1ranser o Propertv Act.

1882
Sem
einition o Immoable Propertv
Transfer of Property Act deals with the
transfers of immovable property. So the
definition of immovable property is vital.
Sec 3 of the Interpretation Clause of
Transfer of Property Act says mmovable
property does not include standing timber,
growing crops or grass.
Thus the definition gives us what is not
included.
einition o Immoable Propertv
efinition of immovable property in the
General Clauses Act says mmovable
Property includes land, benefits that arise out
of land, and things attached to the earth.
Attached to the earth means
Rooted in the earth (as case of trees and shrubs)
Embedded in the earth (as case of buildings or
walls)
Attached to what is so embedded for the
permanent beneficial enjoyment of that to which it
is attached.)
einition o Immoable Propertv
and includes
Portion of earth
Space above and ground below the earth.
Objects that are on and below the earth
Benefits that arise out of land includes
benefits that arise out of immovable property
And every interest in such property
The can be hereditary allowance, ferries and fisheries, etc
Any mortgage debt arising in a property is a benefit arising
out of land, and hence regarded as immovable property
einition o Immoable Propertv
tems not included in immovable property
Standing timber (trees except standing timber are
immovable properties),
Growing crops,
Grass,
Royalty,
Right to recover maintenance allowance,
Machinery which is not permanently attached to
earth.
einition o Immoable Propertv
Fixtures Movable properties attached to
immovable buildings are called FXTURES. t
includes machineries, ceiling fans, lights,
doors, windows which are attached.
There need not be any specific mention
about transfer of ownership of fixtures as they
are treated as part of the immovable property
sold.
eaning o 1ranser o Propertv
Transfer of Property Act deals with all transfers except that of
Movable properties as that is governed by Sale of Goods Act.
Transfer of Property Act does not also deal with all types of
transfers of immovable property, but
Only deaIs with transfer of act of parties and not act of Iaw like
inheritance, will, etc. They are six kinds:
Sale
Mortgage
ease
Exchange
Gift
Actionable claim
eaning o 1ranser o Propertv
Transfer of Property means an act by which living
person conveys property in present or in future, to
one or more other living persons.
Property means:
Tangible materials
Right over materials things. Eg: right to possess, right to
gift, etc
Right over non material things. Eg: right of repayment of
debt, etc
So transfer implies either transfer of a thing, OR
right in a thing, OR transfer of a ebt.
eaning o 1ranser o Propertv
Transfer of Property means an act by which living
person conveys property in present or in future, to
one or more other living persons
Transfer may be in the present or future, but the
property which is being transferred must be in
existence on the date of transfer. Only conveying
can be done in future and not a future property.
n law, conveyancing is the transfer of title of
property from one person to another, or the granting
of an encumbrance such as a mortgage or a lien
eaning o 1ranser o Propertv
Transfer of Property means an act by which
living person conveys property in present or
in future, to one or more other living persons
Conveyance of property must be between
only living persons.
iving persons include Company, AOP, BO
whether incorporated or not.
ssentials o alid transer
Property must be transferable
Transferor must be competent to transfer
Transferee must be competent to take the transfer
Object or consideration must be lawful
f the Act requires a particular mode the transfer
must be in that mode
ssentials o alid transer
So Transfer of Property involves creation of new titIe or
interests in favour of a transferee.
Example:
Partition: does not involve obtaining a new share. So it is not a
Transfer of Property
Charge on property: only right to payment out of the 'property
subjected to charge' is created So it is not a Transfer of Property
FamiIy SettIement: is a document which finds the future titles of
the partners and does not amount to transfer as it does not
amount any creation of interest.
ReIease Deed: it is generally a form of Conveyance. So a
Transfer of Property.
Partition Deed of HUF: a co parcener gets a specific title in
place of undivided title of the family property. So it is not a
Transfer of Property.
1ransers that CANNO1 be done ORALL\
Sale of immovable property of value Rs. 100 or
above
Sale of intangible things
Simple mortgage, irrespective of value
Other types of mortgages of Rs. 100 or above
A lease of immovable property exceeding 1 year.
Gift of immovable property
An exchange
All transfers of Actionable claims (compulsory
writing, registration in some cases
n the above instances written format is compulsory.
1ransers that CAN be done ORALL\
As recognized by Courts
Compromise
Partition
Creating charge
onation to an idol
Family settlements
Settling maintenance claims, etc.
octrine o Part Perormance
Meaning:
hen a person contracts to transfer any
immovable property and the transferee has taken
possession of the property and has done some
act in continuance of such contract OR the
transferee is willing to perform his part of the
contract, then the transferor cannot breach the
contract of transfer.
t is only passive equity and cannot confer any title
nor any additional title
ssentials o Part Perormance
Contract must be of transfer of immovable property
Contract must be in writing
t must be signed by both the parties
Terms of contract must be reasonable and certain
Transferee to have taken the possession of the property
Transferee to do some act in continuance of contract
Contract need not be registered and need be complete in the
prescribed manner as provided by law.
