In this post we will discuss about the various modes of transfer of property under The Transfer of Property Act of 1882
Introduction:
The Transfer of Property Act of 1882 is a comprehensive legislation which governs the transfer of property, both movable and immovable. Chapter 2 of the act generally applies to both movable and immovable property although the rest of the act mainly concentrates on immovable property and procedure, approval of transfer and methods of the same. The overarching act entails only those transaction that arise out of mutual conduct of parties and it does not covers succession, inheritance etc.
From a layman’s perspective Transfer generally means conveying the property from one person to another for some consideration but the transfer of property act, 1882 adds more dimension to the terminology. Section 5 of the act defines transfer of property as an “act by which a living person conveys property, in present or in future, to one or more living person or to himself and one or more other living persons”. The one that transfer’s the property is referred as transferor and the one on the receiving end is referred as transferee. Interestingly, the word “living person” in the definition stated above has a broad scope as it includes company, association of persons and body of individual in its purview besides individual, whether incorporated or not without affecting any law made specifically for transfer of property within these groups.
In order to constitute a valid transfer competency becomes potent. The act has laid a lot of emphasis on competency since the contract of transfer can only be executed by a competent person, has a valid title or person who has the authority to do required transfer. Competency to contract manifests with a person who is of majority in age, has a sound mind and is not otherwise disqualified under any law.
What does not amount to transfer of property?
- Partition: Suppose there are two brothers who are dividing a property among themselves is called partition. It cannot be called transfer of property since it was already in their possession and no new property is created. Here just the share is separated.
- Will: Herein the property comes from death of the person which is contrary to the definition of transfer since it states living person. Therefore it is not covered under the definition of transfer.
- Easement: An easement cannot be transferred. Easement is the enjoyment that the owner of the property holds with his property. Easement cannot be transferred. Once the property is transferred, easement is by default transferred too.
- There are other modes of transfer that are not considered by the act like sale by order of a court, auction, surrender, relinquishment, compromise etc.
ALSO READ- MODES OF TRANSFER OF PROPERTY
TYPES OF TRANSFER:
- Sale
- Lease
- Exchange
- Gift
Sale:
According to section 54 of the act “is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.” In case of sale, transfer of property implies that there is an absolute transfer of all rights and interest in property by the transferor to transferee. Moreover, the subject matter of a sale must always be immovable property which is identifiable. The sale of movable property comes under the purview of Sales of goods act, 1930.
Consideration in terms of money is imperative when it comes to sale because consideration in any other form may result in exchange. The words used such as “price paid or promised or part-paid” highlight the importance of consideration in money. Another impression that it quotes is that the payment need not be full. It maybe a half payment meanwhile the other half is promised or vice-versa in order to execute a sale.
In the Transfer of Property Act, the two recognized mode of transfer is
- Registered instrument, the process of which is mentioned in the Registration Act, 1908
- Delivery of possession.
ALSO READ- TRANSFER OF PROPERTY THROUGH GIFT DEED
Mortgage:
Section 58 of the act defines mortgage as “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 debt, or the performance of an engagement which may give rise to a pecuniary liability.”
The purpose of mortgage is to secure a debt. It helps the cause of mortgagee as well because if the mortgagor is unable to pay the entire sum, mortgagee can recover his loss from mortgagor’s interest.
Unlike sale where there was absolute submission of all rights and interest, mortgage allows transfer of limited interest. The act talks about various nature of mortgage and goes about detailing them further. The nature of interest changes with different types of mortgage. In cases of simple mortgage, the power of sale is transferred. In an usufructuary mortgage, the right of possession and enjoyment of the property is transferred. A conditional mortgage, the right of ownership subject to a condition is transferred. On the other hand, if the debt is completely paid the property comes back to the actual owner.
Lease:
In simple terms, lease means transfer of right to enjoy immovable property for a specific period. According to the transfer of property act, section 105, lease is transfer of right to enjoy an immovable property for a specific period of time, express or implied, in consideration of price or promise, service or any other value rendered periodically or on particular occasion. The periodic payment is usually termed as rent and the price already paid is called premium.
