SALE OF IMMOVABLE PROPERTY

Introduction
Land is a subject falling within the powers of the State Governments under the Constitution
of India1 and hence, property laws in India may differ from State to State. Besides the local
laws, several laws enacted by the Central Government also govern acquisition and
ownership of property (including an interest in property) through purchase/sale, transfer,
mortgage, inheritance or gift. Transfer of property other than agricultural land, registration
of deeds and document fall in the Concurrent List.2 When a person acquires or owns an
immovable property, the law also give him/her the right to use, lease, sell, rent or
transfer/gift of the land. The owner also has a right to mortgage his immovable property as
a security for loans. However, there are some laws which restrict the type of use a land can
be put to, e.g., a land may be used only for residential or commercial purposes to prevent
haphazard/unorganized growth of cities and towns. Laws in some of the States
prevent/restrict outsiders from acquiring property within the State. Restrictions are also
placed on non-agriculturists from acquiring agricultural land. There are also other laws
which prescribe rules and regulations for protection of environment or which provide for
approval of building plans/designs so as to protect people from natural or manmade
hazards. Some laws like the Registration Act, 1908, also lay down provisions governing
registration of property transactions so as to keep proper records of ownership of property
in the public domain. Some laws relating to taxation like the Income Tax Act, 1956 lay down
certain provisions and procedures to be observed while undertaking property transactions
so as to ensure tax compliance of an owner before disbursal of property. In India,
transactions for purchasing/selling/transferring/creating an interest in immovable property
and transmission of title in respect of a property are governed by several laws, rules and
regulations. As matters relating to land fall within the legislative powers of State
Governments under the Constitution of India, these may differ from state to state. The
Transfer of Property between any two parties is governed by the Transfer of Property Act,
1882. Both these parties need to be alive for transfer under the Act. In case of transfer of a
property of a deceased person, Succession Laws as per the religion of the deceased will be
applicable.
General Principles of Transfer Definition of transfer,

The Transfer of Property Act, 1882, deals with transfers in which the transferor and the
transferee are living persons. In other words, it is concerned with transfers inter vivo
(between living persons).

Capacity to transfer A person has capacity to transfer property when he is competent to

enter into a contract and he has title to the particular interest in the property, which he
proposes to transfer. Contractual competency is governed by the provisions of the Indian
Contract Act, 1872. So far as the second requirement, viz. ownership of the right, which is to
be transferred, is concerned, the general rule is Nemo dat quod non habet (no person can
give that which he has not). But to this general rule there are important exceptions. One exception is
the doctrine of holding out.

(a) Doctrine of holding out Suppose A is the real owner of the property but he allows B to hold
himself out to the world as the owner. Then if B as such ostensible owner transfers the
property to C who is a bonafide transferee for consideration and without notice of A's title, C
acquires a good title to the property. The ostensible owner B, though he himself did not
have a valid title, is able to transfer a good title to C.
(b) ) Doctrine of feeding the grant by estoppels. Suppose A, who has no title to Blackacre,
professes to transfer it to B for consideration. Since A has no title, B can acquire none from
him although B made a representation to the effect that he has a good title. Subsequently,
let us suppose that A purchases Blackacre from the true owner. Can A retain Blackacre or is
he bound to hand it over to B? The representation previously made by A that he is the
owner and can transfer ownership to B gives rise to the rule of estoppel, which precludes
him from denying that representation now. This rule of estoppel was no doubt ineffective to
start with, for there was nothing on which it could operate at the time of the transfer. As
soon as A subsequently acquire title to Blackacre, the rule of estoppel can operate upon that
title. It feeds this subsequently acquired title of A to the empty grant, which A had previously
made. When that empty grant is fed with this title by the rule of estoppel, it becomes
perfect. Thus B acquires a good title eventually although at the time when he purchased he
could not receive a good title to the property. The defect in his title arising from the
transferor not having a title is cured by the doctrine of feeding the grant by estoppel. B has
the option of relying upon this doctrine. If he does not want to invoke this doctrine he can,
of course, recover damages for the misrepresentation made by A. In fact, if before A
subsequently acquired a good title, B had already chosen to recover damages, he cannot fall
back upon the doctrine of feeding the grant. It is only if he stays his hand, keeps the
transaction alive, waits for the eventuality of A's subsequently acquiring title and exercises
his option to invoke this doctrine that B can perfect his title to the property under the
doctrine of feeding the grant. The doctrine has been embodied in section 43 of the Transfer
of Property Act. The Supreme Court applied the said doctrine to a case wherein a person
after getting a preliminary decree in a partition suit but before getting the final decree
executed a gift deed of the property he was expecting in the said partition suit. The Court
upheld the validity of the gift deed on the basis of the above doctrine.
Transfer of a property can be made in two ways, firstly by act of parties and secondly by law.
Under act of parties, Transfer of Property Act (TOPA) exists, which gives us further divisions
that is whether the property is movable or immovable, transfer for movable property and
immovable property. In my research paper I am going to focus on immovable property.
Immovable property is divided into six parts- sale, mortgage, actionable claims, lease,
exchange, and gifts, charge.

