• Buy sell agreement

On March 16th 2020 i signed a buy sell agreement to sell property to a man. The buy sell was contingent on him being able to secure finances for said property. The buy sell never listed a set time frame of which he could secure finances. 4 months later after multiple times of contact with him his only reply was he was talking with the bank and would get back to me in a few days with a date and time that the bank will contact me. I have waited weeks and months and was told the same thing over and over. I finally had enough as said he had to a set day the 21 of july 2020 to secure the finances and provide proof of funds for the purchase. as of today he has failed to provide proof of funds and has not been approved for a loan but is in the process of trying to get approved. Am i legally allowed to cancel the agreement due to him not following through on his end?
Asked 3 months ago in Property Law
Religion: Christian

First answer received in 10 minutes.

Lawyers are available now to answer your questions.

27 Answers

Actually this contact when you made you would have given a time frame for the contact this agreement to sell by this agreement the purchaser have the liberty to not to go for a change because of the financial however at this point of time you have the option that you have to send a legal notice to him to provide the detail of finances if he has arranged to quash the contract in case he is not able to find out the finance.

I believed due to this clause he is taking benefit and delaying the sale process.

Vimlesh Prasad Mishra
Advocate, Lucknow
6786 Answers
23 Consultations

4.9 on 5.0

It is necessary to peruse terms of agreement for sale to advice 

 

2) was time essence of contract ? 

3) was any period mentioned in agreement for sale for seller to make balance payment 

 

4) kindly clarify 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

In property transactions time is generally not of the essence unless specified in the contract and unless strict timelines are set out in it

But that does not mean that the parties are allowed to take a leeway and keep on delaying the transaction to avoid their contractual obligations 

Even if no time limit is set, it is always presumed that the contractual obligations have to be performed within a reasonable time

Reasonable time is that which any person of ordinary prudence would generally expect from another person 

It cannot be any unconscionable time enabling the party to indefinitely delay the transaction 

The agreement is of 16 March and now its mid July

Since there was lockdown in between, some concession can be given to the buyer

So you can give him a 15 days notice to arrange his finances and on failure you would cancel the agreement and forfeit any token or advance paid by him as agreed in the contract

Yusuf Rampurawala
Advocate, Mumbai
5757 Answers
35 Consultations

5.0 on 5.0

Presuming the property referred to is situated in India the first relavent question becomes that whether the agreement was registered or not. If it was unregistered then it automatically becomes null, void and ineffective and you can just give a formal notice terminating the same. However if it was registered, you will have to pursue the buyer atleast a couple of times through notices and this will be just to strengthen your case in the event he later approaches the court for specific performance. The only peculiarity in your situation is the the agreement does not state a particular time for which it operates. But logically and reasonably you cannot be made to wait forever due to an agreement to sell and the buyer cannot misuse the agreement to encumber the property for perpetuity.

So in my humble opinion you should send a notice asking him to be present before the concerned sub registrar on a particular day for the execution of the sale deed and completion of the transaction and on the said day you must be present there too and in case he does not show up then for the purpose of evidence you can ask the office of sub registrar for a slip to show your presence. Such a slip can be obtained for a nominal charge and it clearly marks your presence. Even though a few follow up notices would also suffice but if you repeat this a couple of times, it will fortify your case in the event the buyer at a later stage tries to create problems. The presence can be marked even by the attorney authorised by you through a POA in case you are not in India and the reference to the same should be made in the legal notice.

Varun Bhandari
Advocate, Kanpur
86 Answers

5.0 on 5.0

It is difficult to prove oral agreement 

 

do you have any email , messages wherein he agreed for time frame for completion of transaction 

 

you can cancel agreement if purchaser has failed to honour his commitment as provided in agreement for sale 

Ajay Sethi
Advocate, Mumbai
79294 Answers
4742 Consultations

5.0 on 5.0

The property being situated in the USA changes the scenario since the laws relating to mandatory registration are different in different countries. So you will have to check whether the laws in your domicile make it compulsory for an agreement for sale to be in writing and whether they make it mandatory to be registered. Registration as you asked basically means to get the execution of the document evidenced before a public authority authorised to do so. It will most likely be the authority you approach when you sell a property.

 

Having said that the principle of law would undoubtedly remain the same with respect to reasonable time for execution of sale deed as I mentioned previously. Since it is not reasonable to allow someone to encumber a property perpetually just because they entered into a contract to sell especially when they are the ones who are not fulfilling their part of the obligation and are not coming forward to pay the money while you are all along ready to sell the property as agreed. You can also check if your local law stipulates a certain time after which the agreement would automatically lapse.

