a booking form are telling you, at the cheapest possible moment, how they treat the law when it is inconvenient. Listen to that signal. In a market as competitive as Bengaluru's, there is always another project whose paperwork arrives in the order the statute demands.

What is the maximum booking amount a builder can take under RERA?

Under Section 13 of the Real Estate (Regulation and Development) Act, 2016, a promoter cannot accept more than 10 percent of the cost of the apartment, plot, or building as advance payment or application fee without first entering into a written agreement for sale with the buyer, and that agreement must be registered. Any demand beyond 10 percent before registration violates the Act.

Is an agreement for sale the same as owning the property?

No. The agreement for sale gives you enforceable contractual rights: a price, a possession date, penalties, and specifications the promoter must honour. Ownership transfers only through the sale deed, executed and registered at completion on full payment. Between the two documents you are a protected buyer, not an owner, which is why the agreement's terms deserve more scrutiny than buyers usually give them.

Does the agreement for sale need to be registered?

Yes. RERA requires the agreement for sale to be registered under the applicable registration law, the Registration Act, 1908. Registration is what gives the document evidentiary force and makes its terms enforceable as recorded. A signed or notarised but unregistered agreement does not satisfy Section 13, and paying beyond 10 percent against such a document surrenders the protection the law built for you.

What should I check before signing the sale deed at possession?

Match it to the agreement: the property schedule, carpet area, car parking, and common-area rights should be exactly what you contracted for. Insist the occupancy certificate exists before final payment. Confirm the title chain and that all dues are settled. Then register the deed promptly, because registration, not the key handover, is what legally makes the flat yours.

Last updated 2026-06-11. PropNewz Team.