My friend has made an unregistered agreement to sale on Rs. 100 stamp paper. He did not ready to purchase my land on the price mentioned in the agreement. After five years from the date of such agreement, I sold that property to another person. My friend is threatening to file a civil suit for cancellation of that sale deed and performance of unregistered sale agreement. Please guide.
Asked from: Uttar Pradesh
An agreement to sale is a contract in which both parties agree to transfer ownership of a property on a future date, subject to certain terms and conditions. However, either party can refuse to perform their obligations outlined in the agreement to sale, and hence it is not a final agreement between the parties.
In contrast, a sale deed is an executed contract in which the ownership of the property is transferred from the seller to the buyer, and it is legally binding. Once the sale deed is executed and registered, the transfer of property becomes effective and the buyer becomes the legal owner of the property.
It is crucial to understand the difference between an agreement to sale and a sale deed, as they have different legal implications. While an agreement to sale provides a framework for the transfer of ownership in the future, a sale deed completes the transfer of ownership at present.
Section 54 of the Transfer of Property Act (TPA) defines the agreement to sale, stating that "A contract for the sale of immovable property is a contract that a sale of such property shall take place on the terms settled between the parties." The agreement to sale contains only the terms and conditions of the proposed sale, indicating that the parties agree to buy and sell the immovable property on such terms and conditions.
According to the provisions of Section 54, an agreement to sale does not confer any right to the parties, and it is not a valid document of ownership or title of the land. Since the buyer does not pay consideration to the seller, an agreement to sale does not create any right in favor of the buyer, and the buyer cannot claim any right in the property solely based on the agreement to sale.
Signing the agreement to sale does not mean that the property has transferred to the buyer, and its execution depends upon the fulfillment of other conditions such as payment of consideration.
If a party is trying to rescind themselves from the agreement, the other party can prohibit them from doing so. However, they can only bind the other party when they are ready or willing to act on the terms and conditions of the agreement.
Also read: Party to an unregistered agreement can be sued
This condition is mandatory because if they are not ready, they cannot compel the other party. The agreement to sale has limited use in this sense.
An agreement to sale is not subject to compulsory registration under the Registration Act, and hence registration of the agreement to sale is optional. In the case of a disputed property, your friend cannot file a civil suit solely based on an agreement to sale, as it does not confer any right to him. If the property has been sold by executing a valid sale deed, the buyer has obtained an absolute right in the property, and the law shall protect their right first.
If the agreement to sale was registered or unregistered, it has no legal validity after the sale of the land. If your friend had an opportunity to purchase the land and did not do so, their conduct proves that they were not willing to purchase the land. Hence, there is no ground for filing a civil suit based on the agreement to sale.
Question: I am a real estate broker and purchase lands from the owner on installments. So, I do prepare an agreement with the owner for sell his land in a fix period of time. For those period I promise him to pay the whole value of land in equal installments. The number of installments vary according to value of the land. I made a contract with a owner for selling of his land and payment of consideration in ten equal installments. Now, I have paid three installments but he is refusing to sign the sale deed. Thereafter, I have stopped the remaining installment but he did not agree to sign the sale deed. Now, I want to cancel the agreement. That agreement is unregistered.
Asked from: West Bengal
This agreement is not legally binding because it does not constitute a valid agreement. You expressed an interest in purchasing the land in equal installments, but subsequently found a buyer who would purchase the land in parts and pay for it with the sale proceeds. Therefore, you are not considered the true buyer, as the actual buyer is the one who agrees to pay for the land.
This agreement is also not an agreement to sale, as it does not involve the purchase of the entire property by a single buyer. Rather, it appears that you engaged the owner through an illegal agreement, which prevented the owner from selling the land as per their own wishes. As a result, this agreement cannot be enforced, as it lacks a valid consideration. An agreement is considered void if it lacks a valid consideration.
However, since you have paid three installments, you may be entitled to recover that money from the owner. If you have evidence of the payments you have made, you could file a civil suit to recover the money. The owner accepted the installments, so they are obligated to refund the entire amount.
In the case of Suraj Lamps and Industries Pvt. Ltd. v. State of Haryana & Anr. (2012) 1 SCC 656, the Supreme Court held that only a valid sale deed can transfer ownership from seller to buyer. Transfers made through a power of attorney or sale agreement are not considered valid. As a result, you cannot file a civil suit to cancel the agreement.
Question: My uncle has received one lakh rupees from his friend as an advance for sale of agriculture land. His friend took a notary on ten rupees stamp paper. In that notary his friend did not mention the amount as an earnest money. He said in the notary that my uncle wants some money for medical treatment and he will sell the land upon failure to repayment in three months. Now he does not receiving the money and pressurizing him to sell his agricultural land. If my uncle refuses to sell his land then could he take any legal action?
