Transfer of Property Act: Overview, Scope and Types

A transfer means an exchange of a thing from one person to another. The definition of ‘Property’ is a virtual entity or anything physical which is owned either by one person or a group of persons. One can transfer a property to someone else by transferring its ownership, interest, rights, possession, or all of it. 

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To make this process smooth, the Government introduced the Transfer of Property Act in 1882. If you wish to know more about the same, keep reading this piece.

Section 5 of Transfer of Property Act, 1882 defines it as an act by a live person transferring property to one or more other people, himself, or other living people in the present or future. Companies, associations, and bodies of individuals are taken into consideration as living beings.

Property types in India are distinguished as either moveable or immovable under the legal system. This TP Act 1882, which came into effect on July 1, 1882, covers features of property transfer between living things.

The Transfer of Property Act is one of the earliest pieces of legislation in Indian law. It is an expansion of the law of contracts and coexists with succession laws. Knowing the main components of this Act is crucial for anyone who intends to transfer their immovable property.

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The scope of the Transfer of Property Act is:

Parties: According to this Act, two or more parties to the legal process might accomplish the transfer of property ownership

Property Type: The Transfer of Property Act principally applies to the inter-vivos (between live beings) transfer of immovable property. This Act is also applicable to transfers of property made by both companies and by private individuals. In addition, this Act applies only to transfers permitted by law and not to party acts.

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Here are the types of property that are transferable under transfer of property law. 

1. Immovable Property Sales: In return for payment, the seller transfers ownership to the buyer. It also includes transferring physical goods from the seller to the customer.
2. Mortgage of Real Estate: Transfer of ownership of the property is done in the form of a mortgage. Here, the real estate is pledged as collateral for a loan. In order to free the property from mortgage, the mortgagor must pay off both the principal and interest on the loan.
3. Immovable Property Leases: In this situation, there is no transfer of ownership; instead, the property's possession is transferred from one party to another for a fixed charge.
4. Exchange of Real Estate: When two parties agree to exchange real estate, the transaction is known as the exchange of property.
5. Gift of Real Estate: As per the Transfer of Property Act of 1882, a gift is defined as the unrequited transfer of real estate from one person to another.

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In Section 7 of the Transfer of Property Act, one can find the guidelines for legally qualified people to transfer their property. 

According to the section, "Every person competent to contract and entitled to the transferable property, or authorised to dispose of transferable property not his own, is competent to transfer such property, either wholly or in part and either unconditionally or subject to conditions, in the circumstances, to the extent, and in the manner, allowed and prescribed by any law for the time being in force."

A person must be at least 18 years old and of sound mind in order to be qualified to engage in a contract under the Indian Contract Act of 1872.

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An oral transfer means a property transfer which can be done without writing in every case and is not necessary by law. 

A person who intends to leave their property to his/her next generations must do so while keeping in mind the guidelines of this Act. This becomes crucial to prevent legal issues down the road.

The Transfer of Property Act's provisions set in Sections 13 and 14 forbid the direct transfer of property in favour of an unborn child. It is possible that the party planning the transfer must first transfer it in favour of someone alive on the transfer date. 

The property must be registered in this person's name up until the expectant kid is born. In short, a prior interest must exist in the property before the unborn child's interest can exist.

Let's understand this better with the help of an example. Let's assume that person A wants to transfer his property to his son and his/her next generation- his unborn grandchild. 

Now, in case this expectant child is not born before the death of person A, the property transfer would be invalid. It would only be valid if the child is born before person A dies. Moreover, the interest of the property should vest in his son till the birth of the child.

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Section 52 of the Transfer of Property Act of 1882, which talks about "lis pendens" or property that is a subject of a legal proceeding, is one of the 137 provisions under the act.

It states that any movable property which a title dispute involves cannot be sold or transferred while the legal action is ongoing or until a competent court issues a decision.

However, if the property has already been transferred, the transaction is still lawful. The buyer has to now abide by the court's decisions.

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According to Section 54 of this Act, the definition of a sale is the transfer of property ownership in exchange for a sum that has been promised, paid, partially promised, or partially paid. The section covers the obligations of the seller during the property transfer. 

The following is a list of these rules:

• The seller must provide all title documents pertaining to the property upon the buyer's request for inspection.
• He or she must make sure to inform the buyer of any major flaws in the property.
• The seller must treat the property and any relevant documentation in his possession with the same care as an owner. This would be between the date of the contract of sale and until the property is handed over.
• He or she must release all encumbrances on the property that are present at that time.
• He or she needs to give the buyer full possession of the property.
• To the best of his knowledge, the seller must respond to pertinent inquiries on the property's title from the buyer.
• The seller has to pay any rent and any accumulated public charges for the property up until the sale date.
• Upon tender or payment of the amount due in line with the pricing, the seller must carry out the property transfer process at the location and time suggested by the buyer.

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The buyer must take care of his or her obligations as part of the process when buying a property. These obligations include:

• The buyer must inform the seller of any information regarding the property that they are aware of that the seller is not. Additionally, they must also tell it if they have any reason to suspect that the seller is not aware of it. 
• After a buyer receives possession of the property, the seller is no longer liable for any damages, losses, or decreases in value that result from such events.
• At the time the sale is completed, the buyer is required to provide the seller with the purchase money.
• After gaining possession of the property, the buyer is responsible for paying any outstanding debts, including rent and other public charges. This includes the amount that may become due on the property, as well as any accruing interest on such debts.

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This is all about the Transfer of Property Act. The Government of India brought this Act to provide information about property transfer in a simple and easy language. As of now, this Act has undergone a number of changes to increase its effectiveness.