From Token Money to Registered Deed: When a Buyer Becomes the Owner in Bangalore

Buying property in Bangalore means moving through several documents, and two of them are mixed up more than any others. Signing an agreement commits both sides, but only a registered deed hands over the property. The sections that follow go in order, from the first token payment to registration, then cover costs and the options when a deal collapses.

Beginning With a Token

Many resale deals start with token money. Insist on a short receipt in return, with the property, the price, an agreement date and the day the token is refunded if the deal lapses. A full agreement should follow soon.

After signing, that agreement controls the advance on default. As a rule the seller can retain the advance when a buyer quits without good reason, but has to return it, plus an added sum, if the seller quits or the title fails. Ask for repayment to be written in if the title check fails or the loan is declined.

The Agreement Itself

Whether called a sale agreement, an agreement to sell or, for new flats, an agreement for sale, it puts the bargain in writing. It names the parties and the property and gives the price with each payment date. It also sets a time limit for the deed, lists the papers and clearances the seller promises and states the outcome if either side withdraws.

Legally it is limited. Section 54 of the 1882 property-transfer statute treats a sale contract as creating no interest in the land or building. The buyer therefore holds a personal claim for completion, and the seller keeps title. Still, banks require it before sanctioning a loan, it holds the price during the title check, and a court can enforce it.

When the Keys Come Early

Some agreements give possession to the buyer in advance. Karnataka then charges conveyance-rate duty on the agreement, to be credited at the deed, and the agreement ought to be registered to protect that possession.

That shelter derives from section 53A. Where possession is held under an agreement that is written and registered, and the buyer is ready to perform, the seller's moves to evict can be resisted. Occupation is all it covers, and the buyer cannot sell, mortgage or leave the property by will.

Flats Under RERA

In a Karnataka RERA project, a promoter's collections before a registered written agreement for sale cannot exceed 10% of the price (section 13). Karnataka's own RERA rules supply the form, requiring carpet area, instalments and handover date.

The promoter has to register the conveyance within three months of the occupancy certificate, section 17 says, unless local law differs. Someone purchasing a new flat in Bangalore might hold nothing but an agreement for years, with RERA doing most of the protecting.

The Deed and the Moment of Ownership

Property of Rs. 100 or more in value can be sold only by registered instrument, and the Registration Act of 1908 (section 17) says so too. An unregistered deed conveys nothing. The deed confirms that the entire price was received and transfers the property with clear title, with survey or khata number, dimensions and boundaries in its schedule.

Ownership dates from registration, whatever else has happened. Title is not conveyed by an agreement, a power of attorney or a will, taken singly or in any combination, ruled the Supreme Court in Suraj Lamp in 2011. Even 80% or 90% of the price, paid against an agreement, leaves the buyer with a claim only, not the property.

The practical advice is to keep the interval brief, link payments to milestones and pay the biggest sum on registration day. After registration, the khata transfer, tax records, loans and later resale all build on the deed.

Costs at Registration

Registration costs 2%, and Karnataka stamp duty is 5% above Rs. 45 Lakhs, or 5.6% counting cess and surcharge. A flat priced at Rs. 70 Lakhs bears Rs. 3.92 Lakhs of duty and Rs. 1.4 Lakhs of fees, making Rs. 5.32 Lakhs.

Whichever is higher, price or guidance value, forms the base. Banks do not fund these amounts, so the cash must be ready. Use the EMI calculator to see upfront cash together with instalments.

Options if the Seller Walks Away

A suit for specific performance seeks a court direction that the seller execute and register the deed. After the Specific Relief (Amendment) Act, 2018 it is the normal relief, subject to exceptions in the Act. Alternatively the advance can be recovered with damages. A registered agreement also appears in the encumbrance certificate, so other parties are put on notice.

Three points weigh with a court.

• The agreement was written and carried the right stamp.
• The buyer paid punctually and can pay the balance.
• Court action was started inside three years from the agreed completion date.

Checks to Carry Through

Seven habits protect a purchase.

• Check the title, or let the agreement depend on it, before any big advance.
• Get the price, payment dates, deed deadline and default terms recorded in writing.
• List every future owner as a buyer.
• Pay through the bank and keep every receipt.
• See that the deed's schedule agrees with the e-khata, the agreement and the seller's title deed.
• Leave registration holding the original title papers, the newest tax receipts and the letter of possession.
• Apply to change the khata once the deed is back.

A lawyer's fee for reading both drafts is small next to the sums at stake. For help with documents on a project we handle, write through the contact page.