Selling a flat with a tenant in it: the sale deed does not end the tenancy

• 1882Transfer of Property ActSection 109 — tenancy survives the sale
• 5 yrsOwnership neededbefore an NRI can use Section 13-B
• OncePer lifetimethe NRI fast-track may be used
• 1%TDS on salebuyer deducts above ₹50 lakh

This is the call Hoomzz gets most often from owners in Sector 70 Mohali, Dhakoli and Panchkula Sector 20: “I have a buyer, but my tenant is still in the flat. Can I just sell and let the buyer deal with him?” You can. It is legal, it happens every week, and it is usually the most expensive way to sell a flat in the Tricity. Here is what actually happens, in the order it happens.

The sale deed transfers ownership. It does not transfer possession.

Section 109 of the Transfer of Property Act, 1882 says that when a lessor transfers the leased property, the transferee gets all the rights of the lessor — unless the contract says otherwise. Read that the other way round and you have the whole problem: the tenant’s rights survive too. The lease is attached to the property, not to you.

So on the day of registration at the Sub-Registrar’s office, three things move to the buyer at once: the title, the right to collect rent from that date, and the tenant. What does not move is physical possession. Lawyers call what the buyer receives symbolic possession — ownership on paper, with somebody else’s furniture inside.

Most disputes Hoomzz hears about start here, and almost all of them are avoidable. A buyer who is told about the tenant in the agreement to sell is buying a rented asset with open eyes. A buyer who discovers the tenant on handover day believes he has been cheated, and behaves accordingly.

Which rent law your flat sits under

The Tricity runs on two separate rent statutes, and which side of the boundary your flat is on changes how hard it is to get the tenant out. Chandigarh has been under the East Punjab Urban Rent Restriction Act, 1949 since 4 November 1972; the same Act governs urban areas in Punjab, which covers Mohali, Kharar, Mullanpur and Zirakpur. Panchkula sits in Haryana and runs on the Haryana Urban (Control of Rent and Eviction) Act, 1973.

Under Section 13 of the 1949 Act the grounds are exhaustive: arrears of rent, subletting, material alteration that affects the value or utility of the premises, nuisance, the tenant ceasing to occupy, and the landlord’s personal necessity. “I have sold the flat and the buyer wants it empty” is not on that list. That is the sentence most owners find out too late.

The two fast-tracks, and who actually qualifies

The 1949 Act carries two summary routes that bypass the ordinary grind. Section 13-A is for a “specified landlord” — broadly, a retired government employee — and a purchaser who buys by registered sale deed steps into the seller’s shoes for the purpose of that application. Section 13-B is the NRI route: an owner who is a non-resident Indian may recover the premises for personal use or for a dependent, but only if he has owned the building for five years before applying, and only once in his lifetime. The Supreme Court set out these conditions in Baldev Singh Bajwa v. Monish Saini.

Neither route is a general-purpose eviction button, and neither is available to a buyer simply because he wants the flat he just paid for. Take advice on whether you or your buyer qualify before either of you prices the deal on the assumption that you do.

What the tenant does to your buyer’s home loan

This is the part that kills deals quietly. A home loan is secured on a property the lender expects to be able to take and sell if the borrower defaults. A sitting tenant with statutory protection makes that harder, so lenders respond in predictable ways: a lower valuation, a demand for vacant possession before disbursal, or a flat refusal on a self-occupation loan. Some will fund it as a loan against property instead, at a higher rate.

The knock-on effect is on your buyer pool, and it is severe. End-users buying with a loan are the majority of Tricity buyers, and a tenanted flat pushes most of them out of the running. What is left is cash investors, who buy on yield and negotiate accordingly.

The three routes, and what each one costs

1. Get vacant possession, then listCleanest and usually the most profitable. Serve proper notice, honour the notice period in the agreement, return the deposit in full and on time. Cost: one to three months of empty flat and no rent. Benefit: the whole buyer pool, loans included.
2. Buy the tenant outOffer to fund the move — brokerage on his new place, the shifting cost, one month of overlap. In the Tricity this is commonly settled around a month or two of rent. Put it in writing as a surrender of tenancy, signed, with the deposit settled in the same document.
3. Sell it tenanted to an investorLegitimate and fast if the tenancy is clean. Disclose the tenant in the agreement to sell, assign the rent from the date of registration, transfer the security deposit to the buyer in the settlement, and get an attornment letter signed by the tenant acknowledging the new landlord. Expect a discount on the end-user price.

Whichever route you take, work off the real market rate for your sector rather than the number a broker quotes you over the phone. Hoomzz lists physically verified rentals and resale properties across Chandigarh, Mohali, Panchkula, Zirakpur and Kharar, and owners can list a property directly on Hoomzz with no brokerage. If the flat is going to sit empty for a month while you sell it, a short registered tenancy at the current rate is usually better than an empty flat — provided you have read the paragraphs above first. Tricity owners increasingly cross-check asking rents against local real estate pages and creator accounts on Instagram before they commit to a number, which is a reasonable sanity check as long as you treat it as indicative rather than verified.

