Transfer of property - X

LEGAL ANGLE

Where a person contracts to sell or lease immoveable property while having no title, or only an imperfect title, thereto, the purchaser or lessee has the following rights:

(a) if the seller or lessor subsequently acquires interest in such property, the purchaser may seek performance out of such interest;

(b) where the concurrence of other persons is required for validating the title, and they are bound to concur with the request of the seller or lessor, they may be compelled to perform;

(c) if the property is encumbered e.g. mortgaged, without disclosure of such mortgage in the contract, the seller or lessor may be required to redeem the encumbrance and transfer clear title.

If the contract can be split into parts, and the most substantial part can be specifically performed while money can compensate for the rest, such contracts may be specifically enforced by a court.

A person having a right to specific performance can assign such right, thus enabling the assignee to seek specific performance.

However, specific performance will not be granted by a court in favour of a person:

(a) who would not be entitled to recover compensation for its breach;

(b) who has become incapable of performing, or violates any essential term of the contract he is required to perform;

(c) who fails to aver in the plaint (suit) that he files that he has performed, or has always been ready and willing to perform the contract, according to its true construction, unless performance has been prevented or waived by the defendant.

This does not mean that balance moneys payable need to be paid to the defendant, or deposited in court before the suit is filed, but does require that the plaintiff is willing to pay or deposit such money should the court so require.

A significant exception to the right to specific performance of an agreement to purchase immoveable property is if in the meanwhile such property has been transferred to another person for value paid in good faith, who had no notice of the contract now sought to be enforced.

Anand Desai is managing partner with Mumbai-based law firm DSK Legal. He will address readers' queries, which can be sent to real.estate@business-standard.com