Varun Bhandari
Advocate, Kanpur
86 Answers

5.0 on 5.0

Just to avoid any liability you have to send a legal notice for termination of the agreement on the basis of verbal agreement between the prospective buyer and you that he was not able to arrange the fund as agreed by 21st July for the completion of the transaction as agreed in case he has any approval in writing by the bank she can provide you to get this deal on and there should be a time frame agreed by both the parties otherwise you can lead to contract as terminated.

Vimlesh Prasad Mishra
Advocate, Lucknow
6786 Answers
23 Consultations

4.9 on 5.0

Unless time is mentioned and the same is made the  ' essence of contract ' one can not terminate the agreement on expiry of time. 

In your case neither any time is mentioned nor much time has elapsed.  In other words after expiry of few months you can not cancel the agreement. 

To save yourself make him agree on signing a supplementary agreement mentioning a fixed time line .so on its lapse you can terminate it.

Otherwise wait for another 2-3 years. 

Devajyoti Barman
Advocate, Kolkata
21680 Answers
311 Consultations

5.0 on 5.0

The buyer has to stand by his word now

If the time has elapsed and he has still been able to get the loan then you can terminate the contract

Cannot comment about requirement of registration of document for a property situated in USA

For that you need to contact a local lawyer there

This platform would fetch you probable answers based on Indian law 

Yusuf Rampurawala
Advocate, Mumbai
5757 Answers
35 Consultations

5.0 on 5.0

Need to review your "Agreement to Sell" contract and what terms and conditions are mentioned in it plus what are the termination clauses from both the side in case Breach of Contract.

 

For your guidance below are few Remedies:

 

Remedies for Breach of Contract -- Damages

  • If the agreement does not meet the legal requirements to be considered a valid contract, the “contractual agreement” will not be enforced by the law, and the breaching party will not need to indemnify the non-breaching party.  That is, the plaintiff (non-breaching party) in a contractual dispute suing the breaching party may only win Expectation Damages when they are able to show that the alleged contractual agreement actually existed and was a valid and enforceable contract.  In such case, expectation damages will be rewarded, which attempts to make the non-breaching party whole, by awarding the amount of money that the party would have made had there not been a breach in the agreement plus any reasonably foreseeable consequential damages suffered as a result of the breach.  However, it is important to note that there is no punitive damages for contractual remedies, and the non-breaching party may not be awarded more than the expectancy (monetary value of the contract, had it been fully performed). 
  • However, in certain circumstances, certain promises that are not considered contracts may be enforced to a limited extent.  If one party has made reasonable reliance to his detriment on the assurances/promises of the other party, the court may apply an equitable doctrine of Promissory Estoppel to award the non-breaching party a Reliance damages to compensate the party for the amount suffered as a result of the party’s reasonable reliance on the agreement.
  • In another circumstance, the court may award Unjust Enrichment to a party, if the party who confers a benefit on another party, if it would be unjust for the party receiving the benefit to keep it without paying for it.   

Ganesh Kadam
Advocate, Pune
11668 Answers
109 Consultations

4.9 on 5.0

The registered agreement will be valid.

Yes he have failed to fulfill his side of agreement 

Rahul Jatain
Advocate, Rohtak
5364 Answers
4 Consultations

4.8 on 5.0

Hi, in the Indian Contract Act section 51 and 52 to deals with reciprocal promises, you can take a look at it. Since you will be governed by US law. In common law, the answer to your question is Yes you can rescind the contract when you have not specified any time in the contract but later on verbally agreed on specific date then you may rescind it. Any transaction in law is supposed to be done in a reasonable time. The question of forfeiting any amount paid is a question that depends upon the facts and prevailing law of land. 

 

Regards

Dhruv Dwivedi
Advocate, Delhi
12 Answers

Not rated

Send legal notice for cancellation of agreement. Mention all facts and orally agreed the concluded date is 21th July 2020 and since he failed to obtain loan and provide loan approval proof, you are incline to terminate the agreement forthwith.

No matter agreement registered or not, can be terminate by giving legal notice.

