Forfeiture of earnest money
Praveen Jain
(Querist) 09 March 2013
This query is : Resolved
Dear All,
I have entered in to an agreement to sell for a residential property on 15.02.2013 by getting 20% of the total sale consideration as 'Bayana'. The last date of final payment and execution of sale deed was 05.03.2013.
on 05.03.13, when i called the purchaser, he told me that he is short of fund and cant be able to make the payment right now.
The clause mentioned in agreement to sell was "if the purchaser fail to make the payment on or before 05.03.2013, the agreement will be considered as cancelled and earnest money will be forfeited.
In this situation, should i forfeit the amount received as earnest money and if yes then any legal formalities??
Nadeem Qureshi
(Expert) 09 March 2013
Dear Praveen Jain
if the agreement is registered you should be appear before registrar office and mark your attendance and get a copy of your attendance.
you can send a legal notice to him regarding forfeit the bayana.
Feel Free to Call
Praveen Jain
(Querist) 09 March 2013
Sir,
The agreement is on 100/- stamp paper duly attested by notary but not registered. and havin a clause as :
"Time shall be essence of this Agreement. It is agreed between the Parties that in case the Second Party fails to pay the balance sale consideration on or before March 05,2013,it would be strictly understood that the second party is not ready and willing to perform it's undertaken obligations under the Agreement and as a consequence this Agreement shall stand cancelled on its own without any notice required by the first party to be served upon the second party and the earnest amount of Rs. xxxxxxxx/- paid by the Second Party under this Agreement shall stand forfeited and the first party shall be entitled to enter into any fresh contract with any other party of his choice."
prabhakar singh
(Expert) 09 March 2013
You need not serve any notice.
The clause in agreement is perfect and forfeiture is possible on it's own.
Do not enlarge time now.
In case it was an agreement in U.P.then it is void for want of registration and not enforceable at law by any party and this makes him entitled to get his earnest back.
Praveen Jain
(Querist) 09 March 2013
Sir,
The agreement was made at Delhi for the property located in Delhi.
Kindly advice today's March 09 and four days have already been passed the final date of payment. Should i do any thing or just sit back.
ajay sethi
(Expert) 09 March 2013
since the purchaser has failed to pay balance amount by 5th march 2013 you are justified in forfeting earnest money . the agreement specifically mentions no notice is necessary . you are at liberty to forfeit the consideration amount
Praveen Jain
(Querist) 09 March 2013
Thank you very much to all of you.
ajay sethi
(Expert) 09 March 2013
thanks for your appreciation
Guest
(Expert) 09 March 2013
Although, as per the information provided by you, you are quite free to forfeit the earnest money without any notice, but still that depends upon your sole discretion by introspection of your soul's feelings whether you prefer to forfeit the bayana money, as huge unearned money on your part or, as a goodwill gesture, interested in selling the property to the fellow with some extention of time by mutual understandings. Naturally, if the other party is not able to arrange for the balance amount by due date, he would also have arranged the bayana money with some difficulty only.
Praveen Jain
(Querist) 09 March 2013
Respected Mr. Dhingra Sir,
As a human being, i am also thinking in that way, But i was enetered in to deal due to urgent need of funds for the marriage in my family. Now the deal is not completed and date of marriage is very near. in this case i have to search a new buyer and it may be possible that i may get less amount because of urgency and short time. And no one is ready to bear loss due to someone else. One more point i want to add is that the second party is a pvt ltd company.
Regards
V R SHROFF
(Expert) 09 March 2013
sell to Pvt Ltd Co.
Let them ad in news papers any right & NOC//
REgd deed & get your money.
In case earlier purchaser move court, he may or may not get part of earnest money.
Guest
(Expert) 09 March 2013
If it is not an individual, but a private limited company, you may go ahead for forfieture without any hitch and find some other buyer of the property. However for your safeside to avoid any litigation in future, you may just check to ensure yourself, if the party has not played any trick with you by recording his attendance on due date by showing your own absence. Also, issue a notice to the the buyer to pay you the balance by a fixed date within a week's time and get the sale deed executed by attending the office of the registrar, failing which the bayana would be forfeited (give date and time for attendeance). Register your attendance in the office of the registrar on the said date. If he fails to attend, wait there just for one hour. You can feel free to forfeit the bayana thereafter.
Praveen Jain
(Querist) 09 March 2013
Thanks to all of you to clarify in detail.
Regards
Guest
(Expert) 09 March 2013
You are welcome.
Raj Kumar Makkad
(Expert) 10 March 2013
I do endorse the advice of Ld. Dhingra Ji.
Praveen Jain
(Querist) 11 March 2013
Dear All,
Pls also calrify the following point:
In my case, as generally happened, the original 'greement to sell' is with purchaser and I have only photocopy of the same duly signed by both the parties.
Is any problem in that??
Guest
(Expert) 11 March 2013
Of course, no problem.
Praveen Jain
(Querist) 19 March 2013
Dear All,
in continuation of my query, now, the buyer want me to sign on termination agreement. First buyer demanded the earnest money back, but when i refused the same then the buyer is requesting for the termination agreement.
Pls advise, is thre any problem if i sign the 'Termination Agreement' for agreement to sell.
Regards
prabhakar singh
(Expert) 19 March 2013
No answer without draft of the agreement at least from my side.
ajay sethi
(Expert) 19 March 2013
get agreement drafted by a lawyer . dont sign any agreement without getting it vetted by a lawyer
Guest
(Expert) 19 March 2013
In my views, termination of agreement would mean every provision of the previous agreement would become inoperative. If agreement is terminated, no question would arise about forfeiture of earnest money. You will have to refund the same, as that would tend to indirect claim of refund of E/M on termination of agreement.
Anirudh
(Expert) 19 March 2013
Dear Mr. Praveen,
More than me, you must also be knowing as to what is the situation in Delhi.
Just because the Agreement contained a clause that if the balance consideration is not paid on 5.3.2013 the agreement would stand cancelled automatically without notice and the amount of EMD would be forfeited, does not mean that you can do so without serving him a legal notice.
The buyer would come up with umpteen plausible reasons and explanations. 20% of the sale consideration is not a small amount. The Court will not be with you.
It would therefore be advisable for you to serve a legal notice giving him appropriate notice.
prabhakar singh
(Expert) 19 March 2013
Yes! My answer was in haste.
I agree with answer of Dhingra ji.
There is a plan to trap you.
Do not enter in to any new agreement by any name it is called.
Termination has already taken place.
prabhakar singh
(Expert) 19 March 2013
Following Mr.Anirudh would also not be bad in any way.
Guest
(Expert) 19 March 2013
I owe my thanks to Shri Prabhakar Singh ji for endorsing my views.
