Has the POA executed by landowner in favour of developer revoked ?
2) if it has been revoked don’t purchase the flat even if it is under landowner share
3) litigation in India is long drawn and expensive proposition
Purchase property under litigation between developer and landowner
I am interested to buy a flat in a under construction residential complex. There is a development agreement between the developer and the landowner wherein the landowner is to get a share of the 36% of the total built up area including 30% of the common areas. The remaining 70% is with the developer as per the development agreement which was initially signed. Subsequently, a supplementary agreement has been signed between the developer and the landowner which details out the units which are allocated to the developer and the landowner. Both these agreements are registered. The landowner has also signed a General Power of Attorney authorising the developer to execute sale of the flats in his allocation. However, such execution can only be done after the developer hands over the landowners share. As per the terms of the development agreement the handover of the landowners share of flats was supposed to take place in 2018. The building is not yet complete and there is no default on part of the developer as per the Housing Industry Regulatory Authority. The date of completion is 2022. In 2019 the landowner filed a case stating that the Developer is not allocating the landowners share , not allowing the landowner to enter the premises and not furnishing the completion certificate. There were other commercial clause like penalties, rents etc. The landowner has also issued a public notice stating that the any sale executed with the developer is invalid. The unit that I am looking for is within the developer’s share and the developer is willing to substantiate it with the supplementary agreement signed within the develop and the landowner. He is also saying that he has the requite legal authority to sale the flats. In such situation is it legally safe to go ahead with the purchase of the flat? Do the developer has the legal right to sale his in the present situation? Can there be any restriction on the developer to sign the sale deed for transfer of the property due to the pendency of the litigation?
Asked 3 years ago in Property Law
Religion: Hindu
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7 Answers
1. The legal right to sell his share of the property will now be determined by the Court.
2. The Development Agreements are to be perused for advising in the regard.
3. However, the said flat can be purchased if the sale deed is also signed by the land owner as consenting party while registering it.
4. The said sale deed shall have to be very carefully drafted since the matter has already gone for litigation.
Yes it's safe if you are not in hurry. Litigation may take time if you want a speedy and clean possession you should not invest in litigation land
It is not advisable to buy a property under litigation.
In this case the the title itself is under dispute even though the landowner has claimed his share, but it can be seen as over all property dispute only.
Hence you may better wait until the pending litigation is disposed.
The builder may come up with tall promises in order to promote his sale, but once sold, then you may have to run behind him even for power supply and water supply etc.
Buyer beware.
1. the builder may be selling the flat from his share of flats but then such sale is subject to the restriction contained in the DA and SA executed between the builder and the owner
2. that condition states that unless the landowner's share of flats are allotted to him, the builder cannot sell the flats from his share of flats
3. so if you purchase a flat from the builder's share of flats then there are chances that the landowner may challenge such sale based on the DA and SA contracts
4. the landowner's share of flats was to be allotted in 2018. Till today that is not done. So the landowner has exercised a lien over the builder's share of flats
5. thus until that lien is discharged, the builder's title to the flat proposed to be sold cannot be said to be clear and marketable
6. builder can make whatever representations that he has the legal authority to sell the flat, but the documents say to the contrary
7. the builder's right to sell the flat from his share has not yet crystallized until he allots the owner's share of flats as per the contract executed with the owner
8. hence, not advisable, unless the owner gives a NOC for such sale
Dear Client,
In such a situation, you may please wait for the discretion of the Hon'ble Court in this case, in order to go ahead with the purchase of the flat.
Since the landowner, being the complete owner of the property irrespective of authorising a General Power of Attorney to the developer, has filed a case against the developer, such sale and purchase right on the developer shall be on hold till the discretion of the Hon'ble Court is pronounced.
Thank you.
- A Collaboration Agreement is an arrangement between an owner of the land and a builder where the land owner contributes the land and the developer undertakes the responsibility of obtaining approvals, property development, launching and marketing the project with the help of his financial resources.
- As per law, the builder is not the transferee or buyer of the flats as per the Transfer of Property Act, 1882 under the Collaboration Agreement.
- The ownership lies with the owner of the land, but the landowner grants the builder along with development rights, a license to enter the land for the purpose of development.
- The license/authority to enter the land is typically given by way of a Power of attorney issued in favor of the Builder, and this General power of attorney should be registered with the Registrar in order to be legally binding on both parties.
- On completion of the construction by the builder, the occupancy right is granted by the competent authority to the owner, and the owner will himself execute the sale deed in favour of the buyers.
- Further, in case of breach of the terms of the Collaboration agreement, the land owner will have the right to revoke the power of attorney.
- Hence, it is not advisable to purchase the flat from the builder , if thre is already dispute between them.
