A landlord and tenant enter into an agreement to sell the property. The sale does not go through — either because the tenant failed to pay on time, or because the landlord backed out. The landlord then files an eviction suit. The question: when the parties executed the agreement to sell, did the tenancy automatically come to an end? Or does the tenant continue to have the rights of a tenant until the sale deed is actually executed?

The Hon'ble Supreme Court has addressed this with a nuanced answer: it depends on the terms of the agreement and the unequivocal conduct of the parties.

What the Court Held — The Guiding Principles

The Court laid down key principles for this situation:

Why This Question Arises

This situation arises most commonly when a tenant and landlord agree to a sale, the tenant pays an advance, but the transaction does not conclude — and then a dispute arises about whether the tenant can be evicted. If the tenancy survives, the landlord must follow the rent control eviction procedure. If it ended, ordinary civil remedies apply. The stakes are significant.

Practical Guidance on Drafting

If a landlord and tenant are entering into an agreement to sell the rented property, the agreement must expressly address whether the tenancy continues or terminates on execution of the agreement. Leaving this unstated creates uncertainty and litigation.

Practical Guidance

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For tenants who have signed an agreement to sell with their landlord but the sale hasn't gone through — if the agreement does not expressly terminate the tenancy, argue that your tenancy rights continue. The landlord cannot evict you through a simple possession suit; they must follow rent control law.

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For landlords who have entered into an agreement to sell with their tenant — if you want the tenancy to end on execution of the agreement, say so expressly in the agreement. Courts will not imply a termination of tenancy from a mere agreement to sell.

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Payment of rent after the agreement to sell is a strong indicator that the tenancy continues — even if the tenant is also a prospective buyer. Such payment should be documented by both parties.

Case Reference
Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh and Others | Hon'ble Justice Prashant Kumar Mishra & Hon'ble Justice N.V. Anjaria | August 13, 2026 | Hon'ble Supreme Court of India

Frequently Asked Questions

Questions people commonly search on this topic

Does an agreement to sell end a tenancy in India? +
Not automatically. The Supreme Court has held that a mere agreement to sell between a landlord and tenant does not ipso facto terminate the tenancy. Whether the tenancy ends depends on the express terms of the agreement and the unequivocal conduct of the parties.
Can a landlord evict a tenant who has signed an agreement to sell? +
If the tenancy still subsists — because the agreement did not expressly terminate it and the parties' conduct does not show termination — the landlord must follow the applicable rent control eviction procedure, not a simple possession suit.
What happens to tenancy rights when a tenant buys the property? +
The tenancy merges into ownership only when the sale deed is registered and title transfers to the tenant-buyer. Until then, unless the agreement to sell specifically provides otherwise or the parties' conduct is unequivocal, the tenancy continues.
How should a landlord-tenant agreement to sell be drafted? +
The agreement to sell should expressly state whether the tenancy continues or terminates on execution. If the parties intend the tenancy to end, this must be stated clearly. It should also address what happens if the sale does not complete — whether the tenant reverts to their original tenancy status.