The paperwork that prevents the dispute

1. Disclose in the agreement to sellName the tenant, the rent, the deposit held and the agreement end date. Silence here is what turns a discount into a lawsuit.
2. Assign the rent from the registration dateState plainly that rent up to registration belongs to the seller and rent after it belongs to the buyer. Pro-rate the running month.
3. Transfer the security depositEither hand it to the buyer at registration and record it, or adjust it in the sale consideration. Do not leave it with the seller — the tenant will claim it from whoever owns the flat.
4. Get an attornment letterA short signed acknowledgement from the tenant that he now holds under the buyer. It is not a legal requirement, but it removes the “I never accepted him as my landlord” argument.
5. Deduct the TDS correctlyOn a sale above ₹50 lakh the buyer deducts 1% under Section 194-IA and files Form 26QB. This is the buyer’s duty, but the seller is the one whose credit goes missing if it is skipped.

Two related pieces worth reading before you price anything: Mohali collector rates and the stamp duty position for 2026, because the circle rate sets the floor for your registration cost, and what the 41% stamp duty rise against a 39% fall in registrations actually means, which is the market you are selling into. If your buyer is waiting on a delayed project rather than a resale, what a Punjab RERA possession order is really worth is the honest version.

Frequently asked questions

Can I sell my flat in Chandigarh or Mohali if a tenant is living in it?

Yes. There is no legal bar on selling a tenanted flat anywhere in the Tricity, and you do not need the tenant’s consent to register the sale deed. What you cannot do is deliver vacant possession you do not have. The tenancy continues against the buyer under Section 109 of the Transfer of Property Act, 1882.

Does the tenant have a right to buy the flat first?

Not under the East Punjab Urban Rent Restriction Act, 1949 or the Haryana Act of 1973 — neither gives a residential tenant a statutory right of first refusal. A right of first refusal only exists if your own rent agreement created one, which is rare in Tricity agreements. Check the clause list in your agreement before you assume either way.

Will a bank give my buyer a home loan on a tenanted flat?

Often not at the full amount, and several lenders will decline a self-occupation home loan outright until vacant possession is available. The usual outcomes are a reduced valuation, a condition that possession is handed over before disbursal, or a switch to a loan against property at a higher rate. Ask the buyer to get his lender’s position in writing early, because this is the commonest reason a tenanted sale collapses late.

Who keeps the security deposit when the flat is sold?

Whoever ends up as landlord is the one the tenant will ask, so the deposit should move to the buyer at registration and be recorded in writing. The practical options are handing it over at the Sub-Registrar’s office against a receipt, or adjusting it inside the sale consideration. Leaving it undocumented is the single most common cause of a deposit dispute after a tenanted sale.

How much less does a tenanted flat sell for in the Tricity?

There is no published index for this and anyone quoting you an exact percentage is guessing. What can be said honestly is that a tenanted flat loses access to loan-funded end-user buyers and is left with cash investors who price on rental yield, and that shows up as a lower agreed price and a longer time on the market. Get a valuation both ways — tenanted and vacant — before you decide which route to take.

Can the new owner evict the tenant after buying?

Only on the grounds the statute allows. Under Section 13 of the 1949 Act those are arrears, subletting, material alteration, nuisance, the tenant ceasing to occupy, and the landlord’s personal necessity, and a purchase does not by itself create any of them. The summary routes under Section 13-A and Section 13-B are narrow: the NRI route needs five years of ownership and can be used once in a lifetime.

Sources, and what here is judgement rather than data

Checked facts. Section 109 of the Transfer of Property Act, 1882 and the position that the transferee takes the lessor’s rights; the grounds of eviction under Section 13 of the East Punjab Urban Rent Restriction Act, 1949 and its extension to Chandigarh from 4 November 1972; the Section 13-B conditions for NRI landlords, including five years of ownership and one use in a lifetime.

• Indian Kanoon, Section 109 of the Transfer of Property Act, 1882 — rights of the lessor’s transferee
• Indian Kanoon, Section 13, East Punjab Urban Rent Restriction Act, 1949 — the grounds for eviction
• LiveLaw, on the 1949 Act’s application to Chandigarh and the exhaustive nature of the Section 13 grounds
• Baldev Singh Bajwa v. Monish Saini — the Supreme Court on Section 13-B conditions for NRI landlords

Judgement, not data. The buy-out figure of one to two months’ rent is what Hoomzz sees settle in the Tricity, not a published benchmark. The claim that a tenanted flat sells at a discount is an inference from how lenders treat symbolic possession, not a measured number, and we have deliberately not attached a percentage to it. Lender behaviour varies by bank and by branch, so treat the loan paragraph as the common case rather than a rule.

Not legal advice. Hoomzz is a property marketplace and does not provide legal representation. Rent-control positions in this jurisdiction turn on the facts of each tenancy; take advice from an advocate before serving notice or signing a surrender.

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