Dk-28.8.2013 9 results
Agreement for sale is a
very important document. It is a pre-requisite for sale of immovable property.
It records the understanding reached between the parties which is binding on
both. The main ingredients of Agreement for sale are consideration, terms of
sale, handing over possession and rights of both the parties to enforce the
agreement and penalty for not performing the contract. The agreement to sell
also contains the acknowledgement by the seller to the amount which the
purchaser pays as advance.
The provisions of Transfer
of Property Act governs the process of
sale of immovable property. After making preliminary enquiries, the parties sit
and discuss the price and other terms and conditions and thereafter these are
incorporated in the Agreement for sale. It contains clauses which protects the
interest of both the parties specially the purchaser who has parted with
the money.
Many parties tend to
avoid the agreement to sell and directly go for the sale deed but can prove
very risky in the future. Agreement to sell is also required to avail bank
loan. Without the agreement to sell any of the parties may back out from
performing their part of the contract. It may happen that the vendor may tend
to give the property to another purchaser with a better sale consideration even
after the purchaser is ready with the sale consideration and other formalities
as to stamp duty and registration. Similarly even the purchaser may also back
out if he finds out similar property for
lesser value. If the agreement to sell contains any conditions which differ
from the rights and obligations of the seller, purchaser as provided in the T.P
Act then the terms which are agreed in agreement
to sell shall prevail over. If no such conditions are mentioned regarding the
rights and obligation in the agreement then the provisions mentioned in T.P Act
shall operate.
Having
paid the advance amount, (or) earnest money, will the purchaser has any charge
or lien over the property for the amounts paid?
Sec
54 of the T.P Act deals with the sale of immovable property and the purchaser
acquires the title and ownership to the property only if the transfer takes
place in conformity with Sec 54.
Sec
54 of T.P. Act states that “Sale how made
such transfer in the case of tangible immovable property of the value of
one hundred rupees and upwards can be made only by a registered instrument.
Registration is compulsory in regard to a sale deed and the purchaser to
acquire title to the property and the agreement to sell itself does not create
any charge or interest in the property.
In
this kind of situation if the seller refuses to transfer the property under
agreement to sell then the questions which arise for consideration are:
Considering
the first question, Sec 40 of Transfer of Property Act states that “Where a
third person is entitled to the benefit of an obligation arising out of
contract and annexed to the ownership of immovable property but not amounting
to interest therein or easement thereon, such right or obligation may be
enforced against a transferee with notice there of.
FOR
EX; ‘A makes a contract with B whereby he sells a house to B. While the
contract is still in force A sells the same house to C who already has the
notice of the contract. In this case B can enforce the contract against C in
the same way as it was enforceable against A. From this we find that, the
purchaser with notice of a previous contract for sale of the same property is
in the eye of the law is a trustee of the prospective purchaser of previous
agreement of the property purchased.
According to the sec 91 of the Trust Act, the subsequent purchaser’s title with
the knowledge of the previous agreement is dependent upon the obligations
contained in the agreement to sell. Therefore the agreement holder has the
right to proceed against the purchaser of the property who had the knowledge of
the existing contract. Even under the sec 27(b) of the Specific Relief Act, the
purchaser under agreement to sell is enabled to compel the subsequent purchaser
to execute a sale deed in his favor.
The
agreement to sell may be registered in order to get a better hold on the
property to be purchased and a paper notification must be made to the general
public to notify the same.
Sec
53 of the T.P Act is applicable in this regard which provides that when:
1.The
seller has agreed to sell the immovable property for a consideration
2.Such
agreement is in writing and signed by him.
3.Prior
to the execution and registration of sale deed the contract provides the
purchaser with the possession of the property
4.in
part performance of the contract, the seller has put the purchaser in
possession of the property agreed to be sold;
5.the
purchaser in possession under the agreement continues to be in possession in
part performance of the contract; provided the purchaser has done some act in
furtherance of the contract.the purchaser under
agreement has performed or is willing to perform his part of the contract,
than
the purchaser has a right to protect his possession of the immovable property
under the agreement. The right or title of the subsequent purchaser is subject
to the prior agreement of sell who purchased the property with notice of the
prior agreement.
A
person has to be in possession of the property by virtue of a legal document in
order to avail this benefit. A person has to prove that he has taken the
possession of the property in part performance of the contract and if he was
already in possession he continues to be in such possession in part performance
of the contract and had done some act in furtherance of the contract seeking
protection under the doctrine of part performance and he must show that he is
ready to perform his part of contract and in such cases the only way for the
seller is to seek for payment of balance of sale consideration.
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