Transfer of property has been defined under section 5 of the transfer of property act.
According to the act immovable property does not include standing timber, growing crops,
or grass. Interpretation of the section also allows us to construe the fact that things that are
attached to the land and which cannot be detached from the earth and things which are
permanently fixed to the earth also come within the definition of immovable property. For
example, timber, since it is of no use until one takes it out of the land or detaches it, it is
useless therefore it is movable property.

There are six elements, which make a property transferable.

1. The requirements to be met as per Section 5 are four in number.

2. Transfer must be by a living or juristic person.

A juristic person was defined in the case ShiromanigurudwaraPrabhakar committee,

Amritsar v. Sri SomnathDass. In this case the court said that a juristic person can be an
individual, firm, corporate company, association, society, not including partnership firm. Any
individual who can sue or be sued under law would satisfy this requirement.

3. The transfer must be through a conveyance.

Conveyance can be present or future. However conveyance can take place only if there is
creation of new title. Therefore, there should have been nothing with the transferee before
the title. In addition to this the term future is used to define the future interest in the
property and not the future property itself. Therefore, the word future property itself must
be transferred. Therefore, the word future is for the conveyance.

4 .Fourthly, the property itself must be transferred.

5. Fifthly, it must be made to a living or a juristic person.

Any kind immovable property can be transferred. Any kind of immovable property can be
transferred other than that which are given in section 6 of the TOPA. In the case Samsudden
v. Abdul Husen it was held that the chanceto transfer couldn’t be transferred. The right to
re-entry, easement can’t be transferred. Specific rights cannot be transferred, as there are
only certain people who should enjoy the right. The right to sue, public office, unlawful
objects cannot be transferred.

The third element is competency as under section 7of TOPA. The individual must not be a
minor or an insane person. The person must have the title of property or the person must
have the authority to transfer; in part or in whole, as held in the case Krishna khurhai v.
grindlays bank, if transfer is made ultra virus to the authority vested in the agent, the
transfer will be void.

The fourth element being that under section 6(h)(3) the person must not be a legally
disqualified transferee. For example under section 136 of TOPA judges, legal practitioners
and officers connected to the court are disqualified from purchasing actionable claims.

The fifth element being that a valid transfer can also happen under section 9 of TOPA as an
oral transfer.
Transfer of immovable property may happen only in certain ways. They can either be
through sale, mortgagee, lease, and gifts or through actionable claims. These are modes of
transfer.

1. Sale-

Contract of sale of immovable property is basically a contract, which states terms for the
permanent transfer of property. The sale takes place in accordance to the terms, which are
settled by both the parties in the contract itself. Such contract of sale does not create any
interest in or charge on such immovable property. A kind of obligation is created in respect
of the ownership of the property. Essentials of a contract of sale are several. The parties to
the transfer or the vendor should be competent enough to contract under Section 2 of the
Indian Contract Act. Price is another essential ingredient for all transactions of sale and in
the absence of this price, which constitutes consideration; the transfer will not be regarded
as a contract of sale. Delivery of property is necessary for a transfer by way of sale. In case
of tangible property worth less than Rupees one hundred, the transfer can be made by a
registered instrument or putting the purchaser in possession of the property. If it is more
than rupees one hundred then the instrument has to be registered under Registration Act,
1908. There are certain rights and duties of the buyer and the seller, which are subject to
the contract. These rights and duties are governed under Section 55 of the Transfer
Property Act.

