If you are searching to acquire information about the transfer of property act, this is the right place. You will get a detailed insight into the transfer of property act and other relevant information.
Before leading toward the pool of information about the transfer of property act, first, know what exactly it is. The transfer of property is an act by which a living person transfers property, in the present or in the future, to one or more living individuals or himself. The transfer of property came into existence in the year 1882. The act was passed by British India and contained specific provisions regarding what constitutes a transfer and the conditions attached. It applies only to transfer by the act of parties and not by process of law.
There is a condition that a competent person must do the transfer of property act. For a valid transfer, it’s necessary that the property transferred must be of a sound mind. It should not be intoxicated, must be a major, or he is not a person disqualified by law cannot enter into a contract of transfer of property with another person. This act deals with a transfer of property inter vivos, a transfer between living persons. To know more details about the transfer of property act, continue reading this article.
Table of Contents
- 1 What is the transfer of property act?
- 2 How does the transfer of property act work?
- 3 What is the rule for the transfer of the property?
- 4 What is section 54 of the transfer of property act?
- 5 What are the types of transfer of property?
- 6 What are the essentials of the transfer of property?
- 7 What is non-transferable property?
- 8 Conclusion
What is the transfer of property act?
The transfer of property act 1882 is an Indian decree that regulates the transfer of property in India. It has specific provisions regarding what constitutes a transfer and the conditions attached to it. It came out into force on July 1st, 1882. In the following sections, “transfer of property” means an act by which a living person transfers property, in the present or in the future, to one or more other living individuals or to himself. The person may have an individual, company or association, or body of individuals, and any type of property may be transferred, including the transfer of immovable property.
The transfer of property act applies only to transfer by the action of parties and not by operation of law. In addition, any person receiving any immovable property or any share or interest in any such property shall be considered to have notice of the title, if any, of any person who is for the time being in actual custody thereof. The property is classified into the following into these categories:
- Movable property (excluding standing timber, grass, and growing crops)
- Movable property (like timber, watch)
The variation of the act says immovable property does not include standing timber, growing grass, or crops. Section 3, The General Clauses Act, 1897, describes immovable property should have land, benefits to arise out of the land, and things connected to the earth or permanently fastened to anything connected to the earth. Also, The Registration Act, 1908, 2 (6) immovable property includes buildings, land, rights to ways, hereditary allowances, lights, fisheries, ferries, or any other benefit to arise out of the land. Things get attached to the earth permanently fastened to anything which is attached to the earth, but not standing timber, growing crops, or grass.
How does the transfer of property act work?
A property transfer passes immediately to the transferee all the interest the transferor can give in the property unless a different intention is expressed or implied. According to Section 43 of the Transfer of Property Act 1882, in case a person either fraudulently or wrongly represents that he is authorized to transfer particular immovable property for consideration. Such a transfer will continue to operate in the future. It will run on any interest the transferor may acquire in such property.
This will be at the option of the transferee and can be done during the time when the contract of transfer exists. According to this rule, the rights of the bona fide transferee, who has no notice of the earlier transfer or of the option, are protected. This rule embodies a rule of estoppel (a person who makes representation cannot later go against it. Every person who is competent in the contract is capable of transferring property, which can be moved in whole or in part. He should be entitled to the movable property or authorized to dispose of movable property which is not his own.
This might be either absolute or conditional, and the property may be movable or immovable, present or future. Such a transfer can be made orally unless a transfer in writing is especially required under any law. Even when a person is mentally stable but physically unable to sign any contract, the property lawyer he hired can do that with the help of a power of attorney.
What is the rule for the transfer of the property?
The transfer of property must be done by a mentally stable person and a competent person must do the transfer of property to a qualified person. For a valid transfer, the property transferred must be of a sound mind, should not be intoxicated, and must be a major, or he is not a person disqualified by law cannot enter into a contract of transfer of property with another individual. Another rule relating to the transfer of property under the Act states it is essential to draw a line between immovable and movable property. Only immovable property and, in unusual cases, movable property can be legally transferred under the provisions of this Act.
Section 3 of this act applies to the meaning of immovable property. Immovable property means a property that does not include standing timber, growing crops in the form of vegetable produce, which has separate existence except for their produce or grass.
