First of all avoid buying disputed rights property of any type specially when matter is subjudice

here are some points explaining sale of disputed rights properties (it means immovable assets, financial instruments and others)

Sale of Disputed Rights: Key Points

Definition: A sale where the seller transfers rights or property under dispute or litigation to a buyer.

Risk Assumption: The buyer takes on the risk of the dispute’s outcome; success or failure impacts their ownership or benefits.

Legal Validity: Generally valid under laws like the Transfer of Property Act, 1882 (India), provided it does not involve inalienable rights or statutory prohibitions.

Caveat Emptor: The buyer is expected to perform due diligence and accept the risks involved.

Disclosure: The seller must inform the buyer of existing disputes to avoid claims of fraud or misrepresentation.

Discounted Price: The sale price usually reflects the uncertainty and potential risk associated with the dispute.

Legal Documentation: Clear agreements outline the nature of the dispute and risk transfer to the buyer.

Prohibited Practices: Avoidance of maintenance (lawsuit support for profit) or champerty (sharing lawsuit proceeds) is necessary to ensure fairness.

Example of a Sale Involving Disputed Rights:

Scenario:

A seller owns a piece of agricultural land that is under litigation due to a boundary dispute with a neighboring landowner. The court case has been ongoing for several years, and the final decision is pending.

Transaction:

The seller offers to sell the land to a buyer at a discounted price, clearly informing them of the ongoing dispute. The sale agreement explicitly states:

Details of the litigation.

Acknowledgment by the buyer of the dispute and assumption of risk.

No liability on the seller if the court rules against the seller’s claim to the land.

Outcome:

If the court rules in favor of the seller, the buyer retains undisputed ownership and benefits from the lower purchase price.

If the court rules against the seller, the buyer loses the disputed portion of the land but cannot claim compensation from the seller.

This example highlights the importance of disclosure, risk assumption, and clear documentation in disputed rights transactions.

In case you have specific query about any transaction do write and we can explore its outcome