Pro­tect­ing the rights of home­buy­ers

Trans­fer of Prop­erty Act 1882 has pro­vi­sions that help prop­erty own­ers who do not have reg­is­tered ti­tle deeds in their favour

HT Estates - - HTESTATES - Su­nil Tyagi

Gen­er­ally, f or prop­erty t rans­ac­tions, an agree­ment to sell ( ATS) i s ex­e­cuted be­tween the buyer and seller be­fore the sale deed is fi­nalised. There may be in­stances where the seller hands over the phys­i­cal pos­ses­sion of the prop­erty to the buyer af­ter the ex­e­cu­tion of the ATS. How­ever, there are times when the sale deed is not ex­e­cuted by the seller, leav­ing the buyer fac­ing the prospect of evic­tion from the prop­erty.

The Trans­fer of Prop­erty Act 1882 has cer­tain pro­vi­sions that can work in favour of a per­son who has prop­erty in his or her pos­ses­sion but does not have a reg­is­tered ti­tle deed/sale deed in his or her favour. Such pro­tec­tion is avail­able to buy­ers who can prove that a reg­is­tered ATS ex­ists and that he is will­ing to per­form his part of the con­tract ie mak­ing pay­ment of the bal­ance con­sid­er­a­tion etc for the prop­erty.

It is im­por­tant to men­tion here that this rule/ pro­vi­sion does not con­fer any ti­tle to the buyer or creates any ti­tle, but only gives a right of estop­pels (a le­gal de­fence tool used when some­one re­neges on or con­tra­dicts a pre­vi­ous agree­ment or claim) be­tween par­ties.

An­other im­por­tant as­pect of this pro­vi­sion is that the right of part per­for­mance (part per­for­mance means that the buyer has per­formed part of his con­tract and is ready to per­form the re­main­ing part but the seller is not per­form­ing his part of the con­tract) can be raised only in de­fence and can­not be ap­plied for the pur­pose of dec­la­ra­tion of ti­tle to the prop­erty or to seek re­cov­ery of pos­ses­sion of the prop­erty. It is a well-set­tled law that the doc­trine of part per­for­mance is avail­able to re­tain the pos­ses­sion and not to get the pos­ses­sion.

In or­der to ac­quire a per­fect ti­tle to the im­move­able prop­erty, ex­e­cu­tion and reg­is­tra­tion of the sale deed would still be nec­es­sary. A buyer may ap­proach the court for the spe­cific per­for­mance of the con­tract. The above rule has been in­cor­po­rated into the Act to ease dif­fi­cul­ties of buy­ers who have been treated un­justly by the seller. It is based on the prin­ci­ple of equity. For in­stance, A is a ten­ant in B’s prop­erty and sub­se­quently A agrees to pur­chase B’s prop­erty and an ATS is ex­e­cuted be­tween A and B. A pays 90% of the con­sid­er­a­tion and as he is al­ready liv­ing in the prop­erty, B lets him re­tain the pos­ses­sion af­ter ex­e­cu­tion of ATS. A is ready to pay 10% bal­ance of the con­sid­er­a­tion but B af­ter some time en­ters into a con­tract with C to sell the same prop­erty which is in pos­ses­sion of A. B can­not claim the prop­erty just be­cause the sale deed has not been reg­is­tered. Such a claim by B to sell the prop­erty to C would be un­just for A and A has the right to re­main in pos­ses­sion of the prop­erty. To sum up, this prin­ci­ple is not ap­pli­ca­ble when the trans­feree/ buyer fails to prove that he has per­formed any act in con­tin­u­ance of the con­tract and ap­plies when cer­tain spe­cific con­di­tions have been ful­filled.

Un­less t he buyer pleads that he has per­formed or was will­ing to per­form his part of con­tract, this prin­ci­ple would not be ap­pli­ca­ble. If the buyer is in pos­ses­sion of a prop­erty in part per­for­mance of a con­tract of sale and the req­ui­site con­di­tions for the ap­pli­ca­tion of the doc­trine of part per­for­mance are sat­is­fied then the buyer can de­fend his pos­ses­sion even against the true owner.

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