Sale of property
Harish Kothari
(Querist) 18 December 2014
This query is : Resolved
Dear Sir/s,
We have sold one property (in a reg. co-op soc) in Mumbai for a XY consideration. Firstly, the deal was done orally on 22/08/14 in the presence of some persons, where the total consideration has been decided. Thereafter the buyer has paid a partial token amount. On the day of dassera, buyer has paid remaining token amount thus making total token amount at 9% of the deal value. All the token amount was paid in cash in the presence of two witness. On the same day buyer has requested us for a key of the property for one day, as they want to do a pooja of their new property on the day of dassera. We did it. On the same day, we prepare a draft on plain paper stating that seller has agreed to sell the said property at a XY price and buyer has agreed to buy the same. It is also mentioned that documentation process and remaining payment will be completed before 05/12/14. The said paper has signed by buyer and seller. But till 05/12/14, the buyer could not arrange the funds, hence nothing has proceed further. Buyer has requested us to extend a time period till 31/05/2015. We agreed to it. Buyer is in process of sale of one of his flat, but due to his higher expectation, sale could not take place.
Now what could be the possible outcome if buyer again on 31/05/2015 failed to make payment. Can he ask for a refund of token money? We do not want to refund the token amount as we have abide by him for almost 9 months i.e. from August 2014 to May 2015. Apart from this, the market condition is worsting now. We have sent one email to buyer telling him that if he fails to make full payment by 31/05/15, our deal will be terminated and amount paid by you will be forfeited. We orally requested him to confirm our said email. But he is not doing so. What is the legal remedy in the matter? Can he compel us
for the refund?
Request for your reply.
Guest
(Expert) 18 December 2014
Any Un Registered Sale Agreement is Legally Not Imposable.Try to sort out the Issue amicably and better to refund the advance amount.Consult your Local Good Advocate.
Anirudh
(Expert) 18 December 2014
When I read the sentence: "On the same day buyer has requested us for a key of the property for one day, as they want to do a pooja of their new property on the day of dassera. We did it." my heart started sinking.
But, I am relieved that the key seems to have been taken back by you and the possession of the property is still with you. In future, never ever hand over possession of the immovable property to anybody, unless there is a written Agreement (Registered) in place.
Now, coming to your question whether the advance money can be forfeited. Needless to say, it will depend upon the terms of agreement between both of you. Any non-response to your subsequent emails (which you can claim as only confirming what was orally agreed between the parties) will give you an added advantage to forfeit the advance money.
It is not clear whether you granted any Receipt for the advance money received by you. If the buyer has the receipt in his hands, he may bring some law suit to recover the same from you. In that case you may have to contest the case on merits.
Assuming that you are able to successfully forfeit the advance money, though paid to you in cash, please remember the said amount is liable to tax in your hands as "income from other sources", as per the latest amendment to the Income Tax Act.
ajay sethi
(Expert) 18 December 2014
1) the mistake you made was you did not enter into any MOU with purchaser regarding terms and conditions of sale . consideration , time for making payment , forfeiture clause etc
2) second mistake made by you was you again extended time for making payment without laying down in writing consequences in event of failure of purchaser to pay By 31/5/2014
3) had you spent few thousand rupees in legal fees you would not have been in this situation today
4) if you fail to refund purchaser will move court for refund with interest as no written contract had been entered into for forfeiture of 10%advance payment
Rajendra K Goyal
(Expert) 18 December 2014
In absence of clear condition of the agreement to forfeit the token money the same can not be forfeited. Agree with the expert ajay sethi.
Guest
(Expert) 18 December 2014
Dear Anirudha,When you had Mentioned "your Heart went Sinking" I really felt bad. Pleases Take the Queries Sportively and reply Accordingly.
Anirudh
(Expert) 18 December 2014
You may afford to take things sportingly including filling up false and fradulent profile, and answering queries without any legal backing. But I take all things seriously. How I have to reply is my concern and certainly none of yours. As already told you umpteen number of times, I am not at all in requirement of any suggestion from you.
prabhakar singh
(Expert) 18 December 2014
I think you need to bear in mind that even if there is any forfeiture clause in the agreement on breach by buyer, it does not on it's own legally allow seller to forfeit the entire earnest money unless seller proves loss caused to him due to breach of contract.
And this is real estate transaction where property prices always appreciate, so no chances of any damage to seller on buyers' default to buy.
Section 73 of the Indian Contract Act is relevant here.