What is section 54 of the transfer of property act?
In section 54 of the transfer of property act, after explaining what is “sale” and “sale how made,” it is mentioned that contract of sale. A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms agreed between the parties. Sale, in simple terms, is selling a thing in consideration of cash. In the transfer of property act, a sale is completed of immovable property. It is explained in section 54 of the transfer of property act.
A sale is a transfer of privilege from one person to another. One person transfers this title to another. It is transferred into consideration for a price. Price refers to money and not any other valuable thing. Keep in mind that if you give something instead of money, it’s an exchange, not a sale. The price may be paid or promised to be paid on a specific date or part-paid and part-promised. The immovable property must be tangible that can be sensed or touched. If the property for sale is above a hundred rupees, it can only be made through the registered instrument.
What are the types of transfer of property?
The Transfer of Property act 1882 governs the transfer of property. According to its definition, “Transfer” refers to an act by which a living person conveys property in the present or future to one or more living persons or to himself or one or more other living persons. The act provides these types of the transfer mentioned below:
Sale directs to the transfer of ownership of immovable property in a swap for a price paid or promised or partly paid and partly promised. The following are the requirements of a valid sale:
- There must be a transfer of ownership.
- The subject matter of the sale must be immovable property.
- Consideration must be in the money.
- The seller must be competent to transfer.
- The transferee must be clever.
- The transfer must be in exchange for the price paid or promised or partly paid and partly promised.
- The conveyance deed must be registered if the property’s value is RS 100 or upwards. In case the value is less than RS. 100, the transfer may be made by a registered act or by delivery of property.
A mortgage directs to the transfer of an interest in a 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 debt, or the performance of an engagement that may give rise to financial liability. The transferor is the Mortgagor, and the person to whom the property is transferred is the mortgagee. The essential components of a mortgage are:
- Specific immovable property
- Transfer of interest
As per section 58 of the Act, there can be six kinds of a mortgage, including:
In this type of mortgage, the mortgagor, without delivering the possession of the mortgaged property. The mortgagor binds himself personally to disburse the mortgage money and agrees, expressly or impliedly, that in the event of his failure to pay according to his contract. The mortgagee shall have a right to cause the mortgaged property to be sold and the sale proceeds to be applied. So far as may be crucial, in payment of the mortgage money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
Mortgage by conditional sale
In this case, the mortgagor first sells the property, in favor of the mortgagee, with a condition to revert it to him if the loan with interest is repaid. Otherwise, the mortgagee will become an absolute owner.
The word ‘usufruct’ means the right to enjoy the use and advantages of another person’s property. In the case of a usufructuary mortgage, the mortgager delivers possession of the mortgaged property. He further authorizes the mortgagee to receive the rents and profits from the property and appropriate the same lieu of interest and principal sum.
In this type of mortgage, the property is first told in favor of the mortgagee. If the mortgagor reimburses the amount, the sale becomes void. Otherwise, it will become absolute.
Mortgage by deposit of title deeds
Where a debtor declares to a creditor or his agent the documents of the title to the property, with intent to create security, it makes a mortgage by deposit of title deeds.
A mortgage that does not belong to any of the above categories is called an anomalous mortgage.
A lease of an immovable property refers to the transfer of a right to enjoy such property made for a specific time to consider a price paid or promised or partly paid and partly promised. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share service, or any other thing rendered is called the rent. Essentials of a lease:
- The parties to a lease are known as the lessor and the lessee.
- The right to enjoy the property must be transferred for a particular time, express or implied or perpetually.
- The subject matter of the lease has to be immovable property.
- The consideration for a lease is either premium or rent, which is the price paid or promised regarding the demise.
Exchange occurs when two or more persons mutually transfer the ownership of a property for the privilege of another, and property or thing here does not include money.
Gift refers to the transfer of property, immoveable and moveable, done voluntarily without consideration. The person making the transfer is called the donor, and the transfer is accepted by or on behalf of the donor. The acceptance must be made during the donor’s lifetime while he is still capable of giving. The essentials for a good gift are mentioned below:
- The property must be in existence.
- The transfer has to be made without any consideration.
