• Flat already has a registered sale agreement

Hi, 
I entered into a sale agreement with the builder on 1st dec, 2018. I paid 20% of the house cost to the builder. After that I applied for a home loan with SBI. The project is financed by HDFC, so SBI wanted an NOC from HDFC for loan sanction. The builder took one and a half months to procure this NOC. Once this was given to SBI, SBI went ahead with Legal Verification of the flat. There it was found that sometime in 2015, there was a sale agreement registered in the name of person X for that particular flat. When we took this up with the builder, they said the person X is associated with the builder (promoter or an employee) and they will get it cancelled. However, they want another 15 days for the same. Our loan process is stuck because of this and so is the flat registration. I want to know whether the builder is trying to cheat us here? In case, that the deal does not work out, how can I make sure that I do not lose my 20% money that I have already paid? Also, can I claim further compensations for mental trauma that we have gone through for last 2 months, if the deal fails?
For now the builder has assured us that they will get this sorted, but I am starting to have doubts now.
Asked 12 months ago in Property Law from Bangalore, Karnataka
Religion: Hindu

You can approach rera for refund and compensation if rera is applicable to you.

Prashant Nayak
Advocate, Mumbai
15888 Answers
28 Consultations

4.6 on 5.0

Recovering of the said 20% +compensation is never a problem thanks to RERA and consumer courts. Builder had suppressed the fact that there was already a sale agreement executed. Which created a right to a third party. 

What reason did builder gave for prior sale agreement

I suggest before heading with registration cancel the prior sale agreement.

Jamal Sait
Advocate, Bangalore
117 Answers
2 Consultations

4.9 on 5.0

Once sale deed between builder and X is cancelled builder can execute registered sale deed in your favour 

 

2) in the event said agreement is not cancelled and your application for  home loan is rejected you woukd be entitled to refund of 20 per cent paid by you as builder does not have clear and marketable title to the property 

 

3) if builder refuses to refund file complaint against builder before consumer forum and seek orders to direct builder to refund your money with interest you pay litigation costs and compensation for mental torture undergone by you 

Ajay Sethi
Advocate, Mumbai
70894 Answers
4259 Consultations

5.0 on 5.0

Give builder some time to get agreement cancelled 

 

in alternative askbuilder to sell you some other flat  in the project 

Ajay Sethi
Advocate, Mumbai
70894 Answers
4259 Consultations

5.0 on 5.0

Yes insist upon cancellation of prior sale agreement with Mr. X. In order to avoid future legal problems. Imagine a situation if Mr. X appears tomorrow and file a complaint against you and bulider/land owner alleging that sale agreement was already executed in his favour. 

Jamal Sait
Advocate, Bangalore
117 Answers
2 Consultations

4.9 on 5.0

1. There is some dispute as regards title of the property and it may not be disentangled anytime soon.

2. So it is advisable to come out of this deal asap for which you will have to send them a notice seeking cancellation of agreement.

3. Now if the developer does not refund your money in full then you can file case before the consumer forum wherein you apart from getting refund with interest will be awarded with damages and compensation as well.

Devajyoti Barman
Advocate, Kolkata
18424 Answers
261 Consultations

5.0 on 5.0

ensure cancellation of earlier registered sale agreement 

if you wish to continue in the project then issue a public notice in 2 local newspapers informing that you intend to purchase the flat and invite objections from public

also take out a search report from the registration office

the above two steps may have done by your lender bank - so you can ask for copies of the same

the builder ought to have disclosed that this particular flat was sold earlier - non disclosure amounts to cheating 

but as builder has assured that he will have the agreement cancelled, you can give him sometime

however place everything on record by an email

also make the entire process time bound by writing in email that if builder does not complete the cancellation within so and so period then you will cancel the booking and builder has to refund you entire booking amount

even if you approach RERA, it will give sometime to builder to do the needful, unless you wish to withdraw from the project and claim refund of booking amount 

X can also become a confirming party in the sale deed to be entered between builder and you. This will cut down the step of having the earlier agreement cancelled

 

Yusuf Rampurawala
Advocate, Mumbai
4819 Answers
29 Consultations

5.0 on 5.0

See in case builder fails you have remedy under Consumer protection act and RERA act you can claim your amount along interest and compensation by filing a consumer complaint or alternatively a RERA complaint . See if builder get agreement cancelled then go ahead in case it fails issue a legal notice and if on notice he does not refund along interest and compensation file the complaint.

Shubham Jhajharia
Advocate, Ahmedabad
22222 Answers
88 Consultations

5.0 on 5.0

Yes a week or so can be given to register the cancellation deed for the agreement to sale with person X. You should not go ahead till the agreement is cancelled.

