Dk-28.8.2013 9
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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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