2. Mortgage-

Transfer of immovable property can also take place through mortgage. Section 58(a) of the
TOPA says, a mortgage i the transfer of an interest in specific immovable property for the
purpose of securing the payment of money advanced or to be advanced by way of loan, an
existing or future deist, or the performance of an engagement which may give rise to a
pecuniary liability. Ingredients of mortgage; in a mortgage, the mortgagor transfers any one
of his interests in specified immovable property to the mortgagee. Money to be advanced
by way of loan arises in the case of a running account between the parties. Future debt is a
contingent liability, which arises on the happening of some contingency. If the promise not
competed an obligation to pay arises. These may be a pecuniary liability.

An under taking be a person borrowing money not to alienate his property until the money
is repaid is not a mortgage, because there is no transfer of interest in property.

3. Charge-

Transfer of immovable property can also take place through charge. According to Section
100 whena person by the act of parties or operation of law creates a security for the
payment of money to another, and the transaction should not be a mortgagee, the latter is
said to have a charge on the property. Charge is created by operation of law, this
distinguishes mortgage, which is created by act of parties.

4. Lease-
Transfer of immovable property can also take place though lease. Section 105 defines lease.
According to it, lease of immovable property is a transfer of a right to enjoy such property,
made for a certain time, express or implied or in perpetuity in consideration of a price paid
or promised, or of money, share of crops, service or any other thing of value, to be rendered
periodically or on specified occasions to the transferor by the transferee, who accepts the
transfer on such terms.

5. Transfer can also take place through exchange, gifts and actionable claims.
6. Other ways-

Immovable property can also be transferred by way of law that is if there is insolvency,
succession or the absence of a will. In the situation of the absence of a will, the court shall
declare the transfer of property by way of interstate.

However, there are some things that cannot be transferred. Section 6 of the Transfer of
Property Act discusses the immovable properties, which cannot be transferred. Spec
successions cannot be transferred. According to section 6(a) it is void. In the
case AnnadaMohan Roy v. Gom Mohan Mullick, the appellant purchased the rights
expectant upon the termination of the surviving widows rights from the respondents and
further on there was a compromise between the widow and the respondents as a result of
which the respondents got certain properties. Thus it was held in the case that compromise
is void and cannot be transferred.

In the case Karpagathachi v. Nagarathinathachi, two-widows had divided the husband’s

property into two shares and took possession of respective shares. Under the partition deed
each widow gave up her life interest. When one of the widow died her daughter took over
the possession. The other widow filed a suit against the daughter claiming for the share,
which is in possession of the daughter of the other widow. The court held that each widow
transfer her right of survivorship according to section 6(a) of transfer of property act.

Charge cannot be transferred because it is a right, which is a part of property. Compromise

cannot be transferred. Easement cannot be transferred because these are the rights or
interest arising of land, which is a part of the property but cannot be transferred. Family
arrangement may be transferred. A will cannot be transferred because it does not operate
by act of parties. Auction sale cannot be transferred because property is in possession of
another.

Are benefits arising out of land immovable? Yes, benefits like crops from your land; fish and
the lake and anything 12nm from the main land are immovable and can be transferred. In
the case AnandBaherav.State of Orissa, it was held that profit arising out of land is
immovable property. The right to walk on the land and to draw fish from the lake and taking
it away is immovable property as it is the profit arising of the land. Grazing of cattle on the
land is also immovable property as it is profit arising of the land.
Section 54 of the price Transfer of Property Act defines “Sale” as “sale is a transfer of
ownership in exchange for a price paid or promised or part-paid and part-promised.

Sale how made – Such transfer, in case of tangible immovable property of the value of one
hundred rupees and upwards or in the case of revision or other intangible things, can be
made only by registered instrument.

In the case of tangible immovable property of a value less than one hundred rupees, such
transfer may be made either by a registered instrument of by delivery of the property.

Delivery of tangible immovable property takes place when the seller place the buyer or such
person as he directs, in possession of the property.”

Essentials of a Valid Sale

According to Section 54, following are the essentials of a valid sale—

i. the parties, i.e., the seller and the purchase, must be competent. They are also called
vendor and vendee, respectively. They must be competent to contract, i.e., must of sound
mind and have attained the age of majority. The seller must also have right to sell the
property and purchase may be any person not disqualified to purchase a property under any
law enforced in India.

ii. There must be a subject-matter of sale. Transfer of Property Act deals with sale of
immovable property. The transfer of ownership of immovable property is dealt with under
this Act while sale of movable are dealt with under the Sale of Goods Act, 1930.