Definition makes it imperative that lease can be only for immovable property. Again unlike sale, the transfer of immovable property in lease is not absolute. A water-tight line is maintained between possession and ownership.
How lease is to be made is defined stated under section 107 of the act. It states that lease of immovable property for a period exceeding one year or reserving a yearly rent, can only be made by a registered instrument.
ALSO READ- TRANSFER OF PROPERTY- DISCLOSE ALL LEGAL HEIRS
Essentials of lease :
- A lessor must be competent: A lessor must of a sound mind and must not be disqualified by the contracting law. He must be the actual and real owner of the property which is grant in a lease
- Ownership and possession: Unlike sale in lease there is only transfer of possession while the ownership remains with the owner.
- Acceptance: A property which is granted in a lease must be accepted by the lessee on the terms and conditions which are agreed between the parties.
- Consideration: A lease must be made of consideration which may be in the form of premium or rent. It can be rent with premium or rent alone or premium alone.
- Right to enjoy the property: In a lease, right to enjoy the property is transferred. A lessee having a right to enjoy the property at certain period of time but he does have right to further transferred that property because in lease merely possession is transferred not the ownership.
Exchange:
Exchange is quite similar to sale except both differ in consideration. In exchange, consideration is another thing not money, and if there is no consideration then it becomes a gift. Barter system of goods is something that we can closely associate with exchange. Under the act, the provisions pertaining exchange applies to both movable and immovable property.
According to section 118, exchange refers to transfer of ownership of one thing for the ownership of some other thing like an equivalent, neither thing nor both things being money only. It is further stated that an exchange is effected the same way as a sale. Therefore it is dealt in section 54 with regards to registration or delivery of possession. So in order for exchange to be valid, there must be a physical delivery of the property to the parties and such parties are entrusted with same rights and duties as between a buyer and a seller.
Exchange that happens in form of money is also dealt in section 121 of the act. It states when exchange for money happens each party has to warrant genuineness of the money given by him/her.
Gift:
Gift is a unilateral transfer of a property it is generally associated with affection since there is no real consideration like in sale there is always monetary consideration but gifts are gratituous transfer without consideration or expectation of the same.
As per section 122 of the transfer of property act, 1882 , gift is defined as transfer of certain things movable or immovable property made voluntarily and without consideration by a party called donor, to another called done.
Essentials of Gift are:
- There must be a transfer of ownership
- The ownership must relate to property in existence
- The transfer must be without consideration ( herein the word consideration means money or anything of monetary value , it does not include organic emotion like love and affection.)
- It must be made voluntarily ( a gift must be executed with free consent of the donor)
- The donor must be a competent person
- The transferee must accept the gift (Acceptance must be made during the lifetime of the donor and whilst he is capable of giving. As per Sec. 122 if the donee dies before the acceptance of gift thereby the gift becomes void)
There is also a provision for conditional gift, where the transaction depends on happening or not happening of an event, and that condition precedent should not be invalid by law. As per section 126 of the act, a gift can be even suspended or revoked if the donor and donee agree on happening or not happening of a specified event which does not depend on the will of the donor, a gift shall be suspended or revoked but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor is void wholly or in part as the case may be.
Section 126 lays down two modes of revocation of gift:
- Revocation by mutual agreement of donor and donee.
- Revocation by rescission as in the case of contracts.
Conclusion:
The transfer of property act, 1882 a broad legislation which governs the transfer of property not only details the modes, procedure and methods relating transfer but also gives us insight to other ancillary provisions. Section 6 of the act provides us ample accounts about what may amount to transfer and what may not. It not only reveals what amounts to transfer but also the conditions attached to it. The need of this act in India was immense, since transfer and modes of transfer and rules pertaining transfer of property and property been an asset, a livelihood has always been important and therefore this act provides us ample clarity to many dimensions.
ALSO READ- TITLE SEARCH REPORT LEGAL SEARCH PROPERTY VERIFICATION & DUE DILIGENCE
This post was written by Abhishek Pathak
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