• Cheated by property dealer and builder

We were planning to sell our house, so we did an agreement with a builder that he will buy our house. He had taken time (Sept 2012 to march 2013) to purchase our house. And he gave an earnest money of Rs. 5 lacs. In this period, we asked for balance payment but he started giving excuse that property's rate has gone down. In the agreement, it was also written that the after 31st march the earnest money will get forfeited.After 31st march, we asked to cancel the agreement but they told us, it is automatcally got cancelled. 
On March 2014, we sold our floor to another builder at a very low because we need to pay the bank loan. After sales deed, the previous builder gave me notice that you made a deal with us, take the balance amount and hand over the property to me. 
What should I do? What should be done?
Asked 4 years ago in Property Law from New Delhi, Delhi
1) was agreement for sale registered?

2) did you  issue notice to builder to make  balance payment  after 31st march 2014 ? 

3) is your subsequent sale deed duly stamped and registered? 

4) have you replied to notice issued by the fist builder? 

5) if not contact a local lawyer . reply to notice that since balance payment was not made by 31st march 2014 earnest money was forfeited and agreement cancelled with mutual consent
Ajay Sethi
Advocate, Mumbai
46704 Answers
2763 Consultations

5.0 on 5.0

1) if agreement was not registered then cancellation of agreement did not require registration . 

2) you ought to have issued notice for cancellation of agreement and for payment of balance amount . 

3) clauses in agreement entered into with first builder needs to be seen to advice 

4) you have to reply to notice issued by builder that no such verbal extension of time was made . agreement stood automatically cancelled by efflux of time ie 31/3/2014 .

5) third party rights have been created and flat sold  by duly stamped and regd sale deed . 

6) contact local lawyer in Delhi .MR thukral expert is from Delhi . meet him personally after prior appointment
Ajay Sethi
Advocate, Mumbai
46704 Answers
2763 Consultations

5.0 on 5.0

You need to engage a lawyer locally as soon as possible and send a reply to the first builders notice denying any verbal extension of the agreement and the fact that as per specific clause the advance is forfieted and that agreement is no more valid as he failed to pay the rest of the consideration in the stipulated time frame.
You should have got a notice served on the builder when he had failed to pay the remainder of the amount .The only advantage you have is that the said sale is not a registered one. Inform him through your notice that the property now stands sold and no further negotiations are possible.
Do take the copy of the first sale agreement to your advocate so that he can advise you the best course of action.
S J Mathew
Advocate, Mumbai
2263 Answers
110 Consultations

5.0 on 5.0

The earnest money can be forfeited if the buyer doesn't come forward to perform his part of contract.  In Satish Batra v Sudhir Rawal, the SC discussed the difference between earnest money, advance money and liquidated damages and laid above proposition of law. You have to prove with evidence that it was the buyer who failed to perform his part of contract as stipulated in the agreement.  If the buyer alleges that the time to perform the contract was extended then onus to prove the same shall be on him.
H. S. Thukral
Advocate, New Delhi
569 Answers
170 Consultations

5.0 on 5.0

Was the agreement for sake registered before a registar.if not it has no validity before law.but you should have issued a legal notice before selling it.since there was no extension of agreement date verbally or written it stands cancelled. So it can be sold to another. You could say you contact him personally. Since the deed is registered nothing to be feared, let him prove.you must prove that he made latches in spite of repeated contacts
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultation

4.5 on 5.0

1. The agreement for sale was not automatically cancelled. You ought to have issued a lawyer's notice to the builder to cancel the agreement and then proceeded to cancel the agreement in view of the failure of the builder to pay the remaining amount by 31 st March 2014. Which rights can be exercised by you against the builder and vice-versa require a threadbare perusal of the agreement in question. It, however, does seem that you did not act according to the law after the builder failed to honour his obligation of paying the balance amount by 31st March. 

2. Subsequent to the failure of the previous builder to pay the balance amount by 31st March 2014 you created third party rights in favour of some one else. If the builder now goes to court he will make the purchaser also a party to the proceedings. This could have been prevented had you issued a lawyer's notice to the previous builder before selling the house to another person.

3. At this stage the only thing you can do is reply to the notice issued by the builder and deny that you have violated your part of the promise. The sale deed has been registered in favour of the new builder which has resulted in the latter becoming the absolute owner of the property. Engage a lawyer forthwith top reply to the notice issued by the builder.
Ashish Davessar
Advocate, Jaipur
23120 Answers
639 Consultations

5.0 on 5.0

A.  Once the terms of the contract completed it should be communicated by written notice.  Section 55 of the Indian Contract Act, 1872 simply stated that if something is promised to be done at a specified time and the same is not performed, the contract becomes voidable at the option of the promisee if it was the intention of the parties that time should be of the essence of the contract. The Apex Court unequivocally stated that where time is not the essence of the contract, then also it is to be performed within a reasonable time which is to be determined from the express terms of the contract, nature of the properties and surrounding circumstances.

B.  In case buyer does not perform the contract within the stipulated time-period in the contract and perform 2 months or 1 or 2 years later when prices have changed. The apex court said that the court cannot ignore this reality and hence the time is an essential condition of the contract relating to immovable property. 

C. The Apex court decision in Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates Private Limited and others in (2011) 9 SCC 147 where the apex court conclusively held on the issue of time as essence of contract. The court observed that as settled position of law in case of specific performance of contract relating to immovable properties, time is not normally considered an essence of contract but this is not absolute preposition of law and is subject to several exceptions. The court relying upon ratios laid down in its other decisions observed that time as essence of contract can be inferred from nature of properties or terms of agreement and held that in view of express terms of agreement time was intended to be essence of contract. 

D. Issue legal notice to the builder expeditiously by denying all facts which are mentioned in the legal notice, you have already been created third party right And Sale agreement' terms and condition should be scrutinized by the legal expert.
B.T. Ravi
Advocate, Bangalore
836 Answers
58 Consultations

5.0 on 5.0

1. You should have come to us before fixing the 2nd buyer,

2. The copy of tyhe agreement for sale executed by you is required to be seen for rendering proper advice,

3. You should have given proper notice for cancelling the agreement which has not been done,

4. Engage a local lawyer and send reply to the notice of the said builder denying all his charges and claims and stating the the said property has already been sold after the agreement for sale with him was cancelled for his not complying with the payment clause as per the said agreement.
Krishna Kishore Ganguly
Advocate, Kolkata
18749 Answers
452 Consultations

5.0 on 5.0

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