If the seller has failed to vacate the property after the closing date, there are several ways a homebuyer can handle the situation. A homebuyer can not only take a legal action against the holdover owner but can also seek damages.
It’s quite a common scenario in the real estate sector, where the seller either refuses to vacate the property after the closing date or delays the eviction process owing to some unforeseen circumstances. While the latter case is negotiable, the former calls for immediate legal action for equitable eviction.
Vivek Ram, Project Head, One Mahalaxmi asserts that if a seller defaults the new buyer and refuses to evict the property after the closing, homebuyers can always resort to legal proceedings. Legal action would not only aid in the eviction process but would also penalise the holdover owner. For instance, a buyer can sue the seller for monetary damages under the breach of contract and termination of the bond. Besides, he may also ask for deposit return (and possible repayment of expenses) while forcing the expulsion.
However, at times, legal proceedings can be arduous and may last a little longer, causing ample financial inconvenience to the buyer. Therefore, it is advisable to incorporate certain terms and conditions when drafting the agreement. It would act as a proof in the event of deceit and would same your time and energy.
•Penalty clause- In case of a breach of contract, penalty clause obligates the defaulting party, to provide rightful compensation to others. Penalty clauses are enforceable by law; however, avoid keeping the excessive amount as penalty.
•Right to call off the deal- A deal termination clause aids the buyer to dismiss the contract in case the seller violates the agreement. Besides, it also obligates the seller to repay any advances or deposits received from the buyer in the past.
•Indemnity clause - Here, the seller takes the responsibility that if he fails to honour the contract, he would adequately compensate the buyer and vice-versa. The term safeguards both the parties from the losses that may arise owing to the breach of contract.
Furthermore, other clauses such as outstanding dues and Transfer of Deposits / Membership of Owner’s Association must also be essentially incorporated to prevent any financial burden in future. While the clause ‘outstanding dues’ states that the seller has paid all the property related expenses before signing the dotted line in the agreement, the ‘transfer of deposits’ / ‘Membership of Owner’s Association’ (MOA) outlines the transfer of the deposits made by the seller for electricity and water connection, and apartment owners association to the buyer. In return, the buyer would pay only the actual amount for these connections and the not the hiked value over the years. Such terms are vital to prevent the seller from duping the buyer.
Other consequences of a holdover owner
The longer the holdover owner stays in the property, the more challenging it becomes for the buyer both mentally and financially. Therefore, it is advisable to avoid making the full payment in advance. Ideally, only 30-60 percent of the property value should be paid, and the balance amount should be credited only after the property acquisition. Also, compile a list of expenses incurred during the period and seek necessary reimbursements.
As per the law, a buyer has the right to secure the rental expenses incurred after the closing date. Moreover, he is also entitled to reimbursements for property damages caused by the holdover owner. The law also allows the buyer to procure compensation for legal expenses incurred in the eviction process.
The entire process of removing the holdover owner could be complicated and time-consuming. Therefore, it is ideal to consult a reputed solicitor. Hiring a legal connoisseur involves additional expense but it would save your time and most importantly help you get the possession of your dream home.