• Is cancellation clause must in agreement for sale?

I am from Mumbai and have identified a resale property and paid the token amount to the seller. I have also secured a loan on the property. We are in the process of finalizing the agreement for sale. 
Unfortunately my lawyer and the dealer are saying there is no need to put cancellation clause in the agreement because if any party defaults and is not able to carry on with the deal after the agreement for sale is registered, both will have to do a cancellation deal and get it registered. They say without the cancellation deal, the property cannot be sold to any one else so the seller will have to pay my contribution back and only then the cancellation deal will happen. 

Query: I am insisting on putting the cancellation procedures in the agreement so both the parties are clear and don't have to go to the court to settle the default scenario. 
What will happen if the cancellation clause is not in the agreement and either party defaults and not able to carry on with the deal?
Asked 1 year ago in Property Law from Greater Mumbai, Maharashtra
Religion: Hindu
1. A properly drafted agreement for sale should have cancellation clause,

2. Generally a forfeiture clause is also incorporated in he agreement for sale,

3. It is not necessary to execute and register a cancellation deed separately and the agreement for sale should mention the conditions when the said agreement will be automatically be termed and treated as cancelled for defaulting in complying with the terms and conditions of the agreement for sale by either parties,

4. After such default, either party can send a letter to the other party cancelling the said agreement for the aid default and also a per the cancellation clause of the said agreement.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
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1) it is advisable to ncorporate default or cancellation clause in the agreement for sale 

2) since your agreement for sale is regd deed of cancellation also has to be registered 

3) if cancellation clause is not incorporated in agreement in the event of default you will have to file suit for specific performance 

4) yiu should always play safe when you are purchasing flat on resale basis 
Ajay Sethi
Advocate, Mumbai
23143 Answers
1215 Consultations
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A cancellation deal is required only and only if the seller and prospective buyer are cancelling the agreement on mutually agreed terms, which eludes most transactions. In 9 out of 10 transactions the cancellation terms proposed by one party are disputed by the other. It is to resolve this conflict that the cancellation clause is introduced in the agreement. Be that as it may, if the cancellation clause is violated by either party the aggrieved party will inevitably have to seek redressal from the court. The only benefit of incorporating a cancellation clause is that it clearly delineates the rights of the parties.
Ashish Davessar
Advocate, Jaipur
18061 Answers
446 Consultations
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It is always better to incorporate the cancellation clause and the charges on both the sides, this will prevent unnecessary legal problems in the future. 
What the builder and the layerr says is about the happening of an event but why wait so long, if there is a  clause for cancellation and buyer wants to cancel it he can very well go ahead invoking the provisions of the said clause. 
So insist on it.
T Kalaiselvan
Advocate, Vellore
13944 Answers
127 Consultations
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1) since you have already 5%stamp duty while executing agreement for sale the amount paid would be adjustable on sale deed executed in pursuance of this agreement. 


2) registration charges would be payable by you for registering sale deed 
Ajay Sethi
Advocate, Mumbai
23143 Answers
1215 Consultations
5.0 on 5.0
On the whole the stamp duty payable is 5% on the total sale consideration amount for the registration of sale deed. Now since you have already paid % stamp duty on the sale agreement, this amount would be adjusted from the amount actually payable during registration and you would be required to pay the balance stamp duty alone.  The registration charges alone would be payable in full once again. 
T Kalaiselvan
Advocate, Vellore
13944 Answers
127 Consultations
5.0 on 5.0
The stamp duty will have to be paid on the circle rate or the consideration, whichever is higher. The registration charges will have to be paid again on the registration of sale deed.
Ashish Davessar
Advocate, Jaipur
18061 Answers
446 Consultations
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1. You are required to register the Sale Deed after construction of the flat is over and after and possession of the flat has been handed over to you,

2. The Registration Rule is a state matter. In Kolkata, only the balance amount is to be paid while registering the Sale deed of the property for which agreement for sale has already been registered,

3. Best way to ascertain the fact is to visit the Registration Office and enquire about the matter.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
5.0 on 5.0

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