Mou
Querist :
Anonymous
(Querist) 30 October 2011
This query is : Resolved
Hi,
I have to prepare a MOU btwn 2 parties say a & b.
the back ground is as follows
Party A tries to buy belonging to a vendor (who is not part of this MOU) where money is to be paid in two tranches. Property, a plot, worth 3 crores.
Party A has already paid 1 cr with balance to be paid in 2 months, which they are not able to arrange. Therefor they get into a MOU with a party B stating that the party b pays up 1.5 crores and balance 50 lacs will be arranged by party A.
The property gets registered in name of Party B. Thereafter the Party b invests in construction of a G+3 floor building and party B within 6 months pay another 75 lacs and gets to keep the Ground and first floor of the building and the Party B retains the 2nd and 3rd floor
PL advise, and let me know if you want me to restate part of the situation
sanjeev murthy desai
(Expert) 30 October 2011
If the property registered in the name of B, then there is no rights left with A. MOU is not sufficient document assign A's enforceable rights in favor of B. Hence it is advisable to execute assignment agreement between A and B. It is also advisable to execute Sale Deed in favour A and B jointly. After that they may be think about the develop/construction of the property under joint development agreement.
J K Agrawal
(Expert) 30 October 2011
To prevent conveyance stamp duty payment again and again and to prevent issue of ownership you should execute a joint venture agreement and then the property should be purchased under joint venture in the name of both. Then partition of property and than after sale of individual share is proper and legal way.
MOU having no force of law but one can recollect back the amount paid form the other party.
prabhakar singh
(Expert) 30 October 2011
You are misconceiving the transaction as well
as its legal form.MOU shall not serve the purpose desired. The property should be bought in joint name of A and B,either after constituting a JV [as advised by Mr. J.K.Agrawal]or after creation of a partnership firm by a deed of partnership and the firm so created should be registered with registrar of firms societies &chit funds
as per provisions of partnership Act.
Any thing less than it may be realized as convenient at present but shall proved to be begetter of several dispute in future.
Querist :
Anonymous
(Querist) 30 October 2011
Great! Thankyou, Mr Desai, Mr Agarwal, Mr Singh
Pl confirm if I have understood correctly. As I understand, I can summarise that
There are various ways to go about it
a. Register in name of B with a follow on Assignment agreement between B and A. (however this might require to pay the Reg Stamp duty two times)
b. Joint Sale deed and Registration in favor of A & B. (pl Clarify, is it that the joint sale & registration can only happen after a JV or partnership firm is constituted
Which would be the most recommended way considering,
Time is of essence - The registration is happening on the 5th NOv
Minimize cost burden -
Lastly, I would also like to know, as to How do we cover any risk if say one of the parties decide to renegade (god forbid) at a point in time when the then present status of transaction gives them a distinct advantage over the other?
