Basics of Transfer of Property Act, 1882

Posted On : June 21, 2022
Basics of Transfer of Property Act, 1882
Buying and selling movable or immovable property in India is inevitable for any individual. Some people address their basic needs through such transactions, while some others make future investments. If such transfers of property are common, everyone must be aware of the property law in India. Know in detail about Transfer of Property Act, 1882 which governs conveyance of proprietary rights in India.
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Are you planning to sell or buy an immovable property in India? Are you aware of the property law in India which regulates such transfer of property? A casual ignorance in such matters may result in high financial losses. It should be noted that ignorance of laws, Transfer of Property Act in this case, does not help since people are expected to know the laws on the very day of coming into force. That is why ‘prevention is better than cure’ theory should be applied for property related matters.  

Introduction to Transfer of Property Act, 1882

As the name suggests, the Transfer of Property Act deals with the rules and regulations related to transfer of rights in a property from one person to another. It is also commonly known as the TPA Act. It specifically deals with transfer of immovable property among individuals as well as legal persons (i.e. body of individuals, companies, associations etc.). Certain aspects related to property are dealt with under family laws like inheritance rights which are not addressed under the Transfer of Property Act, 1882. Location of the property in question plays an important role for the court which may hear the legal matters. One must consult property lawyers in Kolkata to avoid any kinds or risks to their proprietary rights while buying or selling a property in Kolkata. 

Kinds of Transfer of Property under the Act are :

  • Sale
  • Lease
  • Gift
  • Exchange
  • Mortgage
  • Actionable Claims

Important Provisions under Transfer of Property Act, 1882

Section 5 of Transfer of Property Act

This section of TPA defines ‘transfer of property’ as “an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons”. In other words, when a person conveys his property (interests in case of immovable property) to another person or persons, it is called transfer of property as per the Act. The term also includes future transfers and devolution of sole ownership among a number of people including the former sole owner.  

The term 'living person’ has been used for a person transferring his rights and the other one in whose favour, such rights have been transferred. Such a person also includes the following:

  1. A company 
  2. An association
  3. A body of individuals

Section 6 of Transfer of Property Act

TPA Act Section 6 signifies the proprietary rights which can be transferred. The property law in India clarifies any doubt regarding future property or property in existence with the following provisions of what can not be transferred:

  1. Future Interests - Where there is likely to be an interest in the property in the future like chances of future interest lying in the heir of an estate, or legacy after death of a kinsman can not be transferred. 
  2. Re-entry for Breach - If a Transfer of Property agreement mentions the right to re-entry in case the other party breaches a certain condition, the same right can not be transferred to a third person. 
  3. Easement Rights - Rights acquired after enjoying for a considerable period of time are not transferable to another person.
  4. Restricted Rights - If some rights have been granted exclusively to the owner of a property and expressly restricted from transfer, such rights can not be conveyed to another. 
  5. Future Maintenance - A rightful maintenance expected in the future can not be transferred to another unless there is some rightful interest on the date of transfer. 
  6. Right to Sue - The law can be invoked in the court of law by the one who holds some interest in the matter in hand commonly called locus standi (Public Interest Litigation is an exception to the rule). Such a mere right to sue can not be transferred under the Act.
  7. Public Office - A public office or the salary drawn by such a public officer is a non-transferable right.
  8. Stipends/ Pensions - The amount under stipends allowed for military, naval, air-force are not transferable under the Act. The same also includes government’s civil and political pensions.
  9. Nature Opposed - There can be no transfer of rights if the same is opposed to the nature of interest thereby affected.
  10. Unlawful Object - If the object or consideration involved under the TPA Act is unlawful as per the Indian Contract Act, 1872, the same is non-transferable.
  11. Legally Disqualified - If a person is disqualified to be a transferee as per property law in India, transfer of property in his/ her name is not legal.
  12. Tenancy - A tenant under the Transfer of Property Act, 1882 can not transfer the right of occupancy to another. 
  13. Defaulter Farmer - In case of default in paying revenue by the farmer of an estate, rights can not be transferred.
  14. Lessee - A person who got rights in an estate through a lease is not rightful to transfer such rights to another person.

Section 44 of Transfer of Property Act

This provision elaborates the transfer of property by a co-owner. When an immovable property is owned by more than one person, they become co-owners of such property to the extent of shares held. If one of the co-owners wishes, he/ she can transfer the entitled shares to another through partition as per property law in India. The transfer of rights shall be of such extent as held by the transferor co-owner. It may be noted that in case of a dwelling house of an undivided family, a transferee who is not a member of such family shall not be entitled to right to possession or any other right to enjoyment.

