TRANSFER OF PROPERTY – Overview

Author – Mr. Deepak, Student of Maharshi Dayanand University, Rohtak

Introduction

The Transfer of Property Act, 1882 is a crucial legislation in Indian property law that governs the process of transferring property rights from one person to another. legislated on 1st July 1882, the Act provides a legal frame for the transfer of both portable and irremovable parcels, though it primarily focuses on irremovable property.

Definition

Section 5 of TPA defines “transfer of property” as an act by which a living person conveys property, in present or in the future, to one or further other living persons, or to himself and one or further other living persons. The term” living person” includes an individual, company, or association of persons.

Essential Elements of Transfer of Property:

The Transfer of Property Act, 1882 governs the transfer of property in India and outlines the essential elements required for a valid transfer. Here are the essential elements of the Act:

1. Transferor and Transferee

• There must be a transferor (person transferring the property) who is competent to contract.
• The transferee (person receiving the property) can be any person competent to hold property. In some cases (e.g., for gifts), the transferee also needs to be competent to contract.

2. Transferable Property

• The property being transferred must be legally transferable.
• Section 6 of the Act specifies what properties can and cannot be transferred. For example, a mere right to sue, a public office, or an interest in property restricted by law cannot be transferred.

3. Valid Consideration

• Except for gifts (which are transfers without consideration), all transfers must involve lawful consideration.

4. Compliance with Legal Formalities

• Certain types of transfers (e.g., sale of immovable property valued over ₹100, mortgages, and leases over one year) must be in writing, signed, and registered under the Registration Act, 1908.
• For movable property, a simple delivery or verbal agreement may suffice.

5. Free Consent

• Consent obtained by coercion, undue influence, fraud, misrepresentation, or mistake can render the transfer voidable.

Case law- Peacock v. Pursell (1903)
It was held that any transfer made with the intent to defeat or delay creditors is voidable at the option of the creditors.

6. Lawful Object and Purpose

• The object of the transfer must be lawful. Any transfer made for an illegal purpose or against public policy is void.

7. Mode of Transfer

• The Act recognizes several modes of property transfer, such as sale, mortgage, lease, exchange, and gift.
• Each mode has specific requirements under the Act.

8. Notice to Transferee

• In some cases, the transferee must be aware of the rights and interests involved, especially when dealing with immovable property that may have existing claims or encumbrances.

Types of Transfers under the transfer of property act 1882:

1. Sale (Section 54)

• Definition: Sale is the transfer of ownership in exchange for something.
• Essentials:
  • Transfer of ownership.
  • Consideration in the form of money.
  • In case of immovable property above ₹100, registration is compulsory.

Case law– Narandas Karsondas v. S.A. Kamtam (1977)
Clarified that a contract for sale does not, by itself, create any interest in or charge over the property.

2. Mortgage (Section 58)

• Definition: Transfer of an interest in specific immovable property as security for the repayment of a loan.
• Types of Mortgages:
  • Simple Mortgage
  • Usufructuary Mortgage
  • English Mortgage
  • Equitable Mortgage
  • Anomalous Mortgage

3. Lease (Section 105)

• Definition: Transfer of the right to enjoy immovable property for a certain time in exchange for consideration (rent).
• Essentials:
  • Transfer of possession, not ownership.
  • Consideration in the form of rent or premium.
  • For leases over 1 year, registration is mandatory.

4. Exchange (Section 118)

• Definition: Transfer of ownership of one property for the ownership of another, both immovable or movable, without using money as consideration.
• Essentials:
  • Mutual transfer of ownership.
  • No monetary consideration.

5. Gift (Section 122)

• Definition: Voluntary transfer of property without any consideration, made out of love and affection.
• Essentials:
  • Transfer without consideration.
  • Acceptance by the donee is necessary.
  • For immovable property, registration is compulsory.

6. Actionable Claim (Section 130)

• Definition: Transfer of a claim to any debt (other than a secured debt) or a beneficial interest in movable property not in the possession of the claimant.
• Examples:
  • Unsecured debts.
  • Right to claim insurance money.

