Get lease deed cancelled by mutual consent
2) then proceed with the transaction
3) there should be indemnity clause in sale deed to indemnify you in event of any third party claims are being made
Undisclosed registered lease deed
I am planning to purchase a property in Gurugram, Haryana. The property is a built up house. During title search we discovered a registered lease deed- this was not disclosed by the seller when we met. I asked on kaanoon.com a few days back about how to cancel the above registered lease deed- thanks for the highly informative answers- I know we have to get registered cancellation deed done. My concern now is, other than why this was hidden from us, is the content of the registered lease deed. It is very strangely worded and definitely not a real lease deed. It is for ‘ more than 30 years’ ( as against the normal 2-3 years term of a residential lease ), is at one-sixth of market rent, usual clauses are missing, an arbitrator who is the real brother in law of the tenant has been appointed and, most importantly, a very dubious and suspicious clause is there saying that if Lessor’s husband, in person, wants to shift to tenanted premises ( as against if landlady- lessor and her husband, as is more reasonable - landlady is sole property owner) Or if lessor or her husband transfer the property for reasons beyond their control or on orders of an executing court then the tenant has to vacate on 3 months notice. Highly strange clause. This raises questions as to the real purpose of this lease deed. If it was for income tax purposes, as they claim, there was no need for 30 years term ( implying higher stamp duty ) and these dubious clauses. The landlady is the sole owner- why mention her husband in lease deed ? Is there any litigation/ family dispute/ husband-wife dispute/ claim / government action/ bank action which the sellers ( husband and son of the seller are both seasoned lawyers) anticipate and are trying to create encumbrance on and insulate the property? Why was this encumbrance ( 30 years lease deed- for whatever purpose) not disclosed is itself a big red flag ? Why would the sellers , assuming they did not disclose and cancel the lease deed- if our transaction proceeded, more so being moneyed people and prominent lawyers themselves, take the risk of legal action for fraud ? Any more surprises for us ? Does not leave a good feeling and taste. On the other hand the property is vacant ( checked it myself) , I have seen all original sale deeds myself ( my lawyer will inspect them later ) and , except for this lease deed, the title search report by a lawyer ( including certified copies etc) has not found anything adverse. My question is- should I proceed with this transaction ( once trust has been damaged) and, legally speaking, if I do proceed and get a registered sale deed in my favour, what are my rights ( priority ) as a bona fide good faith purchaser compared to any other charges / claims / liens/ court judgments/ government actions that may arise in future. Please advise me on the correct legal position. Thanks
Asked 2 years ago in Property Law
Religion: Sikh
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6 Answers
- Since, the seller has concealed the facts of lease deed from you , and further the contents of the said lease deed is also looking very confusing , hence you may face problem after purchasing this property .
- Further, it is also not clear that who has entered into the lease agreement and why it was not cancelled earlier before selling the property, and hence a cancellation deed will also not work .
No answer or opinion can be rendered to all your questions because the backgrounds facts are not known neither the documents you refer have been scrutinised.
Their intention may be different which cannot be predicted until heard from their mouth.
If you feel that this property is shrouded by mysterious circumstances, you are not under any compulsion to buy this property.
If you are not satisfied or convinced about the genuineness of the property, you may better ignore the dealing and look for some other genuine property elsewhere instead of wasting your time over such scrupulous issues.
First of all, I would advise you to be very cautious and careful before proceeding with this transaction. The fact that the seller did not disclose the registered lease deed and its suspicious clauses is a red flag that indicates a possible fraud or hidden defect in the title of the property. You should also verify the authenticity and validity of the lease deed and the other documents related to the property. You should also check if there are any pending or potential disputes, claims, liens, court judgments, government actions, or any other encumbrances on the property. You should also consult a lawyer and get a legal opinion on the property before making any decision.
Secondly, if you decide to proceed with this transaction and get a registered sale deed in your favour, you may have some rights as a bona fide purchaser for value without notice. According to the Indian law of property, a bona fide purchaser is a person who purchases property for a valid consideration without knowing of any other party’s claim to the title of that property. A bona fide purchaser can acquire a good title to the property even if the seller had a defective title or no title at all. However, this rule is not absolute and there are some exceptions and limitations to it.
Some of the exceptions and limitations are as follows:
- The rule does not apply to properties that are subject to statutory restrictions or prohibitions on transfer, such as wakf properties, trust properties, enemy properties, etc.
- The rule does not apply to properties that are subject to public notice or registration requirements, such as properties under the Transfer of Property Act, 1882, the Registration Act, 1908, etc.
- The rule does not apply to properties that are subject to equitable interests or rights of third parties, such as mortgages, charges, easements, etc.
- The rule does not apply to properties that are subject to adverse possession or prescriptive rights of third parties.
- The rule does not apply to properties that are subject to fraud or collusion between the seller and the buyer or between the seller and the third party.
- The rule does not apply to properties that are subject to estoppel or waiver by the buyer or by the third party.
Therefore, depending on the nature and circumstances of your case, you may or may not have a superior right over any other charges/claims/liens/court judgments/government actions that may arise in future. You should always seek legal advice and protection before entering into any transaction involving property.
It’s better that you don’t get into the same if there is trust issue. The rights after entering in agreement would depend on the terms agreed in it
Dear Client
Hidden Lease Deed: The fact that the seller did not disclose the registered lease deed is a significant concern. It raises questions about their transparency and intentions. You should continue to investigate the purpose of this lease deed and consult with your lawyer to understand its potential impact on your property rights.
Lease Terms and Unusual Clauses: The unusual terms and clauses in the lease deed, such as the extended duration and the inclusion of the husband, do raise suspicions. It's advisable to seek legal counsel to thoroughly review the lease deed and assess its implications on your property rights. Your lawyer can advise you on whether these clauses could pose future problems or if they can be challenged or invalidated.
Proceeding with the Transaction: Your decision to proceed with the transaction should be based on a careful assessment of the risks and potential consequences. If you decide to proceed, consider negotiating with the seller to address your concerns or seek indemnities if issues arise from the hidden lease deed in the future. Make sure to consult with your lawyer on the best way to protect your interests in the transaction.
Rights as a Bona Fide Purchaser: In India, a bona fide purchaser for value without notice can have certain protections. If you can demonstrate that you acted in good faith, paid a fair price, and had no knowledge of any encumbrances or adverse claims when you purchased the property, you may have priority over subsequent claims, liens, or judgments that arise after your purchase. However, the specific legal protection you have will depend on the circumstances and applicable laws, and your lawyer can provide more detailed guidance.
Legal Due Diligence: Continue to conduct a thorough legal due diligence process with the assistance of your lawyer. Ensure that all necessary searches and investigations are completed to uncover any potential issues or claims on the property. This will help you make an informed decision about whether to proceed with the transaction.
Ultimately, you should rely on the advice of your legal counsel to assess the risks associated with this property transaction, negotiate with the seller if necessary, and take appropriate steps to protect your interests. Property transactions can be complex, and legal guidance is crucial to navigate them successfully.