Yogendra Singh Rajawat
Advocate, Jaipur
21402 Answers
31 Consultations

4.4 on 5.0

Dear Sir,

There must be a time line (time limit) of the agreement and if the not mentioned in the sale agreement; you may mention the same by way of email/whatsapp etc.  to the buyer that he should clear the stand within next 10 days or so, else the agreement stands cancelled. I hope this will solve the purpose. 

Ganesh Singh
Advocate, New Delhi
6512 Answers
13 Consultations

4.5 on 5.0

1. As per the Agreement the sell was contingent on his  being able to secure finances for said property which he has attempted and is in the process.

 

2. Meantime, there has been lockdown declared in India just after the said sale agreement was signed by both of you from 23.3.2020.

 

3. Your said sale agreement does not specify any time limit within which he shall have to pay you the said amount and reasonable tile has not yet been crossed by him with the back drop of lockdown of India.as a whole and also the sates.

 

4. It will be prudent on your part to send him a notice allowing him 45 more days time to complete the deal clearly mentioning therein that the agreement will be cancelled by you if he does not make the payment within the said period.

Krishna Kishore Ganguly
Advocate, Kolkata
24708 Answers
701 Consultations

5.0 on 5.0

1. You have no evidence of his such agreeing to cancel the agreement in case he fails to pay the amount.

 

2. It will be proper for you if you can get a letter or email from him stating that he won't be able to make the payment for which the said agreement can be considered as cancelled by you.

Krishna Kishore Ganguly
Advocate, Kolkata
24708 Answers
701 Consultations

5.0 on 5.0

1. When the property is in the USA , the law and rules of USA shall apply on the matter.

 

2. In India, such sale Agreement is required to be registered to be considered as valid legaly.

Krishna Kishore Ganguly
Advocate, Kolkata
24708 Answers
701 Consultations

5.0 on 5.0

The agreement should be registered. 

Swarupananda Neogi
Advocate, Kolkata
2904 Answers
6 Consultations

4.7 on 5.0

If he has failed to perform the said agreed conditions you are free to cancel the same

Prashant Nayak
Advocate, Mumbai
22417 Answers
49 Consultations

4.4 on 5.0

You can issue a legal notice informing him that he was provided with sufficient time to pay the sale consideration amount and get the property registered, whereas he failed to utilise several opportunities in the past.

Hence it is no more possible to grant him more time or extend the agreement period therefore you are cancelling the sale agreement.You can ask him to collect back his advance amount at his convenient time with prior intimation to you.

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

You can cancel the sale agreement citing the oral agreement for the time limit which was extended until recently has also expired. 

You can call him and tell him that you are cancelling the sale agreement for his failure to keep up his commitments, followed by a notice intimating your decision to cancel the agreement.

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

The prevailing US laws would apply whether it would be valid for a registered or an unregistered agreement.

T Kalaiselvan
Advocate, Vellore
69328 Answers
929 Consultations

5.0 on 5.0

1..Yes you can send him a notice for cancellation on ground that payment was not arranged by him as promised and he is also not following the deal as promised.

2. Give him a further opportunity of 15 days to arrange the funds Otherwise the agreement stand cancelled.

3. You can also offer him for refund of advance paid to you. 

Mohit Kapoor
Advocate, Rohtak
10685 Answers
7 Consultations

5.0 on 5.0

Since you have entered into a contract after signing an agreement to sell with the purchaser , and thereby you bond yourself with the clauses mentioned therein. 

- As per law, A breach of contract occurs when one party fails to fulfils its agreement according to the terms of the contract, and the other party fulfils its obligations, the performing party is entitled to legal remedies for breach of contract.

- But,if the breach inevitably occurs due to something neither party has control over such as a natural disaster that affects one or both party of the contract , or the ongoing COVID-19 outbreak, then it will not come under the definition of the Breach of contract.

- If the said agreement to sell was containing the clause of end of the agreement , i.e during a limited period of time the buyer has to pay the remaining amount , then the purchaser is bound for the same , and if he fails then being the seller , you having right to cancel the same legally. 

Mohammed Shahzad
Advocate, Delhi
5531 Answers
51 Consultations

5.0 on 5.0

the tile period should have been mentioned. Anyways if interpreted the agreement means that a reasonable time is required and hence you may give him a notice and cancel.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

Yeah as per the phone conversation the agreement stands cancelled. But to be on the safe side take it in writing.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

We don't know thwir rules but registered agreement must not be compulsory.

Rahul Mishra
Advocate, Lucknow
11560 Answers
20 Consultations

5.0 on 5.0

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer