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sonia (housewife)     27 October 2011

How to cancel agreement of sale


We have agreed and signed an unregistered agreement of sale and accepted Rs 1 lakh as earnest money (via personal cheque) about 2 and a half months back. The agreement is valid for 3 months and there are 2 weeks left for the 3 months period to end.

The buyer could not get his loan sanctioned till now but today he said he he trying thrugh another bank and that the bank people want to see the property today. My circumstances have changed and now I don't want to sell the house for the next few months. Can I return his money? Do I need to send him a formal document of cancellation of sale? can he take to me to court for not going through sale now? Is the unregistered agreement of sale valid in a court?

Many thanks for your response.


 10 Replies

M.Sheik Mohammed Ali (advocate)     27 October 2011

no need, he is not register your sale deed, even though he is present at the time of register office, then you must before attn the register office, at the time you will cancel the deed and return the money.

1 Like

sridhar pasumarthy (ADVOCATE)     27 October 2011

Dear Sonia,

An unregistered agreement of sale is valid for filing a suit for specific performance.  The buyer is entitled to seek registered sale deed from you provided he is able to pay the balance sale consideration within the time stipulated under the agreement.  Unless, the buyer commits breach, you are not entitled under law to give a go-bye to your promise under the agreement.

1 Like

ajay sethi (lawyer)     27 October 2011

let the bank inspect the propery . it is doubtful whehter within 2 weeks loan would be sanctioned . banks are reluctant now to sanction laon for purchase of property . . unless and until his financial position is strong and he is in position to repay the laon bank wont sanction the loan .


if within 2 weeks he is unable to pay then period within which payment could be made expires . then you have a strong case to cancel the agreement

1 Like

sonia (housewife)     27 October 2011

thank you everyone for your prompt reply. today the buyer called me from the gates of my property with the bank valuers with him. Unfortunately today we are not in the city though my parents have the keys to the property; but because we were not given enough notice, my parents could not show them the flat.

Can we be held liable for that because in effect, it will delay their loan process. Please reply.

sonia (housewife)     28 October 2011

I would also like to add that the agreement of sale was done on a non-judicial stamp-paper of Rs10. The agreement was between us and the single buyer but the cheque was given to me by his wife, whose name is not mentioned in the agreement. There were 2 identical agreements signed, one is with the buyer and one is with us.

The copy of the agreement that we have, does not mention the cheque number, there is a blank space only. The buyer wrote the cheque number in his copy of the agreement.

Can I return the money directly into his wife's account by transfering it from my bank? or do I have to send a cheque to him? What if he refuses to take the money back?

Thanks in advance for your responses.

sonia (housewife)     28 October 2011

The buyer phoned me again today asking me to extend the contract by 30 days as his loan cannot be sanctioned in the next 2 weeks. Am I legally obliged to do that?

Please advice.

sridhar pasumarthy (ADVOCATE)     28 October 2011

Dear Sonia,

Is it a condition precedent in your agreement that the balance amount would be paid after sanctioning of the loan.  Else you are not obliged to extend the time.  

You do one thing.  You give a notice to him remindind about the time remaining for payment of balance amount and also mention that if the buyer won't pay the amount within the time stipulated, the agreement will stand cancelled. 

Deepak Vishwakarma (Advocate)     09 November 2011


An agreement which bears all the neccesarry circumstainces is  bindingup  the parties under terms & conditions therein. If anyone could not  compliance his/her side the other is free to go to the Court to Obtain his/ her right.

In your case the agreement is not Legally strong in favour of buyer because  the cheque was given to you by his wife, whose name is not mentioned in the agreement and The copy of the agreement that you have, does not mention the cheque number, there is a blank space only. The buyer wrote the cheque number in his copy of the agreement.

In this condition you feel relax & wait ending the period of agreement and next day yuou could cancelled the same simply.

1 Like

Amit Mahajan (RH-Legal)     10 November 2011

There is time limit provided in agreement and by returning the money or by non compliance of any of the terms and conditions as laid in the agreement the agreement would stand cnacelled and since not registered hence no further action required 

gidduji (sr manager)     15 January 2017

Dear Sir,


I am facing the similar situation with slight difference.


Background (eight years back): we have 1 acre land at our ancestral village. We wanted to sell the property. One of our distant friends at the village wanted to purchase 0.2 acre land. So, we sold it. For the remaining 0.8 acre he obliged to help. Either he needs a sale deed or power of attorney to make the selling. So, my mother signed the unregistered sale deed. Took a virtual advance of 15000/- (which is actually not taken). Remaining amount shall be paid in three months.


Incident: After the deed he occupied the land and removed trees planted by my cousins (which we allowed). Due to this we realized we did a blunder and that fellow cheated us.


Post Incident: So, we thought of legal battle and issued a notice within a week that we would like to cancel the sale deed because of your occupation of our land.


Response from the Opponent: He filed a case in court for asking us to register the property.


What happened in court: Court listened to the witnesses from our side. we have explained the entire situation (what I explained above) to the judge through arguments and witnesses. We also requested for the site enquiry to prove that land is been taken over by the opponent. It is not in our possession. Court rejected the application by saying that present case is for the agreement but not the possession. So, we filed a counter case for possession which is also been rejected by the court by saying it is just to frame the opponent. At present moment, opponent already constructed a structure in part of our land and 0.2 acre and remaining area is being cultivated.


Second incident: Two years back, when my parents visited the place to take the videography of the possession they were attacked the opponent family. During this incident my father and my cousin sustained injuries. So, my father and opponent filed cases in the police station. Our case is been upheld and charge sheet is filed whereas opponents case is been declared as false by the police.


Recently my father expired. So, I am looking after the case. At present, case is at the arguments stage. Our lawyer is saying that we will produce some more witnesses and we will file a stay in high court. 


Lawyer says following points,

1) Since, we sent notice within a week of agreement, agreement is null and void.

2) Land is not in our possession. So, this also forms a base for the cancellation of the agreement.


I am little confused. Does our argument have any strength? Is there any possibility of winning the case and getting back the possession of our land?

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