Sale of November 16

Immovable
Property
2018
TRANSFER
Submitted by Zeeshan Ahmad OF
To Prof Qazi Usman PROPERTY
LAW
Definition of Immovable Property
According to Section 3 of the Transfer of Property Act 1862, "Immovable
Property" does not include standing timber, growing crops or grass. Thus, the
term is defined in the Act by excluding certain things. "Buildings" constitute
immovable property and machinery, if embedded in the building for the
beneficial use thereof, must be deemed to be a part of the building and the land
on which the building is situated.

As per Section 3(26) of the General Clauses Act 1897, "immovable property"
"shall include land, benefits to arise out of land and things attached to the earth,
or permanently fastened to anything attached to the earth". This definition of
immovable property is also not exhaustive;
Section 2(6) of The Registration Act,1908 defines "Immovable Property" as
under: "Immovable Property includes land, building, hereditary allowances,
rights to ways, lights, ferries, fisheries or any other benefit to arise out of land,
and things attached to the earth or permanently fastened to anything which is
attached to the earth but not standing timber, growing crops nor grass". The
above definition, implies that building is included in the definition of
immovable property.

SALE under Transfer of Property Act

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 subsist 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)]i>
(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,
[[Section 55(6)(a)]