Updated: Thursday January 14, 2010/AlKhamis Muharram 29, 1431/Bruhaspathivara Pausa 24, 1931, at 07:05:54 PM

Course Contents:

1.      The Transfer of Property Act (IV of 1882) as amended upto date, § 40 – 129.

Book Recommended:

1.      The Transfer of Property Act by D. F. Mulla.

Property means all proprietary rights, which can be weighted and measured in monetary value, excluding personal rights, are property. Here property means immovable property, which is attached to earth and cannot be removed in its ordinary meaning. Property itself means anything, which can be measured in monetary terms. It may be either movable or immovable and tangible. It must include ownership. Property can be acquired and sold. Any property having worth upto Rs. 1,000/- must be written on document and got registered.

Immovable property includes land, buildings, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth, hereditary allowances, rights to ways, lights, ferries, and fisheries.

Transfer of Property means transfer of title deed, i.e., transfer of right.

When the property is sold then property is not handed over but the possession/ownership is transferred.

Registration does mean entry in official record in the office authorized by government. Within one year document must be got registered.

Ostensible owner may have not possession but in due course of time he acquires such possession or right. Where there is no evidence that he is not owner, he is supposed owner and termed as ostensible owner.

Bona-fide purchaser is the person against whom there is no proof or evidence that he is not owner of his purchases, no third party has raised any objection, and he has paid full consideration against sale proceed. He has bought the property with the consents of his ostensible owner, paying full price and acquiring right of transfer.

A lets to B a field on rent for Rs. 50/-. Later on A transfers the field to C, the third party. B in good faith, pays rent to A, having no knowledge of such transfer to C. B is not chargeable with the rent so paid. B is bona-fide purchaser.

In another situtation A, lets his home to B on rent for period of one year and receives rent in advance for a year. Later on it reveals that A was not owner and his ownership was defective. B being bona-fide purchaser would not be responsible for the consequences. This transfer would be valid. A is liable for compensation since contract has been performed along-with its obligations so compliance of the contract would not defeat the rights of purchaser. Defective title puts its ostensible owner in the payment of damages. If true or real owner appears then tenant will not be bound to pay rent to defective owner however he may sue against ostensible owner to have remedy. He would not only be entitled to recover all previously paid rent but also benefits obtained from the property and damages.

In case possession is transferred and got insured and then real owner appears, transferor would bear loss, if occurs, and real owner will enjoy profit in inverse situation.

U/s 53, fraudulent transfer is void-able at the option of the creditor so defeated or delayed.

What is sale? Sale is transfers of ownership in exchange for a price paid or promised or part paid and part promised. Operation of law, exchange of goods, mortgage, pledge, bailment, or security may cause transfer but it does not constitute sale due to lacking of price and/or contract. Sale thus requires contract, its execution, consideration of price in shape of money, nature of property, which is immovable, and registration. Charity, gift, and donation lack price in consideration of exchange.

Sale must be in written form, having value equal or more then Rs. 1,000/-, duly stamped or written on stamp-paper, attested, and registered.

Rights and liabilities of buyer and seller: Both, rights and liabilities are co-extensive. Rights of seller are the liabilities of buyer and vice versa.

Seller is bound (liabilities): Following are the liabilities of the seller:

1.      To disclose material defects.

2.      To produce documents so required.

3.      To satisfy buyer with information.

4.      To execute the contract on date and time given by buyer.

5.      To take care of property and all related documents.

6.      To deliver possession to buyer or his agent.

7.      To discharge all encumbrances.

The seller is entitled (rights): Following are the rights of the seller:

1.      To have profits and rent from the property until ownership passes to the buyer.

2.      To receive price of property.

The buyer is bound (liabilities): Following are the liabilities of the buyer:

1.      To disclose seller all the concealed interests about which he is not aware but buyer is aware.

2.      To pay or tender purchase money at the time and place given by the seller.

3.      To bear all the losses arisen after the transfer of property.

4.      To pay all public charges after the ownership of property has been passed.

Buyer is entitled (rights): Following are the rights of the buyer:

1.      To have all benefits and profits arising from property which has been transferred in his name.

2.      To claim expenses incurred on property before acceptance of delivery.

Rights of mortgagor: Mortgagor is a person who transfers the possession of mortgaged property and receives mortgage money. He also can be termed as debtor. He has certain rights, for example:

1.            Right to redemption:

2.            Right to pre-emption:

3.            Direct to mortgagee for transfer to third party upon redemption:

4.            Inspection and production of documents which mortgagee holds:

5.            Separate or simultaneously redemption:

6.            Recovery of possession after payment where he is usufructuary mortgagor:

7.            Accession to mortgage property:

8.            Renewal of mortgaged lease:

9.            Have benefits of new lease where made by mortgagee:

10.        Implied contracts by mortgagor: It may include defend mortgagor’s title, payment of public and government charges, renewal of lease, and discharge encumbrances.