Immovable property may be either tangible, such as land, house, things attaches to earth,
etc., or it may be intangible immovable property, such as right of ferry or fisheries, or right
to a mortgage debt etc. But the immovable property must be in existence on the date of
execution of sale.

iii. Price or money consideration—Price is an essential ingredient of a sale. A sale is a

transfer of ownership in exchange of money. Payment of price is not necessary for
completion of the transfer but its reference is necessary. It may be paid at the time of
execution or promised to pay or same part of it may paid at the time of execution and rest
may be promised to be paid in future.
iv. Conveyance—In sale, property must be transferred from seller to purchaser. According to
Section 54 there must be a registered conveyance in the case of—

(a) Tangible immovable property of the value of Rs. 100 and upwards; or

(b) A reversion of an intangible thing of any value.

In case of tangible immovable property of a value less than Rs. 100, there must either be,

(a) A registered conveyance, or

(b) Delivery of property.

Sale and Contract for Sale

Section 54 of the Act defines ‘sale’ as a transfer of ownership in exchange for a price Paid or
promised or part paid and part promised.

Section 54 also defines ‘contract for sale’ as, “a contract for the sale of immovable property
B a contract that a sale of such property shall take place on terms settled between the
parties,”

Thus a sale may be preceded by a contract for sale. A contract for sale is merely a document
creating a right to obtain another document namely, a duly executed sale deed. On the
Other hand, a sale of immovable property is a transfer of ownership.

A sale passes an absolute interest in the property to the purchaser, but a contract for sale
does not of itself create any interest in, or charge upon the property in favour of the buyer.
It does not convey any little to the purchaser.

A sale must be registered, if it deals with the conveyance of tangible immovable property of
the value of Rs. 100 or more, or a reversion or any intangible things.

A contract for sale need not be registered at all.

Sale and Exchange

According to Section 54 of the Act, a sale is a transfer of ownership in a property in
exchange for a price. On the other hand exchange is a transfer of ownership in property in
exchange of ownership of another property. Section 118 of the Act defines exchange as,
“when two persons mutually transfer the ownership of one thing for the ownership of
another, neither thing or both thing being money only, the transaction is called exchange.

Thus in both, there is transfer of absolute interest in the property, but real difference is that
in sale, the consideration is money, whereas in exchange, it is another property or anything
of value.

Sale and Gift

In both sale and gift, there is transfer of ownership of an immovable property. However the
difference between the two is that where in sale, the ownership is transferred in exchange
for a price, in gift, the immovable property is transferred with any consideration. In sale, if
the valuation of immovable property is Rs. 100 or more, than it is to be effected only by
registered instrument. But in case of a gift of an immovable property, it must be made only
by registered instrument irrespective of the valuation of the property.
RIGHTS AND DUTIES OF SELLER AND BUYER (SECTION 55)

Sellers Duties and Rights

1. Sellers duties before sale—

(a) The seller is bound to disclose to the buyer any material defect in the property or title,
of which seller is, and buyer is not aware, and which buyer could not with ordinary case
discover. [Section 55(1)(a)]

(b) The seller is bound to the buyer on his request for examination of all documents of title
relating to the property which are in the seller’s possession or power. [Section 55(1) (b)]

(c) The seller is bound to answer to the best of his information all relevant question put it
him by him by the buyer in respect to the property or the title there. [Section 55(1) (2)]

(d) The seller’s next duty is to execute the conveyance. He is bound on payment or tender of
the amount due in respect of the price, to execute a proper conveyance of the property
when the buyer tenders it to him for execution at proper time of place. [Section 55 (1) (d)]

(e) Seller is bound to take case of the property and documents of title. Between the date of
contract of sale and the delivery of the property, he is bound to take as much case of the
property and all documents of title relating thereto which are in his possession as an owner
of ordinary prudence would take of such property and documents. [Section 55(1) (c)]

(f) It is the seller’s duty before the completion of sale to pay all the outgoings. Before
completing of sale, the seller continues to the owner of the property, thus the Government
dues, etc., are to be paid by him. [Section 55(1)(g)]

2. Seller duty after sale—

(a) After completion of the sale, it is the seller’s duty to gave possession to the buyer. The
seller is bound to give, on being so required, the buyer or such person as he directs, such
possession of the property as its nature admits. [Section 55(1)(f)1

(b) It is the seller duty to covenant for title. Section 55(2) of the Act provides that—

"The seller’s be deemed to contract with the buyer that the interest which the seller
professes to transfer to the buyer subsists and that he has power to transfer the same. (This
is also known as implied covenant for title): Provided that, where the sale is made by a
person in a fiduciary character, he shall be deemed to contract with the buyer that the seller
has done no act whereby the property is encumbered or whereby he is hindered from
transferring it.

