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Property Law & Civil Contracts 8 min read Published June 2024

Specific Performance: Legal Remedies When a Seller Backs Out of a Real Estate Deal

In booming real estate markets, it is common for property sellers to develop seller's remorse. After accepting an advance earnest deposit and executing an Agreement to Sell, the seller attempts to cancel the deal or demands an unjustified price increase upon finding a higher third-party bidder. Buyers are not helpless; the law provides an absolute remedy to compel specific performance.

Author / Editorial VIDURA Property Dispute Group
Practice Area Property Law & Civil Contracts
Reading Time 8 min read
Publication June 2024

The 2018 Amendment: Mandatory Specific Performance

Prior to 2018, specific performance of a contract was a discretionary relief under Section 20 of the Specific Relief Act, 1963. Courts frequently awarded monetary damages in lieu of property transfer.

The Specific Relief (Amendment) Act, 2018 revolutionized property law by substituting Section 10. Specific performance is now mandatory: courts MUST enforce the contract unless specific statutory exceptions apply.

Proving 'Readiness and Willingness' Under Section 16(c)

To succeed in a suit for specific performance, the purchaser must continuously prove readiness (financial capacity) and willingness (intent to execute the deed).

Maintain certified bank account statements, sanctioned loan approval letters, or liquid mutual fund portfolios demonstrating that you possessed sufficient financial resources to pay the balance consideration throughout the contract term.

Preventing Third-Party Sale: Lis Pendens and Injunction

Immediately upon filing the suit, obtain an ad-interim temporary injunction under Order XXXIX Rules 1 & 2 CPC restraining the seller from alienating, transferring, or creating third-party encumbrances.

Simultaneously, register a formal Notice of Lis Pendens under Section 52 of the Transfer of Property Act with the Sub-Registrar's office. This legally binds any subsequent purchaser to the outcome of your litigation.

Practical Guidance & Conclusion

A seller cannot unilaterally walk away from a binding agreement to sell. By asserting mandatory specific performance under the amended Act, buyers can ensure the court executes the conveyance directly.

V

VIDURA Property Dispute Group

Providing practical legal explainers, regulatory breakdowns, and dispute strategies across Indian courts and statutory tribunals.

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