11.        Power to lease property:

Liabilities of mortgagor: Following are the liabilities of the mortgagor:

1.      Waste while possession:

2.      Destruction while possession:

3.      Injurious effect while possession:

Rights of mortgagee: Mortgagee is a person who holds the possession of mortgaged property and lends money to mortgagor. He also can be termed as creditor. He has certain rights to spend money on mortgaged property against different reasons, such as:

1.      Preservation from destruction, forfeiture, or sale: S. 72, clause B provides that mortgagee can spend amount to preserve the mortgaged property. Where there is indication of the destruction of property by floods, mortgagee may call upon the mortgagor to save it, but upon his failure, mortgagee may incur necessary expenses for its protection and these expenses are recoverable later on with an interest at the rate provided. In contrast he may charge 9% interest p. a. Where the mortgagor is lessee and he mortgages the property, mortgagee may incur expenses or may pay rent if according to lease contract, landlord attains the rights of re-entry upon the failure to pay rent by lessee. Non-payment of government dues may put property to sale. Although mortgagor is liable to pay government dues, but if he fails to do so then mortgagee may protect his interest in property by making payment of government dues.

2.      Supporting of mortgagor’s title: Mortgagor is liable to protect his title of mortgaged property. Where there is sign that mortgagor may lose his title against mortgaged property or mortgagor is unaware of the fact or not in a position to protect his title, mortgagee may defend the title of mortgagor so that the security of mortgagee should remain safe.

3.      Security of title of mortgagee against mortgagor: This clause provides the safeguards against the revocation by mortgagor or his legal representative or successor-in-title. For instance, a person mortgages his property and subsequently his son files suit for revocation on the grounds that debt was incurred for an immoral purpose. Mortgagee may defend his title against son. Amount incurred is recoverable.

4.      Renewal of lease: Where mortgaged property is leasehold and expires, mortgagee may incur expenses for its renewal to protect his interest in mortgaged property. These expenses are also to be reimbursed.

Liability of mortgagee: U/s 76, mortgagee in possession is liable for:

1.      Management of property: Mortgagee is liable to take proper care of property, as it is his own. Although he has right to lease property, but this lease should remain within the period of such mortgage and should not exceed in any circumstances. Also lease should be perpetual.

2.      Collection of rents and profits: Mortgagee is liable to collect rents and profits arising from mortgaged property. Mortgagee is accountable to the extent of rents and profits he actually realized.

3.      Payment of revenues and public charges: Mortgagee is liable to pay government dues from the income of the property, if not provided contrary. He is also liable for public expenses.

4.      Repairs: Mortgagor is very anxious to secure his security. If mortgagor fails to repair property, it is not only in the interest of mortgagee but also he is liable to spend money for repair and such amount is recoverable with interest.

5.      Compliance of law: The mortgagee is not allowed to commit any criminal or tortuous act to destroy property. Protection of the interest of mortgagor is liability of mortgagee. He cannot remove anything from property while mortgagor may remove or cut trees from his property.

6.      Insurance claim: Where the mortgagee has insured the whole or part of property he is liable to apply for such amount if loss occurs. He must reinstate the property otherwise mortgagor may discharge that part of mortgage money.

7.      Keeping the accounts: He is duty bound to keep clear, full, and accurate record of accounts of all sums received and spent, for any lawful and contractual purpose. These accounts should accompany all supporting vouchers. These are to be disclosed to mortgagor upon request.

Kinds of mortgage: There are six kinds of mortgages described as follows:

1.      Simple mortgage: This is a kind of mortgage in which possession is not transferred to mortgagee and mortgagor remains in possession of mortgaged property. U/s 58 mortgagee has right to proceed of sale if debt is unpaid till due date. This requires the decree of court. Only court is authorized to permit for sale proceeds. This mortgage is made either express or implied. In this kind it is called simple mortgage and mortgagor and mortgagee as simple mortgagor and mortgagee.

