What If Buyer or Seller Breaches Sale Agreement

What If Buyer or Seller Breaches Sale Agreement

Sale Agreement contains terms and conditions agreed to between the buyer and the seller for effecting the sale.

When the buyer or the seller acts in violation of these terms and conditions or does not act or refuses to act as required, there is a breach of sale agreement. There can be numerous examples of such breach such as:

  • Payment not made in stipulated time
  • Delivery of product not made as promised
  • Seller refuses to repair within the warranty period

Options with the party when other party breaches the sale agreement:

Also Read: How to save title of your property from illegal occupants?

When one party violates the sale agreement, the other party may give notice to the defaulting party to act as per agreed term. If the defaulting party fails to perform, the other party can

  • Cancel the sale agreement – as per the cancellation clause of the agreement, if any or through the court
  • Approach the court seeking directions to the defaulting party to perform as per the agreement – suit for performance
  • Approach the court to direct the defaulting party to compensate for the loss/damages caused to the party by the defaulting party – suit for damages
  • Ask for a refund of the advance payment made to the defaulting party – suit for the price
  • Retain the advance payment made by the defaulting party
  • Seek directions from court if warranty clause benefits not provided by the seller- suit for breach of warranty

Depending upon the nature of the agreement and its terms and conditions, all or any of the remedies mentioned above can be availed. It is the discretion of the court to grant a specific remedy as per law.

Read: Rights on mother’s property after her death

Specific remedies – (Governed by Indian Contract Act and Sales of Goods Act)

Remedies of Seller against buyer:

  • When the buyer refuses to pay – seller can file a suit for payment
  • When the buyer refuses to accept the goods – seller can file a lawsuit for damages, i.e. seller can recover loss caused to him based on the market price of the goods. The amount taken for calculating the loss is the price existing on the date of delivery of goods.

Remedies of Buyer against seller:

  • When the seller refuses to deliver – the buyer can file a suit for loss/damages caused to him by non- delivery of the product
  • When there is a breach of warranty by the seller-buyer can file a suit for recovery of purchase price or can seek damages. Buyer can also reject the goods but not always.

Remedy to seek interest for the loss – It is available both to the seller and the buyer to recover interest on the monetary loss, especially in suits for recovery of price.  It is the discretion of the court to allow or not. 

Read: Land Kabza- What to do?

Remedy if before the performance as per the agreement, one party clears its intention not to perform – Here the non-defaulting party can either consider it as a breach of the agreement and seek proper remedy or can wait for the defaulting party to perform on the due date.

If the buyer is in breach, the seller can

  • cancel the agreement
  • sue for damages
  • sue for price
  • Sue for claiming the goods if they are in possession of the buyer.

If the seller is in breach, the buyer can

  • Cancel the agreement
  • Sue for damages
  • Sue for performance
  • Reject the goods when delivered by seller if they are not in conformity with the agreed terms

Agreements are meant to be performed. The parties, however, are free to provide remedies in the agreement itself in case one party fails to perform its obligations. The remedies can be:

  • Cancellation Clause
  • Notice to be given or not
  • Advance to be retained or returned
  • Compensation/Damages –payment

Things to do when your home is not selling

Things to do when your home is not selling

A house is essential for a decent living. It is a part of “right to life”, a fundamental right. Investment in a house is made to create a permanent asset.

Investment in real estate is also a lucrative business option, more comfortable and predictable as compared to investment in stocks and shares.

House is put on sale for various reasons like:

  • Relocation
  • Speculative purposes
  • Financial necessity/Distress Sale

If the sale of the house is not getting any response, we advise our clients to consider certain factors as mentioned below: 

Pricing: setting the right price   

Setting the right price for home is very important and depends on the market rate. It is necessary to analyse price influencing factors such as the area where the property is situated, demand for the house whether for residential purpose or speculative investment etc. Accordingly, the price can be changed to attract the buyers and should be set to recover a reasonable amount. Reduction in price should be the last resort.

Time of sale:  Postpone the sale

There is a time when selling a house is more advantageous. It is when the demand for home is rising. Rising income, easy credit availability etc. are some factors which influence the demand for house. If the house is not selling, wait and watch the market movement. If the buyer has too many options, better to postpone the sale.

Try other alternatives: Lease or Rent

If the house is not selling, try other alternatives like offering the house on lease or rent. A tenant may be interested, and such a tenant who has a stake in the house will take good care of the property also.

Sometimes the buyers are not interested in immediate purchase as the arrangement of finance might be a problem. An offer of lease attracts such buyers as there is always an option to buy later. 

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Ensure that the sale of the house has been properly advertised to reach to the maximum number and photographs of the house show the best features.