Section 54 of Transfer of Property Act

Provisions under this section explain various aspects related to the sale of a property. 

  1. Sale has been defined as “a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised”. In simple words, a person may promise another to transfer the ownership of a property in exchange for a price which has already been paid. Exchange may also take place if the price has been promised to be paid in future, or has been partly paid while the rest has been promised to be paid in future.
  2. A contract for sale of immovable property has been defined as an agreement to sell which shall take place on terms settled between the parties, i.e. transferor and transferee.
  3. For sale of an immovable tangible property (which is not movable and can be touched) whose value is above INR 100, (or reversion/ other intangible thing) such sale can only be made through a registered instrument. 
  4. In case of a tangible immovable property of value less than INR 100, either registered instrument or delivery of the property is sufficient.
  5. Regarding delivery of tangible immovable property, it takes place when the buyer is placed in possession of the said property by the seller.

Section 55 of Transfer of Property Act

As per the Sec 55 of TPA Act, 1882, the seller as well as buyer of an immovable property enjoy certain rights. Both the parties are bound by some liabilities as well. The tables below sum up the rights and liabilities of buyer as well as seller as per the property law in India. Unless some specific agreement among the parties through contract of sale restricts, the buyers and sellers shall have the following rights and liabilities:

Rights and Liabilities of Buyer

Rights of Buyer under TPA Act

Liabilities of Buyer

To enjoy the benefit of any improvement or increase in value, rents, or profits in the property after ownership of property has been passed to the buyer

Disclose to the seller any fact which he/ she is not aware of and may materially increase the value of such property

To the extent of seller’s interest, right to such charge on property and interest on the amount paid against the seller or any person claiming under him if ownership has not been transferred on the due date

Pay purchase money to the seller or a person directed by him to complete the sale at such time and place as decided

If seller has properly declined the delivery of ownership of said property, buyer is rightful to compel specific performance of the contract through court or obtain decree to rescind such contract

Bear any loss arising from the property’s destruction, injury or decrease in value after property has been passed to the buyer and such cause has not taken place due to seller

In case property is sold free from any encumbrances, seek such money from the seller as remains due and make payment accordingly

Pay all the public charges, rents or encumbrances due over the property after ownership has been passed over to the buyer

Rights and Liabilities of Seller

Rights of Seller under TPA Act

Liabilities of Seller

Until the ownership of property passes to the buyer, seller is rightful to receive the rents and profits of the property

Disclosure of any material defect in the property to the seller which can not be discovered through ordinary care

Produce before the buyer all the documents of title relating to the sale property  in possession or power of seller

Right to charge over the property delivered and interest over the money yet to be paid, in case the possession has been transferred and the transferee is yet to pay the whole price of consideration

Answer all the buyer’s questions related to such property to the best of his/her own information

Execute conveyance of property in a proper way, time and place on payment of the price due

In case a certain part of the property has been sold, seller has the right to retain the property documents (Such seller is bound to produce the documents at the request of buyers)

Take due care of property documents in between the period of contract of sale and delivery of property

To give the buyer or such other person the possession of property as and when required

Pay public charges, interest on all encumbrances and rent due upto the date of sale unless the property is sold subject to all such encumbrances

The seller or person of fiduciary character shall be taken as the rightful owners of the property who hold the right to transfer their interests in the buyer through contract

Transfer all the documents of title of property to the buyer when whole amount of purchase money has been received by the seller

In case the property has been sold to multiple buyers, the one having the largest share/ greatest value in such property shall be rightful to keep the property documents (Such person is bound to produce the documents at the request of other owners)

Gift under TPA Act

Provisions related to gifts under Transfer of Property Act, 1882 are dealt with from Sections 122 to 129. As per section 122 of TPA Act, voluntary transfer of movable or immovable property from one person to another in the absence of consideration (price for such transfer) is called gift. 

  • The person who transfers such property is called a donor and the one who accepts the same is called the donee. 
  • Acceptance of the gift by donee is a must for transfer of gift under TPA Act. If donee dies before accepting such a gift, it becomes void.
  • In case a gift under Transfer of Property Act has been made to 2 or more persons, lack of acceptance by one of them nullifies the transfer of such interest as made for such person and functional as rest of the donees are concerned.
  •  For gift of an immovable property, a registration instrument called gift deed has to be signed by or on behalf of the donor, and attested by at least two witnesses.
  • In case of gift of movable property, either registration or mere delivery of goods is sufficient for a gift under Transfer of Property Act, 1882. 
  • Only existing property can be regarded as a gift under TPA Act. 
  • Gift of a future property with or without an existing one is void as far as the future property is concerned with regard to property law in India.

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