Now transferor is prevented from breaching the contract except by
the terms provided in the contract.
1ransers as per 1OP Act
Six kinds of transfers as dealt by Transfer of
Property Act:
Sale
Mortgage
ease
Exchange
Gift
Actionable claim
SALE
eaning o Sale
Meaning: a transfer of ownership of a
property
in consideration of a sum of money
paid or promised to be paid fully or in part.
ssential element o sale
Parties seller must be competent and must
possess good title on the property. He cannot be
minor and person of unsound mind.
Subject matter must be immovable property
Transfer or conveyance for a movable property
registration is not required. elivery of possession is
sufficient. But for immovable property registration
and elivery of possession both are required.
Consideration
Summarv o Rights o Buver and Seller
Buyer's rights Seller's rights
Before completion of Sale
Charge for price prepaid To take rents and profits
After completion of Sale
Benefit of increment Charge for price not paid
Summarv o Liabilities o Buver and Seller
Buyer's liabilities Seller's liabilities
Before completion of Sale
To disclose material facts To produce title deeds
To pay price To take care of property
To execute the title deeds
To disclose material facts
After completion of Sale
To bear loss to the property To give possession
To pay outgoings mplied covenant for title
To deliver title deeds on
receipt of price
&npaid Seller`s Rights and Lien
Unpaid vendor's Iien when the
consideration to the transfer of immovable
property is not paid, the registration is valid
as law says there must be a consideration
which is paid fully or partly or promised to be
paid.
So the unpaid vendor needs remedy for the
ownership transferred before payment of
price who cannot set aside the conveyance
&npaid Seller`s Lien
Charge over the property, till the payment of price
is fully made
Interest to receive the interest on the unpaid
amount from the date of possession till actual date
of payment.
CanceIIation usually no right to cancel but if any
fraudulent intention is proved then unpaid vendor
can set aside the contract thro filing a suit against
buyer
&npaid Seller`s Rights
Against the goods
Stoppage in transit
ien
Resale
ithholding delivery
Against buyer personally
Suit for
Price
amages
nterest
Repudiation of contract
Sale bv non owners or Nemo dat quod non habet
No one can gie what he has not got,
Means the seller cannot transfer to the buyer, a
better title than he himself has
i.e. if the title of seller is defective the buyer's title
will also be defective
Aim is to protect the interest of the true owner
Exceptions: Under these cases, the buyer gets a
better title than the seller
ceptions to Nemo dat quod non habet
Sale by Mercantile agent
Sale of title by estoppel
Sale by Co owners
Sale under a voidable contract
Sale after sale
Sale before purchase
Sale by unpaid seller
MORTGAGE
ortgage
Meaning
A Mortgage is 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.
Mortgagor is the transferor or borrower of money
Mortgagee is the transferee or lender of money
Mortgage Money consists of the principaI and interest
Mortgage eed is the instrument of transfer
lementsssentials o a ortgage
Transfer of Interest: Only transfer of interest not ownership. t creates
Right in REM, and available against all subsequent transferees of the
mortgaged property irrespective of notice
Specific ImmovabIe property: f it is vague like "the whole of my
property, then it is void.
Security: Any arrangement that has the effect of extinguishing a debt is
not a mortgage.
Consideration or Purpose: A mortgage like every other contract
requires consideration which means something in return. Pecuniary
iability means a legal obligation to pay damages. Unless parties to the
contract perform as per their terms of engagement then an obligation to
pay damages may arise.
Competence of parties: The parties to the contract must be competent
to contract as per Section 11 of the ndian Contract Act, 1872. Further
the mortgagor must have a title or authority to transfer.
Registration: n all mortgages other than a mortgage by deposit of title
deeds, if the principal money is more than Rs. 100/ a registered
instrument is compulsory. n the case of deposit of title deeds, there is
implied contract between the parties to create a mortgage, and no
registered instrument is required
Sale Vs. ortgage
n case of sale absolute transfer of all the
rights in the property is sold to the buyer.
n case of Mortgage, the mortgagor transfers
only an interest in property to the mortgagee.
The right of mortgagee is only an accessory
right, which is intended merely to secure the
due payment of a debt.
