• Transferring sale consideration to owners business account

I am planning to purchase a plot and the seller agreed to sell the plot to me for 20 lakhs. But the property is currently mortgaged with BANK under Cash Credit (CC) account.

the seller is running a business and he has created cash credit(CC) account in the name of his company and mortgaged this plot in the name of bank for security. 
the CC account is in the seller's company name and he is ONLY the proprietor of this entity. 

Now he is asking me to transfer the advance amount Rs 10 lakhs to his business account/Cash credit (CC) account via RTGS to get back the property/original docs from the bank and the remaining 10lacs he wanted as a cash at the time of sale deed registration. 

My Question is:

1) is it legally allowed me to transfer the portion of sale consideration to his business bank account ?
 or should i transfer the advance amount only to his savings account ? 
2) I am planning to execute the Sale agreement with him for this advance payment(10laks). But it will not be registered in the sub-register office. what about the validity of the unregistered sale agreement in case of any dispute in the future ? 


Thanks
Asked 6 months ago in Property Law
Religion: Hindu

2 answers received in 10 minutes.

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32 Answers

1) ask seller to obtain bank consent for sale of flat 

 

2) only pay 10 per cent at time of execution of agreement for sale 

 

3) un registered agreement for sale is admissible in evidence 

 

4) sale consideration you can issue cheque in his name . Let him deposit where he wants 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

If you are not going for Agreement to Sale deed for registration than go directly sale deed registration, no doubt the papers are with bank. Once the sale deed is registered and all details are made in scheduled of property and payment.

 

Later on buyer can make payment to bank and take original documents and handover to you.

 

Ganesh Kadam
Advocate, Pune
11668 Answers
109 Consultations

4.9 on 5.0

Best safest way to make the payment by bank DD in favour of seller at the time of registration. 

Kallol Majumdar
Advocate, Kolkata
2683 Answers
4 Consultations

5.0 on 5.0

1. You can transfer the amount either to his CC account or to his personal account. When both accounts standminnhis individual name there will not be any problem.

2. Before that you should verify with the bank to confirm whether the CC account is a running account or declared as NPA. If it was declared as NPA, then the bankers may have  proceed SARFAESI proceedings to recover the loan by taking symbolic possession of the property. If it so, you shall not invest in the property without getting prior consent from the bank.

3.Asif, verify the balance debts amount on the CC account. Because the property is mortgaged with the loan /CC, if the loan amount is higher than the property sale consideration then the vendor may not be in a position to pay the balance dept amount to cancel the mortgaged deed. 

4. You are transferring the sale amount by way of online transfer, therefore the sale agreement can be relied upon for collateral purpose to file a case, if unwanted incidents arise in future. 

5. Consult an advocate to draft the sale agreement.

Selva Perumal
Advocate, Chennai
314 Answers
36 Consultations

4.9 on 5.0

1. Yes it is allowed but the advance should be mentioned in agreement or you should get the reciept for amount you are transferring to seller's business account.

2. Agreement are valid without registration but you should get the agreement registered with sub registrar so that seller can't deny it in case of some dispute.

 

Mohit Kapoor
Advocate, Rohtak
10685 Answers
7 Consultations

5.0 on 5.0

Hello, 

I have read out your query and propose you the following legal advise:

Firstly, Check the validity of the property mortgaged, there have been various instances that the property is being mortgaged to 2 or more banks and there is a pending litigation in DRT (Debt Recovery Tribunal). So please make sure that the property is free from all encumbrances and there is no pending litigation upon the said property. 

 

Secondly, If he is asking you to transfer 10 lakhs in advance to his account, you can always do that if you mutually agree and there is a sense of security that he would not run away with the money as the title deeds are not with you and not in your name so you have to be cautious while performing this transaction. It would be better if you issue him a cheque for the like amount. 

Thirdly, an unregistered sale deed has no value in the eyes of law, if any dispute dispute arises on the property then your sale agreement would not serve as an evidence in court of law. Sale agreement is different from Sale deed. so it is preferable that a registered sale deed should be executed. An unregistered sale agreement would be for your own satisfaction, but if in future anyone claims that he has the registered sale deed, then your agreement to sale would have no evidentiary value in a court of law. 

 

I hope i have provided you relevant information. Please leave a rating if your are satisfied with your answer and I would get back to you again. 

 

Thanks and Regards!

Varun Talwar, Advocate Delhi High Court. 

