ARTICAL ABOUT : Agreement for sale of immovable property

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.
     
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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