Paying "Rent" on a Flat You Are Buying? Sindh High Court on Rent v. Sale Agreements (2023)

Flats in Karachi are often bought while still under construction, with the buyer moving in early and paying a monthly amount to the seller until the sale is completed. When the relationship sours, the seller may go to the Rent Controller as if the buyer were an ordinary tenant. In a 2023 order, the High Court of Sindh looked at what such an arrangement really was.

The facts

As recorded in the order, the parties' agreement was, for all intents and purposes, a sale and purchase agreement. The buyer paid a substantial amount and became part-owner of an apartment then under construction; the seller held the balance of the property in trust. A two-year period was assumed for completing the project, and until then a reasonable monthly rent was to be paid to the seller pro rata to his diminishing interest.

The buyer said the project was completed within about four months, that he repeatedly asked the seller to transfer his remaining interest, and that the seller instead kept charging rent. A suit for specific performance was already pending, and the buyer had deposited the balance sale consideration in it. Rent proceedings nevertheless went against him, and he filed a constitutional petition against both orders, arguing that the Rent Controller had no jurisdiction because there was no landlord-tenant relationship.

The question: tenant or owner?

The Court framed the point in such "diminishing interest" matters as whether the transferee entered the premises as a tenant or as an owner. It noted that Section 53A of the Transfer of Property Act, 1882 safeguards a transferee who has taken possession under a written sale agreement, allowing them to claim continued possession and seek part performance from the transferor.

What the High Court held

• Entry as part-owner. The buyer walked into the property as a part-owner, and rent was payable only until the project was completed.
• No rent after completion. Since completion was achieved within four months, the buyer was not obliged to pay rent from then on; he kept seeking performance of the contract.
• Orders set aside. Both impugned orders, already suspended on 31.03.2023, were set aside.
• Forum for ownership. The parties were left to the pending suit for specific performance, preferably to be decided within 90 days, and the buyer was not to be dispossessed until final judgment.

Read our summary on the judgment page: Sindh High Court rent petition (Section 53A, 2023).

Practical points for buyers and sellers

These are general points drawn from this order; every agreement is different.

• Read what the agreement actually says. The Court looked at substance, not labels such as "rent".
• Keep proof of payments and possession. The buyer's payments, part-ownership and possession under a written agreement were central here.
• Specific performance is the forum for ownership. The High Court did not decide title; it left that to the civil suit.
• Depositing the balance consideration helps show readiness. The order records that the buyer had done so in the pending suit.

If you are facing rent proceedings over a property you are buying, bring your agreement and payment record for a review.

Related judgment

• High Court of Sindh, Constitutional Petition (rent matter), 20 July 2023

Disclaimer: General information only, not legal advice. This article summarises a High Court of Sindh order as at the date shown and does not create a lawyer-client relationship. Every case depends on its own agreement and facts; please take advice before acting.