Encumbrance issue - how to get total refund (voiding the sales agreement)

5 years ago

Dear Sir/Madam,

We recently entered an agreement with VGN properties (Chennai) on the purchase of a plot. Since begining, we were never explicitly and clearly told that this property has been mortgaged. We always were promised by either Sales or from Customer Relations that the titles are 100% clear and rest assured there should be no legal issues. This was VGN's main selling proposition and given the brand name and past credibility and VGN's promise that we were dealing with a 100% cleaner encumbrance free title we as NRI's were willing to buy this property.

That being said, the only information that we got was probably two days after booking that we would be issued a NOC from their lender. But that was it and no mention about mortgage or about any encumbrance on the property.

Infact, the initial parent documents given after a long delay after booking were missing the crucial EC documents for the period from 2008 to 2018. This incurred us severe loss of time and caused us serious inconveniences. We had to go for a second opinion with our lawyers with the revised EC documents before having to get their final opinion, only then we came to know that this property has been mortgaged and there is an encumbrance. Now, looking backward I see this as a lack of integrity and transparency at their end.

It was only after informing our lawyers legal opinion, VGN started opening up about the impending encumbrance clearance. They started talking about making provisions to NOC and issueing indemnity etc. but all these provisions were totally put down by our lawyers. They kept insisting not to purchase the property.

Infact only on the premises of the heavy promotion and guarantee and enforcement given on 100% clear and free title and ownership of the property being dealt with, and on the multiple promises that VGN's sales team (orally though) had made that the money would be refunded unconditionally and immediately in case of any legal issues seen by our lawyers, even though we were pending legal opinion at our side we went on to signing the agreement with good will and trust in order to honor the timelines set by VGN. We are sure if the initial parent document had it contained the past 10 years of EC, we would have got the legal opinion well before signing agreement and we would not have entered in to agreement if the opinion had been negative.

Unfortunately the agreement does not in written state anything about legal issues and how such would be dealt with.

Only the agreement stated that the property is mortgated, but at the same time also stated that the property is free from all encumbrances and defects in title.

I have already paid 25% of the total sum. I wish to know in this case where my lawyers have clearly advised not to purchase based on legal grounds, does the sales agreement (made on bond paper) still hold true ?

Thanks,
Vivek (, Tamil Nadu)