Encumbrance issue - how to get total refund (voiding the sales agreement) Encumbrance issue - how to get total refund (voiding the sales agreement)

5 years ago

Dear Sir/Madam,

We recently entered an agreement with VGN properties (Chennai) on the purchase of a plot. Since begining, we were never explicitly and clearly told that this property has been mortgaged. We always were promised by either Sales or from Customer Relations that the titles are 100% clear and rest assured there should be no legal issues. This was VGN's main selling proposition and given the brand name and past credibility and VGN's promise that we were dealing with a 100% cleaner encumbrance free title we as NRI's were willing to buy this property.

That being said, the only information that we got was probably two days after booking that we would be issued a NOC from their lender. But that was it and no mention about mortgage or about any encumbrance on the property.

Infact, the initial parent documents given after a long delay after booking were missing the crucial EC documents for the period from 2008 to 2018. This incurred us severe loss of time and caused us serious inconveniences. We had to go for a second opinion with our lawyers with the revised EC documents before having to get their final opinion, only then we came to know that this property has been mortgaged and there is an encumbrance. Now, looking backward I see this as a lack of integrity and transparency at their end.

It was only after informing our lawyers legal opinion, VGN started opening up about the impending encumbrance clearance. They started talking about making provisions to NOC and issueing indemnity etc. but all these provisions were totally put down by our lawyers. They kept insisting not to purchase the property.

Infact only on the premises of the heavy promotion and guarantee and enforcement given on 100% clear and free title and ownership of the property being dealt with, and on the multiple promises that VGN's sales team (orally though) had made that the money would be refunded unconditionally and immediately in case of any legal issues seen by our lawyers, even though we were pending legal opinion at our side we went on to signing the agreement with good will and trust in order to honor the timelines set by VGN. We are sure if the initial parent document had it contained the past 10 years of EC, we would have got the legal opinion well before signing agreement and we would not have entered in to agreement if the opinion had been negative.

Unfortunately the agreement does not in written state anything about legal issues and how such would be dealt with.

Only the agreement stated that the property is mortgated, but at the same time also stated that the property is free from all encumbrances and defects in title.

I have already paid 25% of the total sum. I wish to know in this case where my lawyers have clearly advised not to purchase based on legal grounds, does the sales agreement (made on bond paper) still hold true ?

Thanks,
Vivek

Shanti Ranjan Behera

Responded 5 years ago

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A.Dear Client,
Get in touch with a good Real Estate Lawyer of the are/City.
Ask for refund if your Agreement is valid.
Shanti Ranjan Behera
Asvocate
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Kishan Dutt Kalaskar

Responded 5 years ago

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A.Dear Sir,
Sale agreement may hold good only if necessary stamp duty and penalty for non-registration is paid. You may get issue a legal notice and cancel the sale agreement and claim refund.

For full procedure contact me on mobile through Vidhikarya.
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Anonymous

Replied 5 years ago

Dear Sir,

Thanks for the response. The sale agreement states that they would penalize the buyer a sum of 10% of the total land cost in case the buyer cancels the deal any time after signing the agreement. Also it states that the refund will be made within 90 days or only after finding the prospective buyer and having received the money from the other buyer in full which ever is later.

Since I dont have a clause on what happens when there is any legal issues indicated by buyers lawyer and how in that case money would be refunded (we only have it in oral that they would refund the money back if in case buyers lawyers have found legal not satisfactory).

As mentioned orally am I eligible to claim 100% refund money or is it subjected to 10% cancellation fee as indicated in the sale agreement

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