In case you ever consider buying the dream house or gifting the house away to a loved one, the Transfer of Property Act would always be deemed the legal backbone that assures a just, safe, and transparent transaction. Whether buying for the first time or a seasoned investor, knowledge of the Transfer of Property Act 1882 would lead you to some information and confidence to decide in the property market. This blog takes you through the process, your rights, and the journey of property transfer.
What is the Transfer of Property Act?
The Transfer of Property Act, 1882 is an Indian law which governs the process of transfer of property with the key word being transfer, both movable and immovable, from one person to another. The Act came into force on 1st July 1882 and continues to be the basic law governing property transactions in India.
The Act applies mainly to those transfers where parties transfer the property by act of the parties and not operation of law, like inheritance or a court order. It defines terms used and the requirements for the transfer of property. Henceforth, the Act provides a legal framework through which such transactions are carried out fairly and by the law.
Key Elements of the Transfer of Property Act
Several basic principles constitute the Transfer of Property Act:
- Voluntary Transfer: A transfer must be made willfully and voluntarily by the transferor.
- Inter Vivos: It covers only the transfer between living persons, i.e., inter vivos, not posthumous transfer, as by will.
- Consideration: Most of the time, property is transferred for a price or some consideration. It also allows transfers without consideration, for example, a gift
- Written Evidence: Some classes of transfer, such as immovable property, must be evidenced in writing and registered.
Types of Property That Can be Transferred Under this Act?
Since a very wide range of property types can be transferred by the act of the law:
- Movable Property: Cars, jewellery, machinery, anything tangible that can be moved from one place to another.
- Immovable Property: Land, buildings, and anything attached to the earth, such as trees and fixtures.
- Leasehold Interests: The rights conferred to use immovable property for a particular period.
- Mortgages: Transfer of interest in the property as security for a loan.
- Actionable Claims: A claim to any debt or any beneficial interest in movables not in possession of the claimant.
Role and Responsibility of Seller and Buyer on Transfer of Property
Sellers’ Responsibilities
Section 54 of the Transfer of Property Act defines sale as a transfer of ownership in return for a promise to pay or for an amount paid. Under the Act, the seller has the following duties to perform on the transfer of property:
- The seller shall furnish the buyer on request with all the title documents in his possession for inspection.
- The seller shall disclose to the buyer any major defect in the property.
- The seller shall maintain the property and all relevant documents with utmost care, as an owner, between the date of the contract of sale and the date of delivery of possession of the property to the buyers.
- The seller shall clear all encumbrances on the property existing at the time of sale, as reflected in the Encumbrance Certificate.
- The seller shall give the buyer full possession of the property.
- The seller shall answer all enquiries relating to the title concerning the best of his knowledge.
- Payment of rent and public charges for the property shall be borne by the seller until its sale.
- The seller shall perform at the time and place to be fixed by the buyer, upon payment of the price or such part as may be applicable, the execution of the transfer.
Buyers’ Responsibilities
According to the Transfer of Property Act, certain duties fall upon the buyer during the transfer of the property; these include the following:
- The buyer, if in possession of pertinent information concerning the property that the seller is not aware of, must impart this information to the seller.
- The buyer, after taking possession of the property, shall bear damages and loss occurring to the property.
- The purchase money must be paid by the buyer to the seller at the time of completion of the sale.
- No rent for the property or other public charges shall be paid by the buyer after possession of the property until they discharge any such charges or debts.
Essential Elements of a Valid Transfer
Some of the essential elements that must be there to constitute a valid transfer of property under the Transfer of Property Act in India are as follows:
- Competent Parties: The transferor and transferee must both be competent to contract as per the Contract Act, 1872.
- Transferable Property: The property should be capable of being legally transferred free from restrictions imposed by law or on certain conditions, such as public property that is not transferable.
- Lawful Object and Consideration: The purported transfer must be for a lawful consideration and with a lawful object.
- Free Consent: The transfer should be made without any coercion or undue influence on any party; fraud and misrepresentation should be absent.
- Written Document: Transfers of sale, loans, and gifts, amongst others, should be on a written document with due registration.
- Proper Attestation: Some documents are to be attested duly by a notary and/or require witnesses, e.g., loan deed, gift deed, etc.
Properties that Cannot Be Transferred Under the Transfer of Property Act
According to the general principle under the Transfer of Property Act, any property, be it movable or immovable, can be transferred. But there are a few things that cannot be transferred under the Transfer of Property Act:
- It is impossible to pass on any mere chance or possibility of a person in the future inheriting a property.
- The chance to receive a legacy from the death of a relative cannot be transferred.
- An owner of land cannot transfer a right of re-entry for breach of condition, it can only be exercised by the owner of the land.
- An easement, such as that of a right-of-way, cannot be transferred separately from the land it benefits.
- A future right to be maintained, by whatever is the foundation thereof, cannot be transferred.
- The right to institute a suit cannot be transferred to another.
- Employees of government or public bodies, whether they are due or not, cannot transfer their salaries.
- Military, navy, air force, and political pensions cannot be transferred.
- Property cannot be transferred if such transfer is illegal, immoral, or made to someone incapable of law.
Modes of Transfer
The Transfer of Property Act in India recognises many modes of transferring immovable property:
- By Sale: A transfer of ownership of property in exchange for consideration; a sale deed, which is a legal document confirming the sale, must be executed.
- By Loan: This type of transfer is made to secure a loan or debt wherein an interest in the property is transferred to the lender as collateral.
- By Lease: The owner of the property transfers to the lessee the right to use the property for a definite period, normally in exchange for rent.
- By Gift: An unwilled transfer of ownership without consideration; for it to be valid, a registered gift deed has to be executed along with attestation by witnesses.
- By Exchange: Involves a mutual transfer of ownership rights between two parties; it needs to be registered through an exchange deed for it to be legally valid.
Conclusion
Understanding the Transfer of Property Act is crucial as it lays out the whole foundation to carry out legitimate and safe transactions of property. It hence keeps you at a distance from any dispute, keeps ownership in your name, and allows you to have your say in decisions about the property. Whatever the situation, be it purchasing a new home or gifting land to family, being conversant with the law ensures you will always be informed and secure.ease, mortgage, gift, exchange, charge, and the rule against perpetuity.