Selling a property that hasn’t been legally registered is not only complicated, it’s risky. Yet, despite the legal and financial dangers, some property owners attempt to offload their unregistered holdings, often driven by financial pressure, delays from developers, or the hope of bypassing taxes and fees. Here's a clear look at what the law says, what people actually do, and what options, if any, exist.
What The Law Says
In India, the sales of immovable property are regulated by two main statutes, i.e, the Transfer of Property Act, 1882, and the Registration Act, 1908.
Whenever the sale involves tangible immovable property valued at over Rs 100, it falls under Section 54. In other words, it doesn’t belong to you (legally speaking, since you haven’t registered it in your name), so you can’t dispose of it for real use by someone else.
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This is reconfirmed by the Registration Act, 1908. Section 17 of the Act provides that if an immovable property is involved then the transaction shall be documented and is required to be registered with the local sub-registrar of the area within whose limits that property is situated if the value of the said property is more than Rs 100 which, in today’s time can barely fetch one any property.
The consequence of such a failure must be that the transaction is unenforceable at law, with the result that both sides would be exposed to the risk of disputes, fraud, or loss of rights.
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How Sales Happen Without Registration
Despite legal constraints, some sellers try to transfer unregistered properties using workaround methods, particularly in the case of under-construction or builder-held properties.
Here’s a common scenario: the original buyer has booked a flat in an ongoing project, but registration hasn't happened yet because construction isn’t complete. In such cases, the original allottee may strike a tripartite agreement with the builder and a new buyer.
If the builder consents, a revised buyer-builder agreement is drafted, usually after charging a transfer or processing fee. The original allottee essentially exits the deal, and the new buyer steps in. But here’s the catch: the outgoing party has no legal ownership, and its rights are weak. Builders are under no legal obligation to honour the deal and may bypass the seller entirely.
