Tuesday, 18 March 2014


(Bangalore property, 2 bhk apartments, flats, lands,studio for sale in Bangalore)

The pre requirement of sale of immovable property is agreement to sell. The agreement to sell contains, terms of sale, consideration, time limit, the complete description of property agreed to be sold, terms of payment, handing over possession and rights of both the parties to enforce the agreement, and penalty for not performing the contract.Generally, the purchaser pays some amount as advance amount, earnest money to seller, which is acknowledged by the seller in the agreement.

Importance of Sale Agreement:
The sale deed is a document, which contains general terms, which are similar in most of the deeds.

But the agreement to sell is a specialised document, which conceptualises the terms of contract. The skill,knowledge, experience of the advocate is reflected in drafting the agreement to sell and the clauses inserted to protect the interest of the purchaser, who has parted with his money.

There is a practise among many to avoid the sale agreements and to go directly for sale deeds. This is very risky. Agreement to sell is required to avail the bank finance. Apart from availing finance without a sale agreement nobody is bound to execute sale deed and convey the property, who may back out at the last moment. Though the purchaser had made all the arrangements for the consideration amount and stamp duty the vendor may back out if he finds another purchaser for better consideration. Likewise, even the purchaser may also back out if he finds similar property for lesser consideration. The sale agreements bind all the parties to perform the contract.

The process of sale is governed by the provisions of Transfer of Property Act. If there is any conditions in agreement to sell which vary from the rights and obligations of the seller, purchaser as detailed in Transfer of Property Act, the terms which are agreed in agreement to sell shall prevail over.If no conditions, are mentioned in agreement, the rights and obligations of seller,purchaser as detailed in Transfer of Property Act comes into force. Having paid the advance amount, (or) earnest money, will the purchaser have any charge, lien over the property for the amounts paid. The Transfer of Property Act governs the rights and obligations of vendor and purchaser.

Rights of Agreement Holder:
In case of sale, the purchaser gets title and ownership to the property only if the transfer is affected in accordance with the law u/s 54 of T.P. Act, dealing with sale of immovable property. 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 be registered instrument.”So registration of the sale deed is mandatory and only thereafter the purchaser gets title. It also states that the agreement to sale itself does not create any interest in or charge on such property. In this kind of situation if the seller refuses to transfer the property under agreement to sale then the questions that arise for consideration are:

Ø  Whether purchaser under agreement to sale is entitled to only damages or else immovable property as per agreement?
Ø  If the purchaser under agreement to sale is in possession of immovable property can he be disposed of immovable property?

So far as first question is concerned 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 thereof

Ex: – “A Contracts to sell a house to ‘B’ while the contract is still in force he sells the same house to ‘C’ who has notice of the contract.  ‘B’ may enforce the contract against ‘C’ to the same extent as 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 so purchased.Even u/s 91 of the Trusts Act, the title of the subsequent purchaser with notice of the prior agreement is subject to the obligations created by the agreement to sell. So, the agreement holder may proceed against a purchaser of the property who had notice of contract prevailing. Sec 27 (b) of the Specific Relief Act entitles the purchaser under agreement to sell to compel subsequent purchaser to execute a sale deed in his favour. 

In order to have better hold on the property agreed to be purchaser the agreement to sell may be registered, and a paper notification may be released to notify the general public about the agreement.

Purchaser in possession of the property:
For the second question as said earlier i.e.,if the purchaser under agreement to sale is in possession of the property, can he be dispossessed of the immovable property?

In this regard Sec. 53-A of the T.P, Act 1882, provides that:-
  1. The transferor i.e., seller has agreed to sell for consideration any immovable property.
  2. Such agreement is in writing and signed by him.
  3. The contract provides for taking possession of the property before execution and registration of sale deed.
  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 under agreement being already in possession continues in possession in part performance of the contract, provided that the purchaser has done some act in furtherance of contract.
  6. The purchaser under agreement has performed or is wiling to perform his part of the contract.

Then purchaser under agreement is entitled to protect his possession of immovable property.While agreement of sale is subsisting; some one who purchases the property with notice of prior agreement of sale his right; is subject to such prior agreement to sale.

It is to be noted this benefit can be availed of only by those who were put into possession by virtue of a legal document. A person seeking protection of doctrine of part performance has to prove that he has in part performance of the contract has taken possession of the property and in case 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. In addition the purchaser under agreement has to show that he is willing to perform his part of the contract.The only course for seller in such cases is to see for payment of balance consideration.

The maximum stamp duty payable on agreement to sell without possession in Karnataka is Rs.200/- and registration charges are Rs.1,000/-.

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