Essential ingredients: The essential ingredients of simple mortgage are:

1.      The mortgagor undertakes personal liability.

2.      No possession is delivered.

3.      There is no foreclosure.

4.      No power of sale out of Court, but a decree for the sale of mortgaged property must be obtained.

In simple mortgage two remedies are open the mortgagee:

1.      A suit for money decree.

2.      A suit for the sale of the property mortgaged.

2.      Mortgage by conditional sale: Where mortgagor ostensibly sells the mortgaged property on condition:

(1)         That upon the failure of mortgagor to repay mortgage-money, sale shall become absolute in favor of mortgagee or

(2)         That payment of the mortgaged-money shall make void the sale proceed or

(3)         That on such payment being made, the buyer shall transfer the property to seller, i.e., if the mortgagor pays the mortgage-money, the buyer shall transfer the property to seller again.

Essential ingredients: The essential ingredients of mortgage by conditional sale are:

1.      The mortgagor ostensibly sells the mortgaged property.

2.      The ostensible sale ripens (matures) into absolute proprietorship on default.

3.      There is no covenant for the personal liability, unless expressly stipulated.

4.      The remedy of the mortgagee is foreclosure and not sale.

5.      The document should be registered if the consideration is Rs. 1,000/- or more. If less than Rs. 1,000/- it can be effected by delivery of the property or by a registered instrument.

3.      Usufructuary mortgage: Where the mortgagor expressly or impliedly delivers property to mortgagee along-with all benefits or profits and rents etc. attached with property is called usufructuary mortgage and the mortgagee as usufructuary mortgagee.

Essential ingredients: The essential ingredients of usufructuary mortgage are:

1.      There is delivery of possession to the mortgagee.

2.      He may retain possession until the payment of the money and to receive rents and profits or a part thereof in lieu of interest or in payment of the mortgage money, or partly in lieu of interest or partly in payment of the mortgage money.

3.      There is redemption when the amount due is paid by the mortgagor or is discharged by appropriation of rents and profits received towards the debt due.

4.      Remedy of the mortgagee is not by sale or foreclosure of the mortgaged property.

5.      If the consideration of the mortgage is Rs. 1,000/- or upward, the deed must be registered, if below Rs. 1,000/-, it may be registered or it can be effected by delivery of the property.

4.      English mortgage: Where mortgagor transfers the mortgaged property to mortgagee with the commitment that he will repay the debt on certain date is called English mortgage. Upon payment mortgagee is liable to transfer the property to mortgagor as agreed.

Essential ingredients: The essentials of an English mortgage are:

1.      The mortgagor binds himself to repay the mortgage money on a certain date. Thus there is a personal covenant to pay.

2.      The property mortgaged is transferred absolutely to the mortgagee and is followed by delivery of possession.

3.      Such absolute transfer is made subject to this condition that the mortgagee upon repayment of the mortgage money on the fixed date will re-convey, the property to the mortgagor.

4.      The remedy of the mortgagee is by sale and not by foreclosure.

5.      Mortgage by deposit of title deed: Where a person delivers the title deed to mortgagee as the security of debt is called mortgage by deposit of title deed.

Essential ingredients: The essential ingredients of mortgage by deposit of title deed are:

1.      A debt.

2.      Deposit of title deed.

3.      An intention that title deed shall form security for the debt.

6.      Anomalous mortgage: U/s 98 any mortgage, which does not fall within the above five categories, is termed as anomalous mortgage. Contract deed of such mortgage determines the rights and liabilities in this case as evidenced.

Subrogation: The substitution of one person or thing for another, so that the same rights and duties which attached to the original person or thing attach to the substituted one. If one person is subrogated to another, he is said to “stand in that other’s shoes”, e.g., creditors are subrogated to the executors’ right of indemnity against the estate where a business is carried on under the authority of the Will; a person paying the premium on a policy of insurance belonging to another may be subrogated to that other; and an insurer is subrogated to the rights of the insured on paying his claim. In other words it is succession. Person subrogated has right of foreclosure. He has priority over subsequent mortgage as equity regards first in time, first in right.

Limitation: Element of notice is one of limit of subrogation. He has must to give notice before going to auction or sale. Mortgage is a liability on property. Mortgage is also called charge. Third party may create charge. Also operation of law may create it.