What may be transferred under this act:

Under the Transfer of Property Act, 1882 (India), the term “property” refers to any kind of property, movable or immovable, that can be legally transferred from one person to another. Section 6 of the Act specifies what may be transferred and also outlines exceptions.

• Properties That May Be Transferred:

1. Movable and Immovable Property – Both types can be transferred unless restricted.
2. Tangible and Intangible Property – Tangible (e.g., land, house) and intangible (e.g., patents, copyrights).
3. Present and Future Interests – A person can transfer existing rights or rights they expect to receive in the future.
4. Conditional Interests – Properties can be transferred with certain conditions attached.

• What Cannot Be Transferred (Section 6 – Exceptions):

1. Spes Successionis – A mere hope of succession (e.g., an heir apparent’s future inheritance).
2. Right of Re-entry – A landlord’s right to reclaim land on breach of conditions.
3. Easement Rights – Right to use another’s land (e.g., a right of way) cannot be transferred separately.
4. Restricted Interests – Such as a tenant’s personal right to occupancy.
5. Right to Future Maintenance – Cannot be transferred as it is a personal obligation.
6. Public Office Rights – The right to hold a public office or its salary cannot be transferred.

Competency of persons to transfer:

1. Competency to Contract (as per the Indian Contract Act, 1872)
   A person must be:
   • Major (18 years or older, or 21 if under a court-appointed guardian)
   • Of sound mind (capable of understanding the act and forming rational judgments)
   • Not disqualified by law (e.g., due to insolvency or criminal conviction)
2. Entitlement to Transferable Property
   • The person must have legal ownership or a valid interest in the property.
   • If the person is authorized by law.
3. Not Disqualified by Law
   • Certain persons (e.g., insolvents, minors, or persons of unsound mind) are disqualified from transferring property.
   • Alien enemies or convicts may also be restricted under specific circumstances.

Oral transfer under transfer of property act 1882:

While the Act primarily emphasizes written instruments for property transfers, it also recognizes certain situations where oral transfers are valid.

1. General Rule — Section 9:

• Section 9 of the Act allows for oral transfers unless a written instrument is expressly required by law.

Implication:
If the law doesn’t specifically require a written document for a particular kind of property transfer, it can be done orally.

2. When is Oral Transfer Valid?

• Movable Property:
  Transfer of movable property (e.g., goods, jewelry) can be done orally since no writing is required.
• Certain Immovable Properties:
  Small-value immovable property (like a simple license or lease under one year) can be transferred orally.
• Gifts of Movable Property:
  As per Section 123, gifts of movable property can be made orally by delivery of possession.
• conditions restraining alienation under the Transfer of Property Act, 1882 (Section 10)

1. Introduction:
Section 10 of the Transfer of Property Act, 1882 deals with conditions or restrictions imposed on the transferee regarding the alienation (transfer) of the property. As a general rule, the law discourages absolute restraints on the alienation of property to ensure free circulation and utility of property in society.

2. Section 10 – Restraint on Alienation:

• Essence:
  Any condition in a transfer of property that absolutely prohibits the transferee from transferring their interest is void. However, the transfer itself remains valid.

3. Illustrations:

• Void Restraints:
  • Example 1: X gifts his house to Y on the condition that Y should not mortgage it under any circumstances. This is an absolute restraint and is void.
• Valid Partial Restraints:
  • Example 2: A gifts land to B, with a condition that B can’t sell it to a specific person (say C). This is a reasonable partial restraint and valid.
• Exception – Transfer for Benefit of Women (Section 10 Proviso):
  • Example 3: A transfers property to his daughter with a condition that she cannot alienate it during her lifetime. This restraint is valid as it is for the benefit of a woman.

4. Key Case Laws:

• Rosher v. Rosher – The court invalidated a restraint that allowed transfer only to a specific person at an undervalued price.
• Renand v. Tourangeau – A condition restricting transfer for a specific period was upheld as valid.

Conclusion:

The Transfer of Property Act, 1882 (TPA) governs the transfer of property in India and outlines the legal framework for the transfer of both movable and immovable property.