1vpes o ortgages
SimpIe Mortgage:
No delivery of possession of mortgaged property to mortgagee
Mortgagor binds himself to repay the loan
f fails, mortgagee can sell the mortgaged property
Usufructuary Mortgage:
iteral meaning is the "legal right to use and enjoy the benefits
and profits of something belonging to another.
elivers possession of property to mortgagee
Authorizes mortgagee to retain till the payment of mortgage
money is settled by mortgagor
Authorizes mortgagee to receive the rent and profits arising
from the property
1vpes o ortgages
Mortgage by ConditionaI SaIe:
n such a mortgage the mortgagee sells the mortgaged
property if the mortgagor fails to repay the mortgage money on
a certain date, the sale becomes absolute.
f the mortgagor pays the mortgage debt on a certain date the
sale becomes void and the mortgagor becomes the owner.
f the mortgagor pays the mortgage debt the buyer must
retransfer the property to the seller i.e. the mortgagor.
t may be defined as an ostensible sale on condition that upon
repayment, the buyer shall transfer the property to the seller.
Ostensible means that it has an appearance of sale but is
really not a sale.
1vpes o ortgages
EngIish Mortgage:
The mortgagor binds himself to repay the money on a certain date.
He transfers the mortgaged property absolutely to the mortgagee but
under a condition that he will return the property to the mortgagor on
payment of mortgage debt.
Mortgage by deposit of titIe deeds: (EquitabIe mortgage in EngIish
Law)
This mortgage is applicable only to the towns of Kolkata, Chennai,
Mumbai and other towns as notified by the state Government in the
official gazette.
There is a debt. t may be an existing or a future one.
The debtor delivers to the creditor all the documents of title in respect
of the immovable property.
elivery may be physical or constructive.
Such documents are intended to create security for the creditor. This
transaction is called mortgage by deposit of title deeds.
1vpes o ortgages
AnomaIous Mortgage:
A mortgage which is not Simple Mortgage
or a Mortgage by Conditional Sale or an
Usufructuary Mortgage or an English
Mortgage or a Mortgage by deposit of the
title deeds is called an Anomalous
Mortgage.
vpothecation:
t is not a statutory creation but is a product of trade
usage.
t is a kind of pledge where the pledged goods
remain in the possession of the pledger for his use.
Hypothecator holds such goods as an agent and not
as the owner.
The goods are liable to be returned to the
hypothecatee under the circumstances stated in the
contract of parties.
f the hypothecator refuses to return the goods to
the hypothecatee, then the hypothecatee has a right
to seek court help in recovering them.
Pledge and vpothecation - Bank
Adances
hile pledged goods are in actual possession of the bank, in
hypothecation they are in actual possession of the borrower.
Pledged goods are stored in the godown under the lock and key of
the bank under the bank's supervision. Thus, they remain under the
physical possession of the bank and no withdrawals or additions of
the stock in the godown are permissible without the bank's
permission.
However, hypothecated goods, strictly speaking are not under the
lock and key of the bank. They are allowed to be kept at the
premises of the borrower without any lock and key of the bank as
such but are supposed to be under the constructive possession
of the bank by virtue of the deed of hypothecation under which
the borrower is obliged to submit regular returns to the bank
indicating the increase and decrease of the value of the said goods
to enable the bank from time to time to determine the drawing of the
borrower in this regard.
LEASE
eaning o Lease
A lease is a transfer of a right to enjoy property
made for a certain time or in perpetuity in
consideration of a price paid or promised. So there
is no transfer of ownership. So it is a partial transfer
of property.
Transferor of the right called the lessor
Transferee of the right Or the person to whom the
right is transferred called the lessee
Hence transfer of ownership is sale and partial
transfer is lease
eaning o Lease
The agreement of lease must be executed
lawfully by both lessor and lessee
A lease of an immovable property exceeding
a year shall be made only by a registered
instrument
The consideration of a lease can be the
PRCE also called premium OR RENT which
is paid thro money, share, services, etc.
inor
Cannot be a lease
As he cannot perform the contractual
obligations put forth by the lessor
Further, contract with minor is void
ssential elements o lease
Contract may be express or implied
Parties to the lease i.e. lessor and lessee shd be
competent to contract
Subject matter of lease must be immovable property
The term of the lease to be certain, definite and
fixed
The consideration of a lease can be the Premium or
Rent
inds o Lease
Tenancy at wiII lease contain a clause that lessor
or lessee may have an option to terminate the lease
Tenancy at sufferance when a person who is a
tenant under a valid lease continuous in possession
even after the expiry of the period with out the
consent of the lessor.
Here the land lord may terminate such lease without
notice or demand
The tenant by sufferance cannot claim the right of
tenancy and pays only compensation and not rent
for use and occupation.
inds o Lease
eases from year to year, leases exceeding a
year, leases receiving a yearly rent and
permanent leases. (to be made only by
registered document and to be executed by
both lessor and lessee)
eases from month to month, leases for less
than a year. (can be made either by a
registered document or oral agreement with
delivery of possession
Lease and License
A lease is a transfer of a right to enjoy property
made for a certain time or in perpetuity in
consideration of a price paid or promised. So there
is no transfer of ownership. So it is a partial transfer
of property
A license is a right to do or continue to do
something, in or upon the immovable property of the
guarantor, which in the absence of such right shall
be unlawful.