Varun Talwar
Advocate, Sonipat
27 Answers

Not rated

1. Transfer the amount only to the bank....not to that person.

2. That property can be purchased from bank

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

1. It is legally mandatory to Register Agreement for purchase of ANY immovable property.

2. It is highly unwise to buy mortgaged property without obtaining NOC from Financing Bank.

3. Instead of paying initial amount directly to Seller party, you may transfer funds to Financing Bank (AFTER receiving NOC), obtain the original documents, verify and THEN Execute Agreement and pay the balance to Seller.

Hemant Agarwal
Advocate, Mumbai
5441 Answers
25 Consultations

5.0 on 5.0

Yes, you can mention all details of payment on whose name you have made it and what is relation with the owner of land etc.

Ganesh Kadam
Advocate, Pune
11668 Answers
109 Consultations

4.9 on 5.0

1. IF Property documents are in Seller's personal name (and not in name of Firm), THEN why would you transfer any money to his business account and what would be show in your income tax returns.  Highly Unwise.

2. Follow suggestions given earlier.

Hemant Agarwal
Advocate, Mumbai
5441 Answers
25 Consultations

5.0 on 5.0

Transfer money to savings account as it is in personal name and property is in his name only and not in name of proprietary concern 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

1. Get the consent of the Bank in writing, that they are willing to release the mortgaged property, this will keep your transaction safe in case the property is affected by any recovery laws.

2. With the bank's consent you may directly go to the registration of the Deed of Sale because you are technically paying whole of the shown consideration amount, if your registrar allows the same.

3. Since, the property papers will have the name of the seller it will be best to issue a cheque or DD in his own name, he can deposit the same in his business account as he his the sole propreitor of the firm. It will help you in clear accounting.

4. If opting for an Unregistered Sale Agreement , you may proceed as it will stand in court in case any dispute arises.

Ayan Sharma
Advocate, Kolkata
6 Answers

Not rated

1. Legally there is no bar to transfer the amount to his savings account or his sole proprietorship firm account.

2. You should not pay the sale consideration to the company or partnership firm account , where the vendor is being one of the director or partner.  

3.  In so far as transferring the amount to his enterprises account will not be a problem until he claims that the said amount was transferred by you for a business  purpose. In future, if some unwanted incidents happened in executing the sale deed, to avoid his liability or make delay, he may take a stand that there was no sale agreement between you and the said amount transferred by you only for business purpose and not a personal transaction. 

4. Therefore, transfer the amount to his savings account is better. If he is gentlemen or known person to you then you may transfer the same to his sole proprietorship firm account. 

Selva Perumal
Advocate, Chennai
314 Answers
36 Consultations

4.9 on 5.0

It's better you transfer the same in savings account. You should keep it different as its a businesses transaction. If it's not a business transaction then it's ok to deposit in savings account. 

 

You can also register the agreement to sale also. It's better to advance with registered agreement

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

Hello Sir, 

Yes you can transfer the amount to his business account instead of savings account but do not forget to mark a receipt or mention in the agreement that the said amount was transferred in the said business account on the request of seller and the amount is duly paid by buyer and received by seller to which the seller acknowledges. 

 

I hope i have provided you relevant information. Please leave a rating if your are satisfied with answer and I would get back to you again. Your ratings and feedbacks would help us grow. 

 

Thanks and Regards!

Varun Talwar, Advocate Delhi High Court

Varun Talwar
Advocate, Sonipat
27 Answers

Not rated

Dear Sir,

You are suggested to first get the sell agreement ready and enter the clause of payment of Rs. 10 Lacs in the CC account. Thereafter you may transfer the amount in CC account and then get the sale deed done.  

Ganesh Singh
Advocate, New Delhi
6512 Answers
13 Consultations

4.5 on 5.0

1. You can pay the sale consideration amount only to the vendor and not to his company or is business account even though he may be a sole proprietor of the company.

2. The unregistered sale agreement cannot be enforced ion court of law.

It is risk on your part to enter into an unregistered sale agreement with the vendor.

 

 

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

You do not get into any legal complication in this regard.

If at all the vendor wants the money to his business account you may refuse to do that instead you can agree to pay the same to his personal account so that he can transfer the same to the bank to clear his debts with the bank and retrieve the documents pertaining to the proeprty with a  discharge certificate from the bank and also a no due certificate

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

1. See it's proprietorship firm so as such even if you transfer amount in his firm's account there won't be any issue a sale agreement can be entered and the transferred amount can be recorded in same.

2. See for time being you can keep agreement unregistered once after lockdown you can register same. Unregistered agreement will be valid to show the transaction.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

Its a proprietorship account.you can pay in same the holder is only seller no other person or entity.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
111 Consultations

5.0 on 5.0

 

"the seller requested the purchaser to pay the dues in the CC account . 
Hence the purchaser paid amount Rs 10lakhs to the seller company
CC account via RTGS"..