Shubham Jhajharia
Advocate, Ahmedabad
22222 Answers
88 Consultations

5.0 on 5.0

If sale deed is cancelled between X and builder then builder can execute a sale deed in your favour.

You may file a consumer complaint against the builder before State Commission or National Commission (depending upon territorial and pecuniary jurisdiction) and claim refund with interest rate. Commission has been passing orders in favour of consumer in such kind of cases. 

Mohammed Mujeeb
Advocate, Hyderabad
13080 Answers
4 Consultations

4.5 on 5.0

Seems reasonable. You can give time for cancellation. Once cancellation completes only Registrar will do registration. So Better wait and move on. All the Best

G Suresh
Advocate, Chennai
390 Answers
4 Consultations

4.9 on 5.0

Then you can go to consumer court or can file a case before NCLT.

Prashant Nayak
Advocate, Mumbai
15888 Answers
28 Consultations

4.6 on 5.0

 

1. It is the clear case of cheating by the builder. Is it the only issue SBI found upon verification of the flat?.

2. Considering your loan process on hold, Is the builder ready to communicate you formally on the time frame to cancel the sale agreement executed in the year of 2015?.

3. You may claim refund ( along with compensation for your mental trauma ) from builder by approaching consumer court.

Niranjan
Advocate, Bangalore
844 Answers
9 Consultations

4.9 on 5.0

If you suspect the integrity of the builder then you may cancel the booking instead of taking a risk which would prevail through your lifetime.

You can quote his fraudulent activity as the reason for cancelling the booking because he fraudulently suppressed the fact of another registration done earlier on the same property with someone and seek full refund with compensation for the mental agony you suffered.

 

 

T Kalaiselvan
Advocate, Vellore
60781 Answers
782 Consultations

5.0 on 5.0

You ensure the previous agreement is cancelled by a registered cancellation deed.

You can proceed with the registration only after the above is confirmed.

The choice is yours to continue with the booking or would like to cancel the same.

 

 

T Kalaiselvan
Advocate, Vellore
60781 Answers
782 Consultations

5.0 on 5.0

cancellation of earlier sale agreement is necessary as builder is no longer owner of flat . sale deed has been executed in favour of X and he could not have sold flat on behalf of builder 

Ajay Sethi
Advocate, Mumbai
70894 Answers
4259 Consultations

5.0 on 5.0

in your sale agreement, X appears to have signed as the POA holder of the builder or as the authorised representative of the builder (check resolution attached to the sale agreement)

in the prior sale agreement you need to check in what capacity did X sign the agreement as purchaser?

whether he signed in his individual capacity or as a representative of the builder?

if the former holds then cancellation is required

if the latter holds then cancellation is not needed

however i suggest in order to keep the records straight, you can insist for a registered cancellation agreement 

Yusuf Rampurawala
Advocate, Mumbai
4819 Answers
29 Consultations

5.0 on 5.0

 

1. My opinion is to get the sale agreement cancelled. It is the simple procedure with jurisdictional sub-registered office.

Niranjan
Advocate, Bangalore
844 Answers
9 Consultations

4.9 on 5.0

Dear Sir,

Entire episode is revolving over doubts and suspicious as such it is better for you in your interest to get issue a legal notice and claim your advance amount with interest and compensation of Rs. 5,00,000/- for mental torture. Failing which you may go ahead by filing private complaint and approach consumer forum. The builder has committed criminal offence by agreeing to sell same property in respect of which agreement of sale was entered by him with X.

 

Kishan Dutt Kalaskar
Advocate, Bengaluru
4899 Answers
149 Consultations

5.0 on 5.0

See it would be better to cancel the prior agreement as now the person X is signing in capacity of authorised representative of builder and sale agreement is in his own capacity.

Yes if he fails to cancel.same then cancel and seek compensation.

Shubham Jhajharia
Advocate, Ahmedabad
22222 Answers
88 Consultations

5.0 on 5.0

Without cancelling the previous agreement, you may have to face disputes or litigation in future. 

You saw that the bank is unwilling to disburse the loan amount without the previous agreement not getting cancelled.

The builder and his partners may have different terms of understanding among themselves, but you should not fall prey to their internal disputes that may arise among them at a later date, therefore exercise abundant caution before venturing into this purchase. Take the assistance of a local advocate if you are struck in between.

T Kalaiselvan
Advocate, Vellore
60781 Answers
782 Consultations

5.0 on 5.0

Yes you can do so...

Prashant Nayak
Advocate, Mumbai
15888 Answers
28 Consultations

4.6 on 5.0

Yes, legally it will be sound if the prior sale agreement is cancelled 

Anilesh Tewari
Advocate, New Delhi
17378 Answers
277 Consultations

5.0 on 5.0

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