• Cancellation of sale agreement

A sale agreement had been agreed on 29/10/2008 for rs 16200000. For 2 acres.stampaper of rs 100 and 02 were used. Advance of 500000rs was received. had agreed to receive remaining  50% within three months.and total balance within on or before 29/04/2009.The only clause in the agreement is if the purchaser fails to pay the remaining amount in the stipulated time the purchaser to loose his right over the property as well as the advance amount.We have not sent notice to the buyer nor received any regarding to the completion of the agreement.Nor we have received further Money. Now a  New buyer is willing to purchase the land. But the old buyer is creating problems without coming to negotiations with us with the old agreement. Please provide a solution to this .Advance Money can be returned only after we enter into a new deal. Please advice.
Asked 1 year ago in Civil Law from Bangalore, Karnataka
1) time was the essence of contract . Full payment was to be received by April 2009 

2) in the event purchaser failed to make payment you should have cancelled agreement and forfeited advance payment received 

3) since you have found another buyer send a letter to the original purchaser that since he has failed to perform his obligations under the contract you are cancelling the agreement and forfeiting advance payment 

4) you are free to sell your land to another buyer 

5) full facts should be disclosed to the new user 

6) execute sake deed in favour of new purchaser 

7) even if original buyer moves court he won't get any reliefs as he. Kept silence for over 6 years 
Ajay Sethi
Advocate, Mumbai
23397 Answers
1229 Consultations
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The old agreement comes to an end only if you issue a legal notice to the previous purchaser intimating to him that since he failed to perform his part of the transaction within the fixed time the agreement of sale stands cancelled for non-performance. After notice is duly served on him, you can enter into a fresh agreement with the new purchaser, deduct 50,000/- from out of the advance amount and refund the balance to the previous purchaser.
If the previous purchaser is making trouble, then lodge a police complaint and the police will help you sort out the problem, in that case you will have to refund the entire advance amount.
Kiran N. Murthy
Advocate, Bangalore
766 Answers
52 Consultations
5.0 on 5.0
Firstly a sale agreement entered on 29.10.2008 is now barred by limitation.  Next the sale agreement is not a registered document with proper stamp duty unpaid, hence it is not admissible in evidence.  Even if this considered as a receipt of the money received, the claim for return of money is also barred by limitation. Further the clause in agreement clearly restricts the buyer from claiming the amount owing to his non-performance of the contract within the time stipulated in the unregistered sale agreement. Thus, the buyer stands losing the claim in all aspects.  However, if you are willing to return the advance amount, you may decide about it, but be assured that he has no rights to forbid you from proceeding with the sale of the property to a third party, if he indulges in any such act, a criminal complaint may be lodged against him for illegal  extortion and threats of dire consequences hereon.  If the buyer is not coming for negotiations but is putting obstruction to selling the same to a third party,  you may initiate legal action against him for his continuous threats.
T Kalaiselvan
Advocate, Vellore
14170 Answers
128 Consultations
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1. You ought to cancel the existing agreement with the buyer before you can enter into a fresh agreement. A fresh agreement cannot be executed with another buyer during the subsistence of an earlier agreement with another buyer.  So the solution is to issue a lawyer's notice to the previous buyer for cancelling the agreement.

2. The advance money paid by the buyer gets forfeited if he does not pay the remaining amount.
Ashish Davessar
Advocate, Jaipur
18264 Answers
450 Consultations
5.0 on 5.0
Dear Querist

Issue a legal notice and give him 15 days time to performed his duty regarding the completion of deal related to sell agreement and after 15 days notice you may execute a new Deed related to your property. in which you may clearly mention regarding the forfeit the advance amount too. 

if he is willing to performed the same then he will reply your notice otherwise he can not take any legal action against you before the court by any means.

Feel Free to Call
Nadeem Qureshi
Advocate, New Delhi
3539 Answers
131 Consultations
4.9 on 5.0
1) cancel the agreement by issue of legal notice 

2) as per your agreement if payment was not made on time advance could be forfeited 

3) no need to refund advance amount 
Ajay Sethi
Advocate, Mumbai
23397 Answers
1229 Consultations
5.0 on 5.0
Legal notice is the correct step. After cancellation intimation by legal notice, enter into new sale agreement and be prepared to refund the money to the earlier buyer. Arrange for funds in order to be prepared to settle the issue with the earlier buyer, if not he can cause problem with new buyer as well.
Also after issuing the legal notice, file a caveat before the civil courts at bangalore, in case the earlier buyer goes to court to seek specific performance of the sale agreement. 
Kiran N. Murthy
Advocate, Bangalore
766 Answers
52 Consultations
5.0 on 5.0
we are planning for sending a legal notice for cancellation of the sale agreement will it be a right step?
This step may not be advisable because this will help him to approach court for a renewed contract somehow, hence this idea may backfire.  You can remain silent about this since this is an unregistered sale agreement and stands barred by limitation, any suit filed by him or propose to file may not be maintainable, moreover no suit can lie now on this issue, so as suggested you can go ahead with the sale of the property to a third person and he can also purchase t freely since there is no encumbrance over tit as the property sale agreement was unregistered. 



returning of the advance amount is the problem,because we are not able to refund without entering into new agreement.
you can return the amount whenever you are getting it from the new buyer. 
T Kalaiselvan
Advocate, Vellore
14170 Answers
128 Consultations
5.0 on 5.0
You do not offer to give refund to the old agreement holder. Only send notice to him about the expairy of the earlier agreement and about the forfieture of the amount for his fault.

You can later bring him to negotiation table and make him to agree for the arrangement where you can afford to pay him the negotiated settlement amount.
Sandeep Hegde
Advocate, Bangalore
361 Answers
97 Consultations
4.8 on 5.0
It is the right step. Advance money is not to be returned unless there is a clause to this effect in the agreement.
Ashish Davessar
Advocate, Jaipur
18264 Answers
450 Consultations
5.0 on 5.0
Hi, As the agreement was entered in the year 2008, the purchaser has not come forward to execute the sale deed  so you have no options issue legal notice for cancellation of sale agreement and also clearly stated in the legal notice for forfeiture of the advance amount.
Pradeep Bharathipura
Advocate, Bangalore
4105 Answers
133 Consultations
4.3 on 5.0

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