Charge: In property law a charge is a form of security for the payment of debt or performance of an obligation, consisting of the right of a creditor to receive payment out of some specific fund or out of the proceeds of the realization of specific property. The fund or property is said to be charged with the debt thus payable out of it. The only property charges capable of subsisting at law are:

(1)   A rent-charge in possession charged on land, being either perpetual or for a term of years absolute.

(2)   A charge by way of a legal mortgage.

(3)   Tithe rent-charge annuities or similar charge on land not created by an instrument.

How charge is created: Two elements create charge such as:

1.      Act of the parties.

2.      Operation of law.

Although it is a security but it is not a mortgage. It is different than mortgage in following respects:

1.      Mortgage is transfer of property for the security of loan whereas charge is not the transfer of interest in the property but even than it is security for the payment of an amount.

2.      Operation of law does not create mortgage but both operation of law and act of parties may create it.

3.      Write up and attestation by witnesses are essentials of mortgage while charge does not require such formalities. If charge is required to write then attestation is no more necessary.

Essential feature of charge: There are five essential features of charge as follows:

1.      It is a nature of liability created by a person or act of parties.

2.      It also can be created by an operation of law.

3.      Estate or property is not responsible but only person is held liable.

4.      It may be crated on future property.

5.      Its amount must be specified and the property (extent of property) must be specified.

Lease: The essential elements of lease are as follows:

1.      Immovable property: It is made out of immovable property.

2.      Transfer of right: Right in immovable property is transferred to other person to enjoy such property.

3.      Time limit: This right is transferred for certain time.

4.      Form of transfer: Transfer can be made either express or implied.

5.      Consideration: Right to enjoy property is transferred in consideration of price paid or promised to pay. Share money of corporation, service, or any other thing of value may also amount, consideration.

6.      Mode of consideration: Consideration can be tendered periodically or on specific occasions to the transferor.

7.      Payment of consideration: Lessor receives the consideration while lessee tenders such consideration.

8.      Lessor: He is the person who transfers the rights.

9.      Lessee: Transferee is termed as lessee. He is a person to whom right is transferred.

10.  Premium: The price of the lease is called premium.

11.  Rent: Share money, money, share service, or other thing rendered is called rent.

12.  Acceptance: Transferee must accept the lease.

Duration of lease: Contract or local law or usage of country determines the duration of lease. Where it lacks, lease for agricultural and manufacturing shall be year to year terminable by either side on giving notice of six months. If lease of immovable property for any purpose shall be deemed month to month, terminable by either party on fifteen days’ notice.

Notice: Notice must be in writing and signed on the behalf of person giving. It may be posted or delivered personally to such party or to family member or servant at his residence. It also can be affixed on conspicuous (noticeable) part of the property.

Rights and liabilities of lessor: Where contract does not provide or usage of country lacks, the lessor possesses certain rights and liabilities as follows:

1.      Disclosure of defect: Lessor is bound to disclose any material defect in property to be intended to use where lessee is not aware.

2.      Possession: Lessor is obliged to transfer the possession of property to lessee.

3.      Payment of rent: Lessee shall pay rent to lessor fixed in contract.

Rights of lessee: As lessor, lessee also possesses certain rights and liabilities such as:

1.      Accession (increase) to property: If any addition or increase is made in lease property naturally or artificially, lessee shall enjoy it for the whole duration of contract.

2.      Termination of lease upon destruction: If any injury is caused to property by fire, tempest or flood, violence of army, mob of irresistible force, lessee may terminate the lease as void.

3.      Making repairs and deduction of expenses: Where it becomes necessary by any lawful reason upon neglect of lessor, lessee may incur expenses on the repair of property, which seem necessary. These expenses may be recovered from lessor or can be adjusted from the amount payable. He also can charge interest.

4.      Compulsory payments and recovery: Lessee can make payment where it becomes necessary in the eyes of law. He can recover such payment with interest. Such payment should be legal duty of lessor.

5.      Removal of fixture: During the course of lease, lessee may remove his fixtures at any time even after determining the lease. Afterwards he cannot remove any attachments to the earth unless he restores the property as he had received it.

6.      Benefit of agricultural lease: Where without fault of lessee, any crop or sown are planted, lessee can take benefit of it.

7.      Transfer of interest: Where contract is silent, lessee may sub-let or transfer interest of property. This interest may be further sub-let.

Liabilities of lessee: He has certain liabilities as follows:

1.      Disclosure of appreciation facts: Where lessee knows the factor increasing the value of interest and lessor is unaware of it, lessee is bound to bring this matter into the knowledge of lessor.