So to differentiate between the two, it is said, if the
instrument creates an interest in the property, then it
is a lease, and if it does not, it is a license.
1ermination o lease - ethods
Expiry of time as prescribed in the lease deed subject
to covenant for renewal
Termination by notice either by lessor or lessee
Tenancy at wiII either by lessor or lessee at their will
ConditionaI Iease termination based upon a condition
of happening of some event.
Forfeiture when the lessee or tenant breaches the
express condition of lease the lessor gets a right of re
entry in the property. Such re entry terminates the lease
1ermination o lease - ethods
Merger - will take place (a) By act of parties
(Eg: lessee can buy the leases land), or (b)
By operation of law (Eg: court may declare
that lessee is the actual owner)
Surrender may be express or implied
Express - if lessee surrenders the property
before the expiry of the term by mutual consent
ImpIied - when the lease is subsisting and if the
lessor creates a new lease to the same tenant,
the new lease operates
EXCHANGE
eaning o change
hen two persons mutually transfer the ownership
of one thing for the ownership of the another, where
the such transferred thing is not money, then such a
transaction is called an Exchange.
So the transferred items/things, any one or both of
them are movable or immovable property.
Eg: 'A' transfers a house to 'B' . 'B' transfers a land
to 'A'. This is exchange, otherwise called barter.
ssentials o alid echange
Presence of two parties
Parties should own the properties exchanged
Mutual reciprocal transfer
Subject matter is tangible things movable or
immovable property
Exchange requires registration
Rule o change
Right of party deprived of exchanged
item/thing
Eg: 'A' transfers a house to 'B' . 'B' transfers a
land to 'A'. This is exchange, otherwise called
barter
n the above Eg: if A, due to the defect of the title
of B is deprived of the land received in Exchange,
then B is liable to compensate the loss caused to
A. This is done by return of the house to its
original owner i.e. A provided the house is in
possession of B.
Rule o change
Rights and liabilities of parties to Exchange
The rights and liabilities of parties to Exchange is
that of seller and buyer for the item/thing
exchanged. Hence all the essentials of Sale must
be fulfilled to an Exchange.
Exchange of money
Both the parties warrants the genuineness of the
money given and taken.
i between Sale and change
Meaning of the two terms
Right of party deprived of exchanged
item/thing is present in Exchange but not in
Sale
n sale the unpaid seller has the charge on
the property sold where as in Exchange there
is no such charge.
GIFT
eaning o Git
t is the transfer of a certain movable or immovable
property
made voluntarily (with free consent and without
undue influence) and
without consideration
by a person called donor and
accepted by donee.
inds o Git
Gift inter vivos is a gift between living
persons which is dealt under Transfer of
Property Act .
Gift Testamentary otherwise called ills is
a gift operating after the death of the testator
and outside the scope of Transfer of Property
Act
ssentials o Git
There should be transfer of ownership, as in
sale, where there must be transfer of all the
rights in the property by the donor to the
donee
The subject matter may be movable or
immovable but must be in existence on date
of transfer
ssentials o Git
Such a transfer of property must be without
consideration
onor must be competent to contract. Minor
cannot gift
Acceptance must be made by the donee or
any person on behalf of donee during the
lifetime of donor. f not accepted then the gift
is void
ssentials o Git
onee must be a living and a specific person.
Minor can be a donee and can avoid the gift
on attaining majority. onee cannot be public
at large
Registration o git
For a gift of an immovable property the
transfer must be thro an registered
document.
t must be signed by the donor and attested
by atleast two witnesses
For a gift of an movable property the transfer
may be thro an registered document or actual
delivery
Reocation o Git
Means cancellation of gift
May happen as agreed upon by the parties to
gift on happening of any specified event.
Reasonable grounds like coercion, influence
fraud, misrepresentation or mutual mistake
are valid ground for revocation of gift
ACTIONABLE CLAIM
eaning o Actionable (laim
Means claims as to unsecurable debts
The foll are Actionable Claims:
Arrears of rent
Amount standing to the credit of members of PF
F in bank
Money due under C, etc
The foll are not Actionable Claims:
Mortgage debt
Right to recover profits from co sharers, etc
Proisions relating to Actionable (laims
Transfer of an ActionabIe CIaims is only thro
execution of a document in writing which needs
to be signed by the transferor
Assignment is the transfer of a claim or right or
interest or property from one person to another