Can A Sale Deed Be Cancelled?
If the buyer and seller agree not to proceed with the transaction, it can be cancelled. To complete the transfer of a property, both the purchaser and the seller must create and record a sale deed. This is the legal document used as proof of the property transfer. Can a buyer or seller revoke a sale deed after it has been registered, including stamp duty & registration charges? What happens if the buyer changes his mind after the purchase? What if the seller wants to withdraw the sale agreement? What is the legal position regarding the cancellation of the selling deed? Check out this tutorial that sheds light on the sale deed, when it can be done, and the consequences.
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What is a sale deed?
A sale deed is a legal document that contains all property-related information, including buyer, seller, and property details. It is critical that a sale deed be executed by paying stamp duty & registration costs so that it is legally valid.
What does a sale deed contain?
Details of the buyers and sellers: A sale deed includes the names, ages, and addresses of both the buyer & the seller.
Property description: The sale deed included detailed information on the property, such as its total area, construction features, exact address, and surrounds.
Property value: The selling deed reveals the price at which the property is being sold. Provides an accurate breakdown of the money. It states how much money was paid in advance and how much was paid at the time of registration. It also includes information about stamp duty & registration fees, as well as payment methods.
Date of delivery: The sale deed clearly states the date on which the seller intends to hand over the property to the buyer. It also specifies the time limit in which the property title will be delivered to the buyer.
Indemnity clause: Under this clause, which is always included in the sale contract, the seller agrees to compensate the buyer for any damages incurred as a result of ownership disputes that result in monetary losses for the buyer.
Reasons that a selling deed can be cancelled
Mutual consent: If the buyer and seller agree not to proceed with the transaction, it can be cancelled.
Breach of contract: If a buyer or seller violates the contract, the sale deed may be cancelled.
Fraud: In the event of fraud by either party, the sale deed may be revoked.
Legally unfit: If it is determined that one of the parties is unable to proceed with the property transfer transaction, the sale deed may be revoked.
Problem with encumbrance certificate: If the encumbrance certificate indicates that the property’s title is unclear, the sale deed may be cancelled.
Misrepresentation: Misrepresentation of facts & people is a common reason for filing an appeal to revoke a sale deed.
serious error: If the sale deed document contains serious errors, it must be annulled. Small errors in the deed can be corrected with a rectification deed.
Use of force or undue influence: If either party is forced to enter into a sale, they have the right to cancel the transaction. They will, however, be required to establish the charge for cancellation of the selling deed.
Void sale deed: A binding sale deed is one that is droughted in accordance with the letter of the law. In the event of an oversight, such a contract will be unenforceable. Here’s where the terms void contract & voidable contract come into play.
Competence of parties: The parties to the contract must be legally capable of entering into it. If they are incompetent, the sale will be void and can be cancelled on that basis.
Sale deed cancellation under the Specific Relief Act.
The Specific Relief Act of 1963 allows for the cancellation of a sale deed within three years of execution on the grounds mentioned in Sections 31-33.
According to Section 31 of the Specific Relief Act of 1963, any person against whom a written instrument is void or voidable and who has reasonable grounds to believe that such instrument, if left outstanding, will cause him serious injury, may sue to have it declared void or voidable, and the court may, in its discretion, do so and order it to be delivered up and cancelled.
It states that “the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; as well as such officer shall note on the copy of the instrument contained in his books the fact of its cancellation,” if the instrument was registered under the Indian Registration Act, 1908 (16 of 1908).
Legal acts governing the cancellation of sale deeds
- Section 31 of the Specific Relief Act, 1963.
- This act allows a party to request the cancellation of a sale deed.
- Indian Contract Act, 1872.
-Under this statute, a sale deed may be cancelled due to misrepresentation of facts, fraud, or mistake.
- Civil Procedure Code, 1908.
-Party can request revocation of deed in civil court.
- Registration Act, 1908.
-If a deed is signed, it may be revoked by signing a recorded cancellation deed.
How to apply for a sale deed cancellation?
Step 1: Hire a lawyer and file a civil claim.
To seek cancellation of the sale deed, the aggrieved party must initiate a civil petition in district court. For this, they will need to engage a lawyer.
Step 2: Arrange supporting documentation.
The lawyer will file the appeal on your behalf, along with the necessary documentation.
Step 3: Submit the appeal
If the court accepts your appeal, it will notify the other parties involved in the transaction to respond.
Step 4: Hearing & arguments
Once the case is set for hearing, the plaintiff and respondent will attend in court and present their arguments to the judge. They will also need to provide documentation evidence and witnesses to back up their claims. However, the plaintiff is responsible for proving the wrongdoing.
Step 5: Court Order.
If the court deems that the case has merit, the sale deed will be cancelled. To complete the cancellation, a copy of the order will be forwarded to the appropriate sub-registrar office. The court may also order the failing party to reimburse the aggrieved party within a certain time frame.
Step 6: Cancellation of the Deed
Following the court order, the SRO will annul the sale deed and provide you with documentary evidence of the cancellation. You can use this document to obtain compensation for the registration costs and stamp duty you have already paid.
What happens when a sales deed is cancelled?
When a sale deed is cancelled, the property’s interest reverts to its original owner. This suggests the buyer is no longer interested in the property. The court may require the party to whom such relief is granted to return any benefit received from the other party as part of the sale.
Effects include:
- Financial loss: Financial losses may include token money, lawyer expenses, a portion of stamp duty, and other penalties.
- Legal: If the sale deed is invalidated due to legal issues, the person found responsible may face some penalties.
- Market impact: Frequent cancellations can harm the reputations of both buyers and sellers in the real estate market.
- Reversal of ownership: When the sales deed is revoked, ownership is reversed, and the buyer loses all rights to the property.
Does a buyer obtain a stamp duty refund if the sale deed is cancelled?
Yes, in the event that the sale deed is revoked, the buyer is eligible to get a refund of 98% of the stamp duty. This is only feasible if the buyer applies for it at the subregistrar’s office.
What are the court fees for cancelling the sale deed?
In a claim for cancellation of a sale deed, the court fees are computed based on the value for which the instrument was executed, rather than the market worth of the property.
Navimumbaihouses.com Point of View
In brief, if the parties involved reach an agreement, the seller and buyer can revoke the sale deed mutually. If both the seller and the purchaser show the cancellation deed together, the sub-registrar is compelled to register it. When one party demands cancellation and the other refuses, the individual seeking cancellation must go to court. In this scenario, the sub-registrar will annul the deed if the court issues an order to do so.
When the cancellation is accomplished, the buyer gives up all rights to the property, which cannot be claimed by their legal heirs. The legitimacy of the cancellation deed may only be determined after a careful review of its contents. It is recommended that the cancellation deed be checked by a lawyer before proceeding with the process. This legal inspection guarantees that the cancellation is lawful and meets all standards.
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