Title of the house and updated government records:

Ensure that the house put on sale has manifestly clear title and is free from all encumbrances. This fact should be evident from the Government records which buyers do check before buying a property. The land where the house is located is not disputed.  Take care that in a housing society, the house is freehold and sale is permitted without hassles.

Incentive:

Try offering some incentive e.g. discount if payment made early or payment made in full at once. 

Repairs/ Renovation:

The house on sale must be in order beforehand.  Repairs, where ever required should be attended. If need be, parts of the house can be renovated to enhance the physical as well as the material value of the house.

Real Estate Agent

The real estate agent hired for selling the house needs to be changed. The sale may require new perspective and better professional skills. Real Estate Agent should not have any vested interest in the sale.

Relocation Companies:

In case of relocation for work, employers arrange for buyouts through relocation companies.  It can be of great help.

Legal Advice: It is always better to engage a lawyer for the brokerage contract, title search, knowing the tax implications and preparation of legal documents, in case of property related matters. Selling a home becomes smooth with right advice and strategy.

Rules for selling immovable property in India and repatriation of sale proceeds

Rules for selling immovable property in India and repatriation of sale proceeds (1)

Real Estate investment and later selling property acquired in India by NRIs have always been a significant area inviting many queries. RBI governs sale and purchase of property by NRIs under FEMA (Foreign Exchange Management Act), 1999. RBI grants general Permission for property transactions by NRIs in India, and in some cases, specific permission of RBI is required. The rules and regulations have been simplified and made investor friendly

NRIs may want to sell the property as it is difficult to maintain if there is no plan to visit India or rent out the same and burden their family friends for payment of property tax, maintenance charges and other municipal dues

A Canadian Citizen who had inherited a property in India wanted to sell his property here in India and repatriate the sale proceeds. We answered the queries as follows:


Read: Sale of property in India by NRIs


Which property can be sold and to whom

  • Any property can be sold to a resident Indian – residential or commercial whether purchased, inherited or gifted.
  • In case the buyer is NRI – any property except agricultural land, plantation property and farmhouse.

Repatriation – It is a vast topic, but here we are confining ourselves to repatriation of sale proceeds only.

Sale proceeds can be legally and safely remitted through proper banking channels. Asset bought in India can be sold if they are purchased confirming to all the rules and regulations of foreign exchange. Once the property is sold, the next step is to repatriate the funds abroad:

If inherited/gifted -property is sold

  • The sale amount is deposited in NRO account. Repatriation is allowed up to USD One million per financial year. If remittance increases US dollar one million in a financial year, permission of RBI is required.
  • If the property has been inherited from a person residing outside India, special permission of RBI is needed.
  • NRIs can acquire agricultural land in India only through inheritance, and the same can be sold only to a resident Indian.

If the purchased property is sold:

a. The property was purchased while being a resident Indian

  • The sale proceeds are credited to NRO account and remittance from NRO account is allowed up to USD One million in a financial year after payment of tax.
  • The repatriation, in this case, is allowed only if the property is held for 10 years. If not, the sale proceeds are held in NRO account to complete 10 years.

Read: Can you sell your share of an Inherited Property?


b. The property was purchased as NRI

  • If the property was purchased using money resources in India (loan from bank or family friends) – sale proceeds are credited to NRO account. Repatriation limit is the same as in point a. Permission from RBI is required if remittance is more than that.
  • If the property was purchased on loan, repatriation is allowed up to the loan repayment amount made through NRE/FCNR accounts or remittance of foreign currency through banking channels.
  • If the property was purchased using foreign currency funds from NRE /FCNR account, the maximum amount of repatriation could be the foreign currency equivalent of the amount paid for the purchase.

In such case, repatriation of the entire principal amount is done without any restriction subject to the condition of repatriation of two residential properties only — no limit for commercial properties. Capital gains/profits are deposited in NRO account and are repatriated subject to condition of USD one million per financial year.

The repatriation limit applies to one person per financial year.


Read: Property rights of daughters Under Hindu Law in India


Documents required for repatriation of sale proceeds:

  • Certificate from Chartered Accountant – Form 15 CB
  • Certificate from income tax department – Form 15 CA
  • Application in a bank for foreign exchange
  • Proof of inheritance in case of sale of inherited property
  • Document proving sale

It is always advisable to hire a lawyer to ensure proper documentation and smooth repatriation of sale proceeds.

Can you sell your share of an Inherited Property?

Can you sell your share of an Inherited Property

The question of selling a share in an inherited property arises when you inherit a property jointly with others. There is joint ownership, and there are co-owners. To determine the share of each co-owner, we need a partition deed.

