• Demand for "On Possession" amount after a successful assignment

About an year back I sold a flat (before taking possession) on which I had paid all the instalments except statutory deposits like Service tax/Khata/Water/Electricity/Sinking Fund/Generator Charges/VAT/Advance Maintenance Charges/Gas Pipe Connection Charges etc. as they were payable “on possession”. In addition to this, there was also an element of "On possession amount" (technically part of original sale value between builder and myself) which was again payable at the time of possession (marked as “On Possession” way in statement of Accounts). However, I sold the flat before taking it’s possession. In the MOU, buyer agreed in builder's presence to pay all the pending payments payable towards possession including registration. The deal was completed through a successful assignment (from Seller to Buyer) we got the promised sale consideration (minus 1% of TDS amount withheld by the buyer). After more than an year later of the sale, builder wants us to make the payment of  "On possession amount" stating that it’s a part of original cost / sale value and should be paid by me. We maintain that the buyer had reviewed the statements of account and so did the builder and they didn't bring this point forward during the MOU meeting or any time before the assignment was done. Also since buyer had agreed to pay this amount, there is a hand written note by the builder on statement of accounts stating "on possession charges to be paid by buyer". The denial of buyer to pay the sum to builder now an year later and the denial of builder to acknowledge that amount as "on possession amount" and asking us to pay it after the successful execution of assignment agreement and transfer of the property doesn't seem right. 
I have the below questions :
1.        Does the MOU legally remain valid after a successful execution of the assignment from the seller to buyer with all payments made and deal closed? (to our understanding it holds good only till the assignment agreement is executed) 
2.        Does the builder have a legal right to come back after an year of successful execution of assignment agreement and ask for that sum of money? 
3.        Can a successful assignment agreement be executed by the builder between buyer and seller if all the payments were not closed by the seller & agreed upon to be buyer to pay the same before assignment?
4.        Do I have any legal option to deny that payment since the property is no longer in my name. Per my understanding, if payments were due from my side, the deal and execution of assignment agreement wouldn't have successfully taken place. Once the property has been transferred to the buyer, it should be a matter between builder and the buyer. Seeking your expert legal advice on the same.
Asked 4 months ago in Property Law from Bangalore, Karnataka
Religion: Hindu
1) builder has to recover amount from buyer as you have assigned right , titje interest in flat to purchaser 

2) builder would  not have agreed to transfer of flat unless purchaser agreed to pay the bakance amount on possession 

3) refuse to make payment . Generally in such cases builder furnishes no due certificate and on receipt of transfer charges agrees for  assignment of flat in name  of purchaser 

4) let builder recover amount from purchaser 
Ajay Sethi
Advocate, Mumbai
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1. The endorsement by the builder wherein he has said that  "on possession charges to be paid by buyer" binds him. The MOU continues to be the charter of rights and liabilities even after the execution of the assignment. 

2. If the on possession charges have not been paid by the buyer the builder has the remedy of proceeding against him in the civil court, but he cannot hold you liable. It seems that the building is trying to find a shortcut.

3. A successful assignment may be executed between the buyer and seller even if the payments have not been remitted. 

4. Issue a reply through your lawyer to the builder to deny your liability. If the builder subsequently goes to court then you may contest his suit.
Ashish Davessar
Advocate, Jaipur
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1.        Does the MOU legally remain valid after a successful execution of the assignment from the seller to buyer with all payments made and deal closed? (to our understanding it holds good only till the assignment agreement is executed) 

Once the property is transferred by an assignment deed the original buyer's responsibility or liability over the property terminates and to evidence this is the present MOU  or any tripartite agreement is made.
Therefore, since all the issues have been sorted out and agreed at the time entering into a MOU, the demand now being made with you is not maintainable.




2.        Does the builder have a legal right to come back after an year of successful execution of assignment agreement and ask for that sum of money? 

Dont entertain any verbal or oral demand.  Let him send a legal demand notice, you can give a fitting reply based on the agreement already signed in this regard. 
Let him seek the relief through court and let the court decide based on the facts and merits. 






3.        Can a successful assignment agreement be executed by the builder between buyer and seller if all the payments were not closed by the seller & agreed upon to be buyer to pay the same before assignment?

It is not abnormal.  It is usual practice being followed by many under such circumstances. 
There is no legal infirmity in it. 





4.        Do I have any legal option to deny that payment since the property is no longer in my name. Per my understanding, if payments were due from my side, the deal and execution of assignment agreement wouldn't have successfully taken place. Once the property has been transferred to the buyer, it should be a matter between builder and the buyer. Seeking your expert legal advice on the same.

Your understanding is right.  You can very well deny or refuse to pay any amount, let them make it legal issue, they may not be successful to recover the same from you. 

 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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