Mumbai | 23 Sep, 2017 (1 year, 7 months ago)

Contracts and Legal Documentation

sale of flat from investor

I'm an investor of a flat holding an Allotment Letter from the builder in 2010. The building is now complete & ready for possession. I've yet to make about 25 percent payment to builder to be able to get the possession. I do not have enough funds to make complete payment to the builder. I've a buyer who wants to purchase the flat from me at CURRENT MARKET PRICE. I understand that i cannot sell the flat as I've not executed a sale agreement with the builder. What are the key points & documentation I should be doing to take this deal forward. I realize that builder is going to penalize me & charge interest on the outstanding amount to the builder.
Answers
26 Mar, 2018 | 14:04

Hi. The builder is only interested in his money. Whether it comes from you or your buyer. So you just have to inform the builder that the balance payment will be done by your buyer and the agreement has to be registered with that buyer instead and not with you. You have one advantage that you have not signed an agreement with the builder. Generally in the agreement a clause is put which states that if the purchaser assigns his rights in the flat to be allotted to a third party then he will be liable to pay a transfer fee to the builder. Hope such a clause is not there in your allotment letter. Till a proper agreement is registered between the builder and purchaser, the allotment letter acts as a binding agreement between the parties. So if such a clause is present in your allotment letter then the builder can invoke the same against you and demand transfer fee from you. If such a clause is absent then you are not obligated to pay any transfer fee. However the builder in all probability may try creating issues in giving his NOC and consent for transferring the rights in the flat to your proposed buyer without first paying the transfer fee. So if the clause is absent and the builder makes a demand from you then you will have to negotiate hard with the builder. Whatever is ultimately agreed between you and your builder, if the builder agrees to transfer the rights in the flat to your buyer, then a triparty agreement will be executed between you, your buyer and the builder wherein your buyer will pay the agreed amount for you to exit from the project and will also agree to pay the balance consideration payable to the builder and this agreement will then be registered. You can also try and negotiate with the builder for directly executing and registering the agreement with your buyer in case you do not wish to disclose the sum that you have received from your buyer, to the builder. So its a tricky situation which you have to handle smartly.


Yusuf Rampurawala 26 Mar, 2018 | 14:09

To add further, the flow of the transaction will also depend on what is agreed between you and your buyer. I am not aware on what terms you have agreed to sell your rights to the buyer. But in case there is any balance outstanding which is payable to the builder by you, then that outstanding can be deducted from the sum which your buyer has agreed to pay to you. And the same so deducted will be then paid by your buyer to the builder. Or it can be that your buyer will pay you the full agreed price and you will have to clear the balance outstanding to the builder which is due and payable by you.

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