there is no forfeiture clause
2) if buyer fails to pay full amount within 90 days you can cancel the deal but have to refund Rs 25 k received by you
3) it is binding on you for 90 days
Legal
For sals of a residential site in Bangalore, I agreed on the price and terms with a prospective buyer and collected a token advance of 25K and gave him a set of documents copy for legal verification. An acknowledgement handwritten as below was signed between us. Bangalore 23 Sep 2024 Confirmation of agreement to sell Owner (Seller Name:……………). of (property address…………..….) agreed to sell the above plot to (buyer name & address) at a lumpsum rate of ( price…). Agreement to sell will be formally prepared and signed within 2 weeks. Sale deed registration shall be done within 90 days. Complete transaction shall be through account only. A set of documents related to the property has been handed over for legal verification to the buyer ( buyer’s name) who has paid a token advance of Rs 25,000/- to the owner which has been acknowledged. Sd- Sd/- (Buyer) ( Seller) Buyer then proposed an agreement for sale, with his partner as buyer and with a nomination clause which said the sale deed to be executed on buyers name or a nominee proposed by him, there was no forfeit clause , no mention as to what happens if the sale deed is not executed within 90 days etc..I was not prepared to sign such an agreement for sale, then told him to come with full money and we will directly execute the sale deed and register. Wish to seek your legal advice on “ if the buyer do not pay the agreed amount and execute the sale deed within 90 days as indicated in the above confirmation/ acknowledgment. Can i consider the deal as cancelled and forfeit the token advance? and thereafter look for new buyers. Is the above signed acknowledgment / confirmation legally binding on me for 90 days or even further..??
Asked 1 year ago in Property Law
Religion: Hindu
First answer received in 10 minutes.
Lawyers are available now to answer your questions.
5 Answers
1. Before the cancellation of deal, you have to send a legal notice to the buyer asking him to pay the remaining amount of sale consideration and execute the sale deed failing which it should be treated as cancelled and advance amount forfeited.
2. In case you do not inform the buyer, then it will be binding for 90 days and beyond .
- Since, there is mentioned that the registration should be done within a period of 90 days from the date of execution of this agreement, then after the expiration of the 90 days you can cancel the deal with the said buyer.
- However, as there is no clause for forfeit amount , then with the cancellation of the agreement, you sill have to refund the paid amount by the buyer.
- You can terminate/cancel the agreement after sending a notice for the same after passing this limitation period.
- Further, after cancellation of the agreement you can sell to another buyer legally.
Dear Client,
In the instant case, taking into consideration the Indian Contract Act, 1872, and the other relevant legislations, it can be noted that firstly, the acknowledgement made by you signifies an agreement of you to sell the property and the prospective buyer, to purchase the same. Secondly, the payment of the token advance signifies the buyer's intention to proceed with the purchase. Thirdly, though there has been an initial acknowledgment made, the same cannot be taken as a agreement under the Contract Act, unless it fulfils all the essential elements of the same, including the addition of forfeiture clause, consequences of non-execution of the agreement, and so on. However, it can be taken as a binding document on both parties, as the same has been entered into with their mutual consent. Furthermore, the mention on the 90-days clause, may be that, if the buyer does not pay the agreed-upon amount or execute within the given timeline, the agreement may be considered unfulfilled, thus giving the right to you, to forfeit the token advance, being a common legal practice in case of a default, and find for new prospective buyers after notifying the same to the present buyer on the cancellation due to non-fulfilment of the agreement entered into.
Hope you find this answer beneficial for resolving the dispute.
You have given a receipt for the amount received from the purchaser and have actually not entered into a sale agreement.
Besides this is an unregistered document having no legal validity.
Since you admitted that there is no forfeiture clause added to this acknowledgement, you cannot forfeit the advance amount if the purchaser do not run up on the stipulated date for executing a registered sale deed in his favor after reeving the sale consideration amount .
However you are at your liberty to cancel the deal if the buyer is not honoring the commitment on or before the stipulated time period but remember that you may have to return the token money to him otherwise he may sue you for either recovery of that amount or may even file a suit for specific performance of contract claiming execution of sale deed. .
