Sale of
immovable property is an act of contract between the parties, wherein each
party to the contract has got definite duties to be performed, such as, the
vendor has to establish the clear and marketable title to the property and at
the time of registration, has to handover the title deeds along with vacant
possession of the property.On the other hand, the purchaser has to pay the
sale consideration as agreed and co-operate in completing the registration
formalities.
It is very
important for the seller and the buyer to enter into an Agreement to sell
before executing the Sale Deed.The reason is that such agreement will bind
both the parties to the agreement and make it obligatory to perform their
duties as envisaged in the agreement.The seller
and the buyer will be on the disadvantageous position if the agreement is not
executed because the purchaser may not co-operate in paying consideration as
agreed by both of them and on the other hand, the seller may avoid or delay
from proceeding to convey the property at the time of registration, leading to
misunderstanding and disputes between the parties. So it is advisable to
execute agreement to sell prior to executing the sale deed.
Generally,
vacant possession of the property is handed over to the purchaser at the time
of registration, but in certain cases, the vendor will handover vacant
possession of the property to the purchaser before the registration of the sale
deed.This act of the parties to the contract is called part performance.
Rights of the Purchaser:
Section 53-A of Transfer of Property Act recognizes part performance. The purchaser, who gets possession of
the property under terms of contracts, pending registration of sale deed, gets
equitable rights.The seller
cannot enforce eviction against the purchaser once he has parted with
possession of the property as per the agreed terms of contract.The purchaser
can enjoy peaceful possession of the property even before the sale deed is
executed and registered.Section29 of Registration Act also recognizes the
part performance.
Mandatory Conditions: Section 53-A of Transfer of
property Act stipulates certain mandatory conditions to establish part
performance of the contract, as discussed below:
1. The
transaction must be a contract for transfer of immovable property for
consideration.
2. The
contract must be III writing.
3. It must
have been signed by the seller or his authorized agent.
4. The terms
of contract should be clear, unambiguous and certain, wherein the act of part
performance should also be part of the contract.
5. The
vendor, in pursuance of the contract should put the purchaser in vacant
possession of the property.The purchaser should take the possession and if
already in possession shall continue to be in possession.
6. The
purchaser must have made part payment of the sale consideration and should be
willing to perform his part of terms and conditions agreed upon.
The
equitable right bestowed on the purchaser can be enforced by the purchaser against
the seller or anybody claiming under him.It cannot be enforced against party
who has purchased the property for consideration without the knowledge of
contract of part performance. As regards the right of the seller is concerned,
the only remedy available for the seller is to initiate civil suit against the
purchaser, seeking recovery of the balance of sale consideration.
Non-applicability:
The applicability of part
performance has two important ingredients, firstly, the existence of written
contract and secondly payment of consideration. The transfer should involve the
element of consideration to be paid by the transferee.
Gifts:
The concept of Part Performance is
not applicable in the case of gifts since the essence of the gift is transfer
of property without consideration and existence of consideration is mandatory.
Co-Owners:
The doctrine of Part Performance
will not be available against other Co-Owners who are neither the signatories
nor have signed such an agreement as consenting witnesses. Thus, even the
agreement is valid to the extent of the seller's share, the same cannot be
enforced against the other co-owners since there is not privity of contract
between the purchaser and the other Co-owners.
Minors: The doctrine of Part Performance
cannot be invoked in case of property involving minor's share and though the
Guardian of the minor enters into the contract on behalf of the minor, the same
is not valid since minor is not competent to enter into contract and
enforcement of the contract by the minor is not valid.
Thus, it may
be said that the doctrine of Part Performance, as envisaged under the TP Act,
confers only an equitable right over the purchaser in order to defend his
possession, but cannot be enforced against those to whom the property is conveyed legally and as required under law.Thus, Part performance is only a
weapon to defend possession having acquired under a legally valid agreement and
it does not validate the agreement or contract which is, prima-facie, illegal.At the time
of entering into the agreement, both the seller and the purchaser should
incorporate a clause which would clearly depict the concept of part
performance, by virtue of which the purchaser will be handed over possession of
the property.
However,if
possession of the same is agreed to be parted by the seller to the purchaser,
then the stamp duty will have to be paid on such agreement, which will be
equivalent to the stamp duty required to be paid on conveyance deed or sale
deed.
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