I want to buy a housing property in Mysore. I have learnt that there is already an agreement between the land-lord and an individual working in Govt, undertaking company on this property wherein the Individual had paid 10% of the property value as advance to the land-lord, and balance amount would be paid at the time of registration. It is stipulated in the agreement that registration of the property through a sale deed would be done within 3 months of the agreement and there is a penalty clause to both the parties. (For failure on the part of the individual, the land-lord has the right to forfeit the 10% advance and for failure on the part of landlord, the individual can claim penalty of Rs. 5 lacs plus interest on the advance money) For some reason, the sale deed was concluded within the stipulated period of 3 months and the individual has filed a civil suite against the landlord. The case is still going on. Both the parties are accusing each other for not concluding the sale deed. The above agreement is not registered, but it is notarized. Other facts of the case are as follows: 1. Property is still in the name of the Land-lord. 2. I have checked the encumbrance status of the property, which is in order 3. The dispute between the individual and the land-lord is not on the property per se, but on the advance money and interest. 4. The landlord has raised a bank loan at the time of purchase of the property and still there is an outstanding amount of about 20 lacs, He is paying the EMI regularly to the bank. 5. The land-lord is Muslim. Under these circumstances, can I purchase the said property from the land-lord? What are the risks involved? What precautions I should take? Kindly advise.
1) pending hearing and final disposal of the suit don't purchase the property
2) purchaser must have obtained an injunction restraining landlord from creating third party rights on the property
3) obtain copy of the suit filed by purchaser , reply if any filed by landlord , copy of interim orders passed by court
4) contact a local lawyer
There is lis-pendens' in and over the suit schedule property which is the crux of the matter, both parties concerned are in court, the court has however not given any interim order of stay against the land lord from alienating the property to any one else.
In this background,
1. It will continue to be in land lords name and if the landlord has created a charge over the property at the time of raising the home loan, then without the consent of the bank you cannot buy the property.
2. E C reflects that the property is non encumbered.
3. The purchaser has filed the case against the landlord alleging that he is not coming forth and executing the sale deed in his favour, if the court were to direct the landlord to receive the balance sale consideration and execute the sale deed in his favour, then what happens to your agreement and advance payment.
4. As discussed earlier, without the closure of the loan, the landlord cannot execute the sale deed in your favour.
5. Religion is not important in such transactions, it is applicable for every indian.
If it is only the question of money, meet with the earlier purchaser, offer to pay him back his advance, along with interest, take his signature as consenting witness, and then clear off the loan amount, and then pay the balance to the landlord. If this is acceptable to all then enter into an MOU with connected parties without any advance payment to be made now, but once the case is agreed to be withdrawn, then agree to pay the money.
My thanks to Mr. Ajay Sethi and Mr Kiran N Murthy for your expert advise. To my knowledge, the purchaser has not obtained any injunction from the court. I telephonically spoke to him (purchaser) and asked him if he has any objection if I buy the property. He said he has no objection, but wanted to consult his advocate before conveying this in writing. He said all that he wants from the landlord is: (1) Refund of Rs. 5 lakh advance paid to the landlord. (2) 18% interest (although in the agreement there no mention of '18%'. It only says 'refund with interest' (3) Rs. 5 lakh penal amount mentioned in the penalty caluse of the agreement. (for not honouring the agreement within the stipulated 3 months.) If I :- (a) Obtain a written statement from him (purchaser) stating that he has no objection for me to purchase the said property (sort of duly notarised 'no objection certificate' or NOC attested by his colleagues; (b) Give an advertisement in the newspaper stating I intend to buy the property and if any one has any objection, he /she should file / inform within 4 weeks and wait for response and (c) Keep his employer (a PSU) in the picture and obtain NOC Do you think above course of action will reduce the risk? I suspect the problem is from his office, where he had applied/obtained housing loan. One pre-condition from his office for sanctioning the loan is that ‘all the property documents should be in the possession of the landlord’; whereas in this case property documents were with the Bank, which disqualified him from taking/using loan from his office. In an email reply to the landlord the purchaser clearly mentioned that he is no longer interested in the purchase of the said property and asked the landlord to pay him the above mentioned sums. This email was sent to the landlord after the expiry of the three months period. In the legal notice sent to the landlord also his advocate clearly mentioned that he (his client = purchaser) is not interested in the property and made claim for Rs. 5 lac advance + 5 lac penalty + interest. In view of this do you think hon'ble court will direct the landlord to sign the agreement with the purchaser? Technically, the agreement between the purchaser & landlord is now invalid as the three months period has already lapsed. Kindly examine these points and advise. Purushotham Kallianpur
1) purchaser should execute an affidavit that he has no objection to your purchasing property
2) issue public notice inviting objections
3) also take 30 years title search and based on legal advice purchase the property
4) it is necessary to peruse reliefs claimed by purchaser in suit filed by him
5) contact a local lawyer
From the above it emerges that the earlier purchaser wants his 5 lakhs + interest + 5 Lakhs as penalty, whether the landlord is willing to give into this demand, if so then take the NOC from the earlier purchaser, enter into an MOU with the landlord, tell the landlord to clear the outstanding loan with the bank and then proceed to execute the registered sale agreement with the landlord.
You must first and foremost take the NOC from earlier purchaser, along with this take his consent to withdraw the case as well within 10 days from this NOC so you can arrange for the money to repay this person, along with the consent of landlord to execute the sale agreement with you after this NOC and case is withdrawn from court.
The MOU will safe guard your interest both with the previous purchaser and landlord.
1. It is a disputed property as according to your own statement the civil suit is still pending in the court. The title conveyed to you will be subject to the decision of the court.
2. A NOC from the plaintiff will not foreclose his right to sue unless a consent decree is passed on the basis of such NOC.
3. Stay away from the property.
Under these circumstances, can I purchase the said property from the land-lord? What are the risks involved? What precautions I should take? Kindly advise.
Literally speaking the landlord has done a grave mistake by entering into a sale agreement for this property to that individual especially when the property is already on mortgage loan with the bank.
The landlord cannot enter into a sale agreement with a third person without the permission of the bank which has lent him money mortgaging the property.
Now the problem is whether you can buy this roperty or not.
The strong advise is to not to buy this property at this stage for two reasons:
1) the property is under mortgage loan with the bank;
2) There is already a sale agreement with a third party who has approached court for enforcement of the specific performance of contract;
The EC or other papers will not reflect the rue picture of the property hence better keep off from buying it.
f I :-
(a) Obtain a written statement from him (purchaser) stating that he has no objection for me to purchase the said property (sort of duly notarised 'no objection certificate' or NOC attested by his colleagues;
Purchaser is not the owner that he will give NOC to you to purchase and it has no legal validity. What is the basis that the buyer is giving a NOC?
(b) Give an advertisement in the newspaper stating I intend to buy the property and if any one has any objection, he /she should file / inform within 4 weeks and wait for response
(c) Keep his employer (a PSU) in the picture and obtain NOC
Do you think above course of action will reduce the risk?
The buyer has no power to give NOC, nor any other person has got any thing to say about this, until the court case is not cleared and the mortgage loan is not cleared it cannot be said that it is worth buying, also without a legal opinion after scrutinisation of the title documents, it is not advisable to venture into the purchase.
In view of this do you think hon'ble court will direct the landlord to sign the agreement with the purchaser?
Technically, the agreement between the purchaser & landlord is now invalid as the three months period has already lapsed.
In such cases time is not essence of contract, the period no doubt mentioned as three months, it is valid upto three years hence the court will go by the law in this regard. Moreover you should concentrate on your points alone and not on his points, let him fight his case, you have to consider whether it is worth buying it or not.