How to le­gally exit a prop­erty sale trans­ac­tion

Af­ter can­cel­la­tion of al­lot­ment at the stage of book­ing, the prospec­tive buyer would be left with no right, ti­tle or in­ter­est in the prop­erty

HT Estates - - HTESTATES - Su­nil Tyagi

There are many cases where be­fore a trans­ac­tion of sale-pur­chase of im­mov­able prop­erty cul­mi­nates in an ul­ti­mate sale, ei­ther the buyer or the seller wishes to ter­mi­nate the ar­range­ment and exit the trans­ac­tion for some rea­son or the other. There are var­i­ous le­gal­i­ties to be kept in mind, de­pend­ing on the stage at which the par­ties are de­cide to exit the sale-pur­chase trans­ac­tion.

At the stage of book­ing/ flat buyer’s agree­ment

Prospec­tive buyer smay de­sire to can­cel their al­lot­ment of an un­der- con­struc­tion prop­erty for var­i­ous rea­sons – for in­stance, if they find them­selves un­able to pay fur­ther in­stall­ments to­wards pur­chase of the prop­erty, they may opt for can­cel­la­tion of their al­lot­ment. Can­cel­la­tion of al­lot­ment may be done at any time prior to the ex­e­cu­tion of the con­veyance deed/sale deed. Most stan­dard buyer’s agree­ments con­tain a clause stat­ing that in the event of can­cel­la­tion, the earnest money ( which is paid by the buyer at the time of book­ing the prop­erty) would stand for­feited and the amounts paid over and above the earnest money by the buyer, if any, would be re­funded with­out in­ter­est thereon. Af­ter can­cel­la­tion of al­lot­ment, the prospec­tive buyer would be left with no right, ti­tle or in­ter­est what­so­ever in the prop­erty.

If a buyer has a nom­i­nee in whose favour he/she wants to trans­fer his al­lot­ment, he should in­form the de­vel­oper by a writ­ten ap­pli­ca­tion, prior to pro­ceed­ing with the trans­fer of al­lot­ment. Most de­vel­op­ers im­pose a trans­fer charge (cal­cu­lated on per square foot/per square me­tre ba­sis) or pro­cess­ing fee for trans­fer of the book­ing/al­lot­ment by the buyer in favour of a third party. In some projects, the first in­stance of trans­fer is per­mit­ted with­out levy of any trans­fer charges. The buyer would be re­quired to sign an en­dorse­ment form. For the pur­pose of ver­i­fi­ca­tion of sig­na­tures of the buyer and the nom­i­nee, both may be re­quired to be present in person at the de­vel­oper’s of­fice on a spec­i­fied date. Once the de­vel­oper ap­proves trans­fer of al­lot­ment, the amount (that had been al­ready paid by the orig­i­nal buyer) would stand trans­ferred to the ac­count of the nom­i­nee, and the nom­i­nee steps into the shoes of the orig­i­nal buyer. The re­spon­si­bil­ity of pay­ing the re­main­ing in­stall­ments, de­posits and charges to­wards pur­chase of the prop­erty would be that of the nom­i­nee.

At the stage of agree­ment to sell

An agree­ment to sell (ATS) is a pre­cur­sor to the sale deed which sets out terms such as ad­vance sale con­sid­er­a­tion, to­tal sale con­sid­er­a­tion, time pe­riod within which the sale deed is to be ex­e­cuted and reg­is­tered, obli­ga­tions to be per­formed by the par­ties be­fore trans­fer can take place, etc. In order to validly exit an ATS (with mu­tual con­sent of the par­ties) that has been duly ex­e­cuted and reg­is­tered, a can­cel­la­tion deed may be ex­e­cuted with all par­ties in­volved in the trans­ac­tion. Such can­cel­la­tion is re­quired to be reg­is­tered as per the pro­vi­sions of the Regis­tra­tion Act, 1908.

At the stage of sale deed

Where sale of im­mov­able prop­erty has been made ab­so­lute, par­ties may an­nul and exit the sale deed, pro­vided proper doc­u­ment is ex­e­cuted by the par­ties. A buyer who, af­ter ex­e­cu­tion of the sale deed, sub­se­quently dis­cov­ers that the seller has mis­rep­re­sented ma­te­rial facts re­lat­ing to the prop­erty, can ap­proach com­pe­tent courts and seek relief of an­nul­ment/can­cel­la­tion of sale deed. How­ever, where both the buyer and seller want to can­cel/ an­nul the sale trans­ac­tion, they may do so only by ex­e­cut­ing a con­veyance deed for re-con­veyance. This is be­cause once ti­tle to im­mov­able prop­erty has been ab­so­lutely vested in the trans­feree (buyer), ti­tle and own­er­ship can­not be di­vested unto the trans­feror (seller) by mere deed of can­cel­la­tion. Here, the par­ties would be li­able to pay stamp duty and regis­tra­tion fee which is levi­able on a sale/con­veyance deed of im­mov­able prop­erty.

THINKSTOCK

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