The benefit of the contract mentioned in this rule shall be annexed to, and shall go with, the
interest of the transferee as such, and may be enforced by every person in whom that
interest is for the whole or any part thereof from time to time vested.”

(c) It is the seller duty to deliver title-deeds on receipt of the price. Section 55(3) of the Act
provides that, where the whole of the purchase-money has been paid to the seller, he is
also bound to deliver to the buyer all documents of title relating to the property which is in
the seller’s possession or power. However, he proviso to Section 55(3) lays down that:

 Where the seller retains that part of the property with him, which of greatest value
and, such property is included in the documents, the seller is entitled to retain all the
documents with him.
 Where the whole of such property is sold to several buyers the persons who
purchase the largest part of the property would be entitled to retain all the
documents.
3. Seller’s Right before Sale—Section 55(4)(a) provides that ‘the seller is entitled to
the rents and profits of the property till the ownership thereof passes to the buyer’.
‘Thus, before completion of the sale, the seller is entitled to all the rents, profits or
another benefit. interests of the property’.
4. Seller’s Right after Sale—If after completion of sale, the price or any part of it
remain unpaid, the seller acquires a lien or charge on property. Accordingly to
Section 55(4)(b) if price remains unpaid, the seller cannot refuse delivery of
possession for can claim back the possession if already given to buyer, but he (seller)
is given a right to recover unpaid purchase money from and out of the property.
Buyer’s Duties and Rights

1. Buyers duties before sale—

(a) Before completion of sale, it is the duty of the buyer to disclose, facts which materially
increases the value of property, Section 55(5)(a) of the Act provides that, "the buyer is
bound to disclose to the seller any fact as to the nature or extent of the seller’s interest in
the property of which the buyer is aware, but of which he has reason to believe that the
seller is not aware, and which materially increases the value of such interest.

(b) The buyer is bound to pay or tender the purchase money to seller [Section 55(5)(b)].

2. Buyer’s Duties after Sale—(a) where the ownership of the property has passed to
the buyer, the buyer is bound to bear any loss arising from the destruction, injury or
decrease in value of the property not caused by the seller. [Sec[Section 55(5) (c)

(b) According to Section 55(5) (d) after the completion of sale, the buyer is liable to pay the
outgoings, e.g., Government dues, rents, revenue or taxes, as the buyer becomes the owner
of the property.

3. Buyer’s Right before Sale—

Section 55(6)(a) of Act provides that the buyer is entitled to (unless he has improperly
declined to accept delivery of property):

 A charge on the property for the purchase money properly paid by him in
anticipation not the delivery.
 (ii) Interest on such purchase money.
 The earnest and cost awarded to him in a suit to compel specific performance of the
contract or to obtain a decree for its recession in case he properly declines to accept
delivery.
4. Buyer’s Right after sale—after sale, the buyer is entitled to the benefits of any
improvement in, or increase in value of, the property, and to the rents and profits
thereof.
Conclusion-
Therefore for a property to be transferable several conditions need to be satisfied. These
include that of constituting a transfer; it to come within the definition of an immoveable
property and it should not be amongst those items, which may not be transferred under
Section 6 of the Transfer of Property Act. In addition to this it is clear that there are several
kinds of transfer that may take place. Each kind of transfer as has been explained has
different procedures and conditions, which need to be satisfied. These are hence the various
elements that are required to be transferred for a property to be transferable. It is advisable that
the buyer’s advocate should investigate the title of the property after entering into an agreement
for sale. The title should be traced for at least 30 years. Besides, the title deed search should be
also done in the office of the Sub Registrar or relevant revenue authority to investigate whether
there is any encumbrance on the property whether there is any defect in the title and whether the
property stands in the name of the seller in the land revenue and municipal records. It is also
advisable that the buyer’s advocate should enquire from the relevant authorities and gather
information on whether a notification has been issued for acquisition of the property. In major
property deals the buyer through his advocate should give a public notice in the newspaper
stating his interest in purchasing the property. The sale deed is chargeable with stamp duty
under Article 23 of Schedule 1 to the Indian Stamp Act and it has to be executed on stamp paper
equal to that of conveyance or else attracts duty penalty of 10 times that of actual stamp
duty.The sale deed transferring immovable property of the value of 100 or more requires
registration under Indian Registration Act 1908.