- There has to be a transfer of privilege.
- The transfer must be done voluntarily.
- It has to be accepted by Donee during the Donor’s lifetime while he is still capable of giving.
Some things cannot be considered transfer:
Charge: A charge only makes a right to receive payment out of the property and hence, cannot be called a transfer.
Partition: Co-sharer doesn’t receive anything new. Hence, it cannot be considered a transfer.
Relinquishment: It leads to the extinction of a right. There is nothing left to transfer.
Easement: The composition of an easement does not amount to transfer.
Family settlement: A family settlement entered into by parties for ending disputes cannot be considered a transfer.
What are the essentials of the transfer of property?
To constitute a valid transfer, it must fulfill a few conditions, such as the transfer must be between two living persons. One of the main features of the transfer of property act is that it governs transfers only between living persons or the transfers have to take place inter vivos. Both the transferor and transferee must be living at the date of the transfer. The property has to be transferred from one living person to another.
So here, conveying the property involves the creation of a new title or interest in favor of the transferee. If the new title or interest is not made in favor of the Transferee, then the property is not conveyed and is not regarded as a transfer of property. Another essential of the transfer of property is that the property must be transferable. There are exceptions to the general rule that property of any kind may be transferred. These exceptions are mentioned in section 6 of the transfer of property act. According to this section, the following are the unique types of property whose transfer is forbidden by the law:
- Right to re-entry
- Restricted interest
- Mere right to sue
- Public office
- A chance of succession
- Pensions, etc
The transfer should not oppose the nature of interest. There are particular things known as “res communes.” These things are in their natural form and do not belong to anyone, like air, water, light, sea, etc. It is impossible to hold and possess these things separately, so if anyone tries to transfer such a thing, it would be opposed to its nature. The consideration must be lawful. To be a valid transfer, the consideration and the object be legal. Section 23 of the Indian Contract Act provides when the reference or the object is unlawful.
According to this section, considering the object is unlawful if it is forbidden by law. Another situation is the case where it defeats the provisions of any law. It is also illegal if the object or consideration of any agreement is made for fraudulent purposes. If the contract concerns harm to any person or their property, if the agreement entered into is immoral, or if the agreement is against the public policy, it is unlawful.
One of the primary essentials of the transfer of property act is that the person must be competent to answer. Section 7 of the transfer of property act provides that if the person is competent to contract, then the person is intelligent to transfer the property either wholly or in part, and absolutely or conditionally, in the manner permitted by law.
The competency to contract is defined in section 11 of the Indian contract act. According to this section, “every person is eligible for contracting who is mature and is of sound mind, and is not disqualified from contracting by any law. The transfer must be made in the method and the form needed by the act. Section 9 of the transfer of property act delivers for oral transfer. It states that the transfer of property can be carried out without a written instrument where writing is not expressly essential under the law. The writing is required for the transactions mentioned below:
- Transfer of actionable claim
- Simple mortgage irrespective of document secured.
- Sale of immovable property where the value is Rs.100 or upwards
- Exchange of value of Rs. 100 or upwards
What is non-transferable property?
A public office is a non-transferable property. Therefore, it cannot be transferred, nor can the salary of the public officer be transferred. Consequently, prohibition is based on public policy as a public office is held for personal qualities. The chance of an heir-apparent succeeding in getting the property, the chance of an inherited relationship upon the death of any relative, or any other possibility of this nature cannot be transferred.
Clause A declares that the transfer of a bare chance of a person to get a property is prohibited under this section. According to clause C, the easement cannot be transferred. An easement is a right to use or ban the use of land of another in some way. For example, the right of way or right of light cannot be shared. An easement cannot be transferred except for the dominant heritage. For instance, right to way, right to light, right to water, etc. These rights cannot be transferred without property which has its advantages.
Clause D mentions that an interest specified in its enjoyment of himself cannot be transferred. For example, if a house is lent to a man for his personal use, he cannot transfer his right of enjoyment to any other person.
The transfer of property act lays down certain conditions which are necessary for a valid transfer of property, so all the essentials must be fulfilled to constitute an accurate transfer. If the essential requirements are not fulfilled, the transfer will not be considered a valid one, or it can be declared void.