Asked from: Tamil Nadu
The agreement in question is ambiguous and does not reflect the true nature of the transaction. Your uncle's friend has attempted to purchase the land through deceitful means by disguising earnest money as a loan in the agreement. Consequently, he can only recover the amount on the basis of the notarized agreement.
Regarding the specific performance of the agreement to sale, the terms are ambiguous and against the true intentions of the parties involved. Since your uncle's friend is not accepting the money, he cannot file a civil suit for specific performance of the contract. He has suffered no loss and has no grievance against your uncle, so he cannot seek any relief from him. In fact, he is the guilty party as he is not accepting the one lakh rupees.
In this situation, your uncle should file a civil suit for the rectification of the agreement. He is willing to return the loan amount and can file the suit under Section 26 of the Specific Relief Act for rectification. He should not admit the amount as earnest money since his friend has admitted it as a sundry loan in the notary.
If a party fails to fulfill their duty in a valid agreement, the other party can invoke the provisions of the Specific Relief Act. Your uncle's friend has defaulted by not accepting the one lakh rupees, making your uncle the real aggrieved party to the contract. Therefore, he can file a suit under Section 26. It is advisable to file the civil suit as soon as possible.
Question: I have five acre land in Haryana. The market value of that land is more than six crore. Last year, I contracted to sell this land to a person living in Australia. However, he is living in Australia but his parents are living in my village. We are old friends and have faith on each other. He remitted three crore rupees in my bank account and prepared a notary agreement. After three years he is claiming ownership on that land. He filed a civil suit for permanent injunction and declaration of right. Please help.
Asked from: Haryana
According to the Supreme Court ruling in T.G. Ashok Kumar v. Govindammal, (2010) 14 SCC 370, a buyer cannot claim legal right in a property unless the sale deed is properly registered and attested by witnesses. As there is no sale deed executed in this case, no right in the property has been vested in your friend.
This agreement does not meet the requirements of a valid sale deed as you did not pay the full consideration and proper stamp duty. The notary affidavit is not sufficient. This is merely an agreement of sale, commonly used by shady property owners or brokers to evade stamp duty and cause financial loss to the government.
Under the law, an unregistered sale agreement is considered void. You should not be intimidated by your friend's threats of a civil suit. In your written statement, you can assert the following points:
- You are in possession of the land.
- The plaintiff did not pay the full consideration.
- There is no sale deed in force.
- The plaintiff is attempting to portray the agreement of sale as a sale deed.
- The plaintiff has no evidence to prove ownership of the land.
If your friend tries to produce the notarized agreement as evidence of ownership, the court will reject it. He has no right to invoke legal process for the enforcement of an unregistered sale agreement. Based on these grounds, you have a strong chance of winning the case.
Question: A person contacted me through the Magicbrics and shown interest in purchasing of my house. We had finalised the deal and prepared an unregistered agreement to sale. He did not deposit money as per the agreement and also do not come forward to purchase the land. The agreement to sale is still exist. Sir, please help how to solve this issue?
Asked from: Uttar Pradesh
The person who agreed to purchase your house does not seem interested in buying it anymore, and has not taken any steps towards executing a sale deed. In light of this, it would be wise to cancel the agreement.
Since the other party has not paid any earnest money, there are no legal obligations under this agreement. This unregistered agreement is now stale and of no legal consequence. Therefore, sending a legal notice for the cancellation of the agreement should suffice. According to Section 37 of the Indian Contract Act, parties to a contract are expected to perform their respective promises.
Unless such performance is excused or dispensed with under the provisions of this Act or any other law. In the event that a party refuses to perform or is unable to perform their promise, the promisee may put an end to the contract, as per Section 39 of the Indian Contract Act, unless they have signaled their acceptance of the contract's continuation through their conduct or words.
As such, it is recommended that you send a legal notice informing the other party of your decision to cancel the agreement to sell. This will allow you to sell your house to any other interested party without encountering any legal problems.
Questio: I made an unregistered sale agreement with a buyer (who happened to be a real estate broker) and I want to cancel the unregistered sale agreement (within two weeks of its execution). However, that buyer refuses to get back his advance amount and forces me to register the property. What is my legal right and how can I return his money? ” The clause mentioned in agreement is if either of the parties fail to honour the agreement then the aggrieved party can take action as per law” so what is the legal right for me as a seller to unilaterally cancel the unregistered sale agreement.
Asked from: Uttar Pradesh
It is possible for you to cancel this sale agreement, and the buyer must return the money received under the agreement. This agreement does not grant any right or title in the property to the buyer, and he cannot force you to sell the land based on this sale agreement.
It's important to note the difference between an agreement and a contract - an agreement is not legally binding if one party has withdrawn their consent. As you have withdrawn your consent, this agreement is not enforceable by law. Although there is an indemnity clause, it does not change the fact that the agreement is not enforceable.
To cancel the agreement, you should send a legal notice to the buyer informing them of the cancellation and withdrawal of consent. This will make it clear that you are not willing to perform the agreement.