2.      Payment of rent: As provided in contract, lessee is responsible to pay or tender rent at time and place specified, to lessor or his agent on his behalf.

3.      Maintenance of property: During the lease time or on termination, lessee is responsible to restore property as it was in the condition at the time of leasing out. Normal depreciation (wear & tear) is taken into consideration as usual damage to property.

4.      Notice of encroachment: Lessee is obliged to inform lessor if any damage is caused to his property due to any unlawful means by others.

5.      Protection of property: Lessee is liable not to commit any act destructive or injurious to the property. Lessee can use property and its products where contract permits without committing any wrong with property.

6.      Refrain unauthorized construction: Where lessor does not permit, lessee is not allowed to construct any permanent structure in leased property except for agricultural purpose.

7.      Putting the possession back: When the lease is determined, lessee is bound to put the lessor into possession of the property. Lessor acquires the rights of reentry when lease expires.

8.      Exclusion the day on which term commences: Where lease is for limited period or it commences from a particular day, it is held that first day may be excluded as the commencement day. Where lease is mentioned terminable before its expiration and terminator is not specified, presumption goes to lessee to have such option.

Exchange: When two persons mutually transfer the ownership of a thing for the ownership of another is called exchange.

Transfer of a thing for another thing, moveable or immovable, is an exchange.

Mutual transfer or conveyance of property is exchange. It does not need transfer of possession. Mere transfer of ownership is sufficient to constitute exchange.

Party deprived in exchange: If a party to an exchange loses the whole or part of the property received in exchange, owing to a defect in the title of the person who gave it, he may ask for compensation for the loss incurred by him thereby or he may, if he so likes, claim for return of his property if it is still in possession of the other party or his legal representative or a transferee from him without consideration.

Rights and liabilities of parties: In exchange both parties are either seller or buyer, thus their rights and liabilities are same as seller and buyer u/s 55 of this Act.

Gift u/s 122: A gratuitous grant or transfer of property, for a valid gift there must be an intention to give and such acts as are necessary to give effect to the intention, either by manual delivery of the chattles, or of some token part of the subject–matter, or by such change in possession as would vest possession in the intended donee. It may be made by deed. Equity will not construe an imperfect gift as a declaration of trust.

It is a transfer of property without consideration from one person being donor to another person being donee. Property may either be moveable or immovable. Transfer of this property is voluntarily. Donee must accept it. This acceptance must be during the lifetime of donor and till his solvency. If donee dies before acceptance, the gift is void.

Essential feature of gift: Following are its essential features:

1.      Transfer of ownership of property.

2.      Existing property either moveable or immovable.

3.      Transfer without consideration.

4.      Voluntary transfer.

5.      Acceptance of transferee or donee.

6.      Acceptance within lifetime by both donor and donee.

When gift remains incomplete: Following things make gift incomplete:

1.      Non-transfer of property.

2.      Non-existence of property.

3.      Transfer with consideration.

4.      Involuntary transfer.

5.      Non-acceptance of donee.

6.      Acceptance after death in any case.

Mode of transfer: Gift must follow following conditions:

1.      Registration.

2.      Attestation by two witnesses.

3.      Delivery of possession.

Gift of future property: Gift consist on future property is void either full non-existent or partially. It must be existent. A gift of future property is mere promise thus not enforceable.

Unenforceable gift: Following are the conditions where gift is not enforced being unlawful:

1.      If one of both dies.

2.      If it is not accepted.

3.      Where its existence becomes impossible.

4.      When it is revoked.

5.      When it is conditional and its condition remains un-happened or impossible.

6.      If consideration is received.

Onerous gift: It is a kind of gift in which rights are transferred to donee along-with all of its liabilities. Donee becomes liable.

A right of property, e.g., a lease, in which the obligations attaching to it counterbalance or exceed the advantage to be derived from it.

How gift is revoked: A gift can be revoked in the following manner:

1.      Contingency: If the particular event or thing is not happened, gift revokes.

2.      Power to revoke: If donee is empowered to renounce the gift after it is accepted, it may be revoked.

3.      By legacy: A gift can be discharged by legacy.

Universal donee: A person who receives all the properties moveable and immovable of another is called universal donee. Donee is personally liable of all the debts, obligations, and liabilities of donor. The extent of liability is to the property comprised therein.

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