After the amendment in the year 2005, in Hindu Succession Act, 1956 the interest of deceased Hindu, shall devolve by testamentary or intestate succession as per the Act. The law of intestate succession is more appropriately the law of inheritance.

The self-acquired property can be bequeathed by will by the owner to anyone even to the exclusion of legal heirs, but the ancestral property devolves as per the law of succession.

Types of co-ownership

Co-ownership can be:


Guide for NRIs to Sell Inherited Property in India


  • Tenants in common – Share of each co-owner is not specific. When one co-owner dies, his share passes on to his heirs as per his will or intestate succession. The heirs become tenants in common with other surviving co-owners
  • Joint tenancy – Each co-owner owns an equal share in the property. When a co-owner in joint tenancy dies, his share passes to surviving co-owners. There is a right of survivorship.
  • Tenancy in entirety – A particular kind of co-ownership where husband and wife share equally. None of them can sell the property without the consent of other.

Unless expressed, in the document of title to the property, the law presumes co-owners to be tenants in common u/s 19 of Hindu Succession Act, 1956.  It means no right of survivorship.

Rights of Co-owners

A co-owner has


How to deal with the inherited property – Inheritance law in India


  • Right to use
  • Right to possession
  • Right to dispose of off his share in the property (with or without the consent of other co-owners as provided in the document of title to the property)

Division of share of co-owners by partition

The shares of the co-owners are undivided. A partition deed is required to divide the property among the co-owners so that each co-owner gets his share to which he is entitled to as per law. Partition can be

  • By mutual consent
  • Through court by filing a partition suit.

A co-owner’s share in property is inheritable and transferable.

Undivided share of co-owners

The co-owner can sell even his undivided share in the absence of any partition deed. The buyer of the share steps into the shoes of the co-owner. He can enforce partition. He acquires the rights of the transferor.

Do we need the consent of other co-owners to sell the share in an inherited property?

According to the Transfer of Property Act, every co-owner has a proprietary right of the entire property. The sale has to be made with the consent of all co-owners. But if there is an agreement that gives the co-owners exclusive rights to certain parts/portions of the property, a co-owner can sell his portion.

However, if the dwelling house is the subject matter of sale, then

  • All co-owners who jointly own the house must give their consent.
  • The transferee does not get the right to joint possession with other co-owners.

4 Easy Steps For NRIs To Sell Inherited Property In India


Generally, co-owners are free to transfer/sell their share in the inherited property. However, one co-owner cannot transfer the share of other co-owner without permission.

Selling the share in inherited property involves an understanding of the nature of co-ownership and rights of all co-owners. Partition deed is required to determine the share of each co-owner, with clarity.

Reasons for Investing in Indian Real Estate

Reasons for Investing in Indian Real Estate

A few decades ago, investing in real estate was a luxury, a way of boasting their social standing and not a necessity. But today, in this era of globalization investing your money in property is not merely imperative but also one of the most tried-and-tested ways to grow that money over the coming years. Following are a few reasons as to how investing money in the realty business is one of the safest bets for NRIs (Non – Resident Indians):

  • Stay Connected, stay rooted: No matter how much one loves living abroad, having a house back home in one’s own country gives a sense of belonging. Moreover, wherever you stay, at some point you are sure to say ‘Take me home’ country roads.
  • Rent Benefits: Having an extra property in India, would pose as an additional source for your income. Even though NRIs have to pay tax on the rental income, a part of it gets compensated under Section 80 (C).
  • Retirement Benefits: Senior citizens who own property in the country get benefits of Reverse Mortgage, i.e. money taken from the bank towards this Mortgage is not considered as a part of the income of the NRI.
  • Price Benefits: Along with the emotional connect and the benefits of rent, affordability of properties is yet another reason of why investing in real estate is lucrative for NRIs.
  • Long-Term Returns: The real estate industry has observed tremendous growth in the last decade or so and is further expected to rise by 10-15% per annum.
  • Controlled Asset: While in order to invest in shares and stocks you might require a broker, real estate investments are simple enough to be done on your own, especially with the various portals available for property purchase and sales such as Makaan.com and 99acres.com. These websites provide all the required information such as the localities and any and every query can be answered.
  • Ample Finance Options: From banks to the various Financial Companies along with numerous private lenders, there is truly no dearth of money in this business.
  • Pass onto next generation: Real estate properties can be passed onto the next generation, this is one such investment which will continue to grow and prosper. No other company or National Stock Exchange has topped the market in a row during the last decade.

Thus, investing in real estate would turn out to be the fruitful endeavour, which would not only benefit you but also your children and the coming generations.