Does an Agreement to Sell Automatically End a Tenancy?

The Supreme Court has clarified that an agreement to sell and tenancy do not automatically merge into a single legal relationship. In Nazim Shaikh Hasan v. Nasir Mushtaq Shaikh & Ors., decided on 13 August 2026, the Court held that merely executing an agreement to sell between a landlord and tenant neither terminates the existing lease nor transfers ownership. Whether the tenancy has been surrendered depends on the agreement’s terms and the parties’ unequivocal conduct.

Four principles clarified by the Court

The Supreme Court identified four important propositions:

An agreement to sell does not, by itself, terminate an existing tenancy.
The lease ends only when the agreement or conduct establishes express or implied surrender under Section 111(e) or 111(f) of the Transfer of Property Act, 1882.
A tenant’s continued possession does not automatically become possession in part performance under Section 53A.
An agreement to sell is not a registered conveyance and does not independently transfer title or an interest in the property.

In this case, the tenant’s possession continued to be attributable to the tenancy. The post-2001 agreement was also unregistered and could not protect possession under Section 53A. Payment of additional stamp duty would not cure the absence of registration for that purpose. Read the judgment: 2026 INSC 853.

Practical implications for landlords and tenants

A property agreement should expressly state whether the tenancy is being surrendered, when rent stops, how possession will be treated and what happens if the sale is not completed. Paying part of the price does not make the tenant the property owner, while executing an agreement to sell does not always preserve the tenancy either—the complete document and surrounding conduct remain decisive.

S&S Law Associates advises on tenancy disputes, agreements to sell, specific performance, possession proceedings and property documentation.