Yes, you can mention like that.

Kishan Dutt Kalaskar
Advocate, Bangalore
5583 Answers
218 Consultations

4.8 on 5.0

First execute tripartite agreement to sell with seller and bank. Payment will made to bank account and NOC and original document will deliver to you.

Than on registration of sale deed, rest amount will paid.

Yogendra Singh Rajawat
Advocate, Jaipur
21402 Answers
31 Consultations

4.4 on 5.0

Transfer the funds to his savings account 

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

when he has pledged his property ro thw bank how can he go about making this agreement when at the time of agreement the property is not his!

Make an agreement to sell and then give him money so that he repays the loan and then transfers the property.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

First of all make an agreement to sell based upon certain conditions. Then when he repays the debt after you give him the money then make a registered agreement.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

1. A tripartite agreement should be executed between you, seller and bank in the first place before you transfer the amount to seller.

2. You should transfer the sale consideration to his business account only and only if it is mentioned in the agreement that you shall transfer the sale consideration to his business account.

3. Agreement to sell does not require mandatory registration.

Ashish Davessar
Advocate, Jaipur
29956 Answers
864 Consultations

5.0 on 5.0

Hi, it is advisable to make the sale agreement ,and then transfer the initial amount (ex:- 10 lakh ) to his account saving or business( if he is the only sole proprietor)  ...Remaining amount can be given to him at time of transfer..Also add a clause in the initial agreement,that the seller shall clear the loan of the property form the initial amount  

Hemant Chaudhary
Advocate, Gurgaon
4595 Answers
41 Consultations

4.9 on 5.0

There is no restrictions to pay the seller INR 10 Lakhs in advance .Pl follow the instructions below mentioned to succeed in your lawful deal with the seller-: 

1- Pl enter in to MOU with the seller with specific terms that out of INR 20 Lakhs cost of the property which is lying mortgaged with bank and CC facilities, you would release the seller a part payment of INR 10 Lakhs to get the documents of property released from the Bank and the seller would ensure Strictly to enter into a valid contract with you within two week  from the date of release of Property mortgaged documents. 

2- After entering into MOU Pl release the amount to his savings or name of concern as it is a proprietary concern no harm would cause to you if amount is transferred via RTGS to his personal account or proprietary account. It is one and same.

3-After payment RTGS and release of documents, Pl ensure your self to make the seller enter into a valid agreement within two week for a valid sale and registration of sale and conveyance deed at the office of Registrar who has jurisdiction over the plot and property to register the same.

4- After the registration you may pay the balance amount as you may agree with the seller. 

 

Ramesh Pandey
Advocate, Mumbai
2538 Answers
8 Consultations

5.0 on 5.0

Sir/Madam,

 

There is no harm as such. Under law, if Rama owes money to Krishna who owes money to Shiva, Rama can pay off Krishna's debt or part of the debt to Shiva. Then Rama no longer owes any money to Krishna or Shiva for that matter. Here, you are Rama, your seller is Krishna and the bank is Shiva.

 

Furthermore, a "proprietorship" in law is not considered as a separate entity from the owner. So if Krishna takes a loan from Shiva for his business, which is a proprietorship, there is no harm as such in Rama paying back a part of that loan even though it is in the name of Krishna's business/his business purpose.

Balaji Iyer
Advocate, Bengaluru
18 Answers
2 Consultations

5.0 on 5.0

you can transfer the consideration amount eto his cash credit account better mention same  agreement about this transaction. 

unregistered Agreement is valid for three years from the date mentioned to execute. .

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

You can buy under agreement and pay the amount and get NOC from the concerned bank plus you can give public notice and also get the original papers verified that it has no other lien on it. 

Mohammed Mujeeb
Advocate, Hyderabad
18935 Answers
11 Consultations

4.5 on 5.0

Since, the sellers company is running under his proprietorship , hence for transferring the part consideration amount in his said business account , instead of saving account is safe legally , but this transaction should be through cheque or online mode ,and not depositing the amount personally in his account i.e cash.

- However, you are suggested to enter into an sale agreement with him , after mentioning all the details of considerations amount of the plot and its payment , and thereby take a receipt for the said payment , in his personal capacity after mentioning that .. I am receiving Rs........ from the buyer of the property bearing No........ namely shri...... on behalf of my proprietorship firm ie. M/S.......... .  

- As per registration Act, the registration of a sale agreement for the purpose of the execution of sale deed is not mandatory required . 

- Yes,  you should mention in your sale deed for the payment of full consideration amount in details , for future safeguard . 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

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