How Does The Law Treat Inherited Property That Has Been Sold Illegally?

When inherited property is sold illegally, it creates serious legal complications, as the ownership of the property may be disputed. Illegal sale refers to a transaction where the seller does not have the legal right or authority to transfer ownership of the property, often due to lack of proper documentation, fraud, or absence of consent from legitimate heirs.

1. Legal Standing of the Sale

Fraudulent Transactions: If inherited property is sold without the consent of all legal heirs, the sale may be considered fraudulent and invalid. In such cases, the property does not legally change ownership, and the buyer does not acquire valid title over the property.

Sale Without Consent: If the property is sold by only one heir, and other legal heirs have not agreed to the sale or have not signed any documents, the transaction may not be legally binding. The sale deed signed by the unauthorized heir can be challenged by the rightful heirs in court.

Unauthorized Sale:

If the property is jointly inherited by multiple heirs, one heir selling the entire property without the consent of the others can lead to legal disputes. The buyer, in this case, cannot claim full ownership of the property, and the transaction is subject to cancellation.

2. Legal Heirs' Rights to the Property

Property Repossession: The rightful legal heirs can file a civil suit in a court of law to seek repossession of the property. They can challenge the sale by proving that the transaction was illegal and that the seller had no right to sell the property.

Fraudulent Sale Deed: The sale deed can be contested in court as a fraudulent document. If it is proven that the sale was made without the consent of the rightful heirs, the court may declare the deed null and void.

Court’s Role:

The court can order the revocation of the sale deed, and the buyer may be required to return the property to the rightful owners. If the buyer has already made improvements to the property or is holding it in good faith, compensation may be considered in some cases.

3. Role of the Registration Authority

Fraudulent Registration: If the sale deed was registered fraudulently, without proper consent from all legal heirs, the Registrar can be notified, and a legal challenge can be initiated. In cases where forgery or fraud is suspected, the Registrar may be involved in the investigation.

Fraudulent Sale Registration: A legal heir can approach the sub-registrar's office to challenge the sale if they find that the sale deed was registered without proper documentation or their consent.

4. Buyer’s Position

Buyer in Good Faith: If the buyer purchased the property in good faith, believing the sale to be legitimate, they may be considered a bona fide purchaser. However, the sale remains illegal, and the buyer may lose the property if it is recovered by the rightful heirs.

Buyer’s Protection: In some cases, the buyer may have the right to claim damages from the seller who conducted the fraudulent sale. The buyer may pursue a claim for reimbursement from the seller, but they will lose their claim to the property.

5. Steps to Recover the Property

• File a Civil Suit: Legal heirs should file a civil suit for cancellation of the sale deed in a court of law. The court can declare the sale void if it is proven that the sale was made fraudulently.
• Seek Injunction: In some cases, the legal heirs may seek an injunction from the court to stop any further transactions or alterations to the property until the dispute is resolved.
• Compensation and Damages: If the fraudulent sale has led to significant financial loss, the rightful heirs can seek compensation for damages from the person who illegally sold the property.
• Criminal Action: In cases of fraud or forgery, the legal heirs can also file a criminal complaint for fraud or forgery under Indian Penal Code (IPC) sections. The seller may be prosecuted for fraudulent transfer of property.

6. Example Case

• Example 1: If a father passes away and his property is inherited by his children, but one of the children sells the property without the consent of the others, the other children can challenge the sale in court. The sale deed would be declared void, and the property would be returned to the rightful heirs.
• Example 2: A mother inherits a property from her parents and then sells it to a buyer without informing her children. The children can file a case for the cancellation of the sale, arguing that the sale was unauthorized, and they are the rightful heirs. The court can rule in their favor and restore the property.

7. Legal Recourse for Buyers

If the buyer of the property is unaware of the fraudulent sale and has paid for it in good faith, they can seek a refund from the seller. The buyer may also seek compensation for damages if they have made improvements to the property. However, the property will ultimately be returned to the rightful heirs.

Consumer Protection: If the buyer believes that they were deceived, they can approach the consumer court for a refund or compensation, but they will still lose their claim to the property.

Conclusion:

When inherited property is sold illegally, the legal heirs have the right to challenge the sale and reclaim the property. The sale is typically considered fraudulent and can be canceled in court. Legal heirs must file a civil suit to seek the repossession of the property and can also seek criminal action for fraud. The buyer, if acting in good faith, may lose the property but may have a claim against the seller for damages or compensation. It is crucial for legal heirs to act swiftly to protect their rights and recover the property through legal means.