Agreement to Sell Land and Agreement to Build: How Bangalore Under-Construction Flats Are Papered

Pay a booking amount on a flat that is yet to rise in Bangalore and the next thing handed over may be two contracts. One deals with a portion of the plot and the other with the construction of the home. This article follows the purchase from booking to registered deed, covering RERA, GST, stamp duty, bank finance and the questions to put to a lawyer.

Step One: Understanding What Is Being Bought

An apartment buyer ends up holding two things. One is the home, and the other is a UDS, the undivided share of the plot beneath the entire project. Early on, the plot is all that exists, which is why the seller promises the plot share in one place and the home in another.

Joint development explains why this is so common in the city. One party brings the site, another brings the building skills, and each contract is signed by the party who controls what is promised.

Step Two: The Agreement to Sell the Plot Share

This contract is about the ground and nothing above it. It maps the full project plot in a schedule, then states the buyer's portion as an area and as a percentage, together with the price and the names of the plot owners. The buyer becomes owner only when the deed of sale is registered.

Protect the UDS figure above all. If a project is redeveloped, or part of the land is acquired, this share sets what the owner is entitled to. It should equal what the project documents show for that flat.

Step Three: The Agreement to Build

The building contract identifies the flat by number, tower and floor and lays out how it will be delivered. It is the paper a buyer consults most, because it fixes the content and the schedule of the purchase. A loosely written one cannot be rescued by a well-written land agreement.

Look for these items in it.

• Carpet area and the approved plan for the flat
• A specification schedule listing structure, flooring, joinery, kitchen and bathroom fittings
• Instalments tied to progress on site
• The handover date
• Interest owed by whichever party defaults on time
• Parking, amenities and the portion of common areas

Each contract must carry the buyer's name and the same flat, and the prices must total the booking price. A clause that treats a breach of one as a breach of the other stops the deal from coming apart.

Step Four: Checking Against RERA

The 2016 RERA statute contemplates a single agreement for sale. Section 13 stops a promoter taking advance money beyond 10% of the price before that agreement is signed and registered. A Karnataka model agreement dates from 2020, and a good many Bangalore developers now use one combined contract.

If a registered project continues to issue two papers, the buyer's statutory protection still spans everything. That covers carpet area, price, handover timing, interest on late delivery and five years of liability for structural defects. A clause that runs against the statute cannot override it.

The simplest approach is to read the pair as if it were a single agreement for sale. If handover timing or interest on delay shows up in neither, ask for it in writing before the next payment.

Step Five: Paying the Taxes

Each charge arrives at a separate moment. GST is added to the construction instalments as they fall due, whereas stamp duty and registration come at the time of the sale deed. After the occupancy certificate is issued, a flat carries no GST at all.

GST runs at 5% for a regular flat and 1% in the affordable category, and a third of the price counts as land inside those rates. The levy follows the joint value of both contracts, so shifting money from one to the other changes nothing.

Karnataka duty on property worth over Rs. 45 Lakhs is 5%, or 5.6% once cess and surcharge are added, and registration costs 2%. The deed at completion transfers the flat and its land share together, so duty applies to the total value, the greater of price and guidance value.

Consider a flat that costs Rs. 75 Lakhs altogether.

• GST at 5% comes to Rs. 3.75 Lakhs, added into the instalments.
• Duty at 5.6% comes to Rs. 4.2 Lakhs, paid with the deed.
• Registration at 2% comes to Rs. 1.5 Lakhs, paid at that time too.

In 2025 the Karnataka High Court decided that duty follows the wording of the deed, so a deed passing just an undivided share is charged on that share alone. Understating the price remains unsafe, since a low figure causes tax and title disputes down the line. Try a loan on the EMI calculator.

Step Six: Arranging the Loan

A lender asks for both contracts because the loan pays for the plot share and the building together. Frequently the bank also enters a three-party agreement with buyer and developer, under which it releases money in tranches as work advances and receives the title papers.

Make sure the instalments in the building contract mirror the tranches in the sanction letter. A mismatch forces the buyer to cover a stage from savings until the bank reaches its own milestone. The three-party agreement is laid over the two contracts and substitutes for neither.

Step Seven: The Registered Deed

Ownership passes through a registered conveyance deed that section 17 requires the promoter to execute, usually once the occupancy certificate exists. The flat and its land share should both be covered. Until then, both contracts are only promises.

Before registration, compare its UDS, carpet area, parking space and flat number with the two earlier papers. Fixing a mistake later means a rectification deed, which takes time and money.

Questions for the Lawyer

With two documents involved, the review has to cover both together. A property lawyer should receive the drafts before anything is signed and respond to the following.

• Is the UDS identical to the share listed for the flat in the project filings?
• Did the landowner sign, or has the developer been given a registered power to sign?
• Do both contracts point to one flat, one tower, one floor and one parking bay?
• Do the prices in the two contracts total the cost sheet figure?
• Are possession date and delay interest part of the text?
• Does the specification run to a detailed schedule?
• Will the agreement be registered before payments cross 10% of the cost?
• Do the default and cancellation terms treat both as a single transaction?

A builder who offers one combined agreement makes the review easier. The older two-paper route is still valid when neither document is incomplete or at odds with the other. For draft agreements on a specific project, write to us on the contact page.