Process of cancellation of agreement of sale
We've signed an Agreement of sale for a house two weeks back and no money has been exchanged so far. Now we do not wish to buy that property.
So kindly advice on
1. Can we cancel the agreement? And if we can, then kindly explain what shall we do, the process.
2. Can the other party go to court regarding the issue? The buyer claims he is losing customers because of the agreement he made with us.
Thanks and regards,
Asked in Property Law from Hyderabad, Telangana
1) is agreement for sale registered?
2) what are the terms of agreement for sale regarding time within which payment should be made and consequences in case you fail to make payment ?
3) you can cancel the agreement with consent of seller .
4) if you cancel the agreement for sale unilaterally seller can drag you to court and file suit for specific performance
If the agreement has been registered then both parties must be present for its cancellation also.
If the agreement has not been registered but only notarized or signed on a stamp paper, then you the buyer can send an intimation to the seller that you are no longer interested in proceeding with the purchase (state specific reasons), since no money has been exchanged, the seller will only curse you and also might seek some monetary compensation for causing loss to him (negotiate with him on this amount) He can go to court seeking specific performance of the agreement against you only if
a) agreement is duly registered,
b) if agreement is sufficiently stamped (as per Telangana stamp act)
An agreement made without passing any consideration is actually void. What was the clause or terms of the agreement?
You can terminate the agreement by giving a notice to the buyer stating that you are no more interested to sell the property since he has not paid any advance amount towards the consideration of sale so far.
Consult a local lawyer and take decision as per his further advise after seeing the agreement paper.
1. What does the cancellation clause, if any in the agreement, say? Once the agreement has been entered into it can be cancelled only within the periphery of the cancellation clause.
2. If the agreement is sans a cancellation clause then you can issue a lawyer's notice to the seller to cancel the existing agreement.
3. The prospective seller will be at liberty to sue you to claim compensation for cancellation of the agreement and also judicial directions to you to honour the agreement i.e to buy the property. His claim can be contested in the court by you if the cancellation is due to his fault.
Dear sirs, Thank you all for your responses. I apologize for not giving the details of the agreement.
The agreement was done on Rs. 100 non judicial bond paper and it is not registered.
The terms as follows.
1. Vendor has agreed to clear property tax, electricity and water charges upto date if any before registration and handover of the receipts to the vendee.
2. Vendor shall bring Non-Encumbrance certificate for past (13) years before registration.
3. Vendor hereby declares that he/she absolute owner of the said property, there are no other persons have any rights over the said property.
4. The Vendor hereby declare that the said property is free from all encumbrance, lease, cost, liens and other sort of court litigation and also free from all claims.
5. Vendor hereby declares that he/she is not entered into any agreement or executed any deed prior to this sale of agreement. If any claim arises the Vendor hereby undertakes the responsibility to compensate in full value to the vendee or to settle that matter.
6. Vendor hereby agrees to indemnify the vendee any loss suffered due to the litigation and also defect in the title deed. If the vendee is put to any defect in the title deed or expenses, losses the vendor hereby agree to compensate the full value as per expenses, losses, including sale consideration.
7. Vendor agreed to hand over the entire copies of documents, title deed of the said property at the time of registration.
8. Vendor hereby agreed to co-operate with the vendee to sign any papers, forms to perfect the registration for the said property.
9. Vendor hereby agreed to give to give physical and vacant possession of the house to the vendee on the day of registration of the sale deed.
10. Vendor hereby agreed to execute the sale deed or deeds in favour of the vendee or his/her nominee or nominees after receiving the total sale consideration from the vendee.
11. Registration fees and any other petty expenditures arising for registration purpose will be borne by the vendee.
These are all the terms mentioned in the Agreement of sale. And once again let me remind you that we are the buyers.
Kindly go through the details and please advise. Thank you everyone for your responses
Asked 1 year ago
There is no mention of the cancellation clause anywhere in the document. And no mention of the terms regarding cancellation.
And another thing at the time of writing the agreement only one copy was made and it is with us. Seller does not have any copy of the agreement what so ever.
Asked 1 year ago
1) the agreement is completely silent about consideration to be paid
2) further no time period is mentioned within which payment is to be made
3) agreement is silent as to consequences in case you fail to make payment within stipulated period
4) no particulars are given of any earnest money paid by you
5) the agreement is badly drafted
6) have you taken inspection of the title deeds ?
7) contact a local lawyer
8) you can terminate the agreement by informing the vendor that you do not want to proceed with the purchase of property and cancel the agreement
1) it appears that you have had the agreement drafted
2) since you do not want to proceed with purchase inform the seller that you are cancelling the agreement and he is at liberty to search for another buyer
3) since no payment is made there is no question of forfeiture or refund of any earnest money
1. Since the agreement is devoid of a cancellation clause the cancellation can unilaterally be done only if there is a breach of the agreement by the seller. Your query does not mention any such breach by him. Law does not permit unilateral cancellation without case.
2. The seller not having a copy of the agreement does not create any right in your favour.
1. You had entered into an agreement for doing some act against some act to be done by the other party,
2. Normally, there are clauses mentioned in the agreement for its termination,
3. If you do not act as per the agreement, he other side may file a specific performance suit for which the Court may direct you to perform specifically as per the agreement signed by you or compensate for the loss incurred by the opposite side for your not complying with the terms of the agreement entered into by you.
1. If you have entered in to an agreement, you should comply with what you have agreed to perform,
2. Otherwise you can be sued as detailed in my earlier post.
1.You have escaped the clutches of law by keeping the original agreement with you when the said agreement was not registered
2. Just deny that you have ever entered in to any agreement,
3. The seller will not be able to claim any thing from you for want of the original agreement,
From the contents of the so called agreement posted by you now it can be seen that this is not at all an agreement to sell the property. The contents mentioned are the conditions which the vendor is obliging to carry out.
There is no sale agreement at all.
There is no mention about sale consideration.
There is no mention about when the sale will take place .
There is no mention about the termination clause
There is no mention about acceptance of sale, k.e., buying and selling by both on the specified conditions.
There is no mention about the buyer's role in the sale agreement
The so called sale agreement is on Rs. 100 NJS paper and has no legal validity.
The said sale agreement can be called off without any notice or by giving a verbal notice and not beyond that.
You dont have to worry about such an absurd sale agreement, it is purely amateur and nothing serious about the property sale transaction hence can be ignored.
1. Cancellation of agreement can't be debarred by way of agreement.
2. So in your case on breach of agreement or in unavoidable circumstances one party can send notice of cancellation and either send or demand earnest money depending on the situation.