It is important to get the right kind of legal advice when dealing with property-related matters, it’s just as important to be acquainted with the common acts and laws that are involved in the process. The purchase or sale of property is a complicated affair and by gaining some knowledge of the steps involved, one can safeguard one’s property transactions more effectively. Starting today, we present to you a series of posts that will look at some common property acts, legal documents and legal implications or various drafting, as well as necessary safeguards that should be incorporated in legal documents to protect the interests of all concerned parties.
SALE: This refers to the complete transfer of ownership of property, with no rights to said property remaining with the Seller. This is defined by Section 54 of the ‘Transfer of Property Act,1882’. However, there are certain restrictions or prohibitions under Section 6 and Section 136 of the said Act regarding such transfer of ownership. For instance, if either of the parties is a minor, lunatic, insolvent, alien enemy, the property is managed by the court. Similar restrictions are imposed in transactions between persons in fiduciary relationships such as guardian and ward; parent and children; solicitor and client, where one is in a position to dominate the will of the other. Here it is assumed that there is enough scope for undue influence in cases of transaction between them. A valid sale has to be in exchange for a price paid or promised and where the value is Rs.100/- or more, it can be carried out only by a registered instrument.
TITLE AND OWNERSHIP: Execution of conveyance and payment of price are reciprocal. However, where the seller is in possession of the property or the deed and payment remains pending, the purchaser does not acquire any right by execution and registration of the deed. Similarly, when the deed expressly states that it shall be void unless the price, either in whole or in part, is paid within a fixed time, the purchaser does not acquire right by execution and registration of the deed, unless the consideration amount is paid according to the terms of the deed.
In other cases, a sale is completed and perfected by execution and registration of the conveyance, irrespective of the fact of non-payment of the purchase money. The title of the property is also transferred from the seller to the buyer. The purchaser in such cases (even without making payment of the price, but having properly executed and registered conveyance deed)) can claim possession of the property.
EFFECT OF CONTRACT FOR SALE: The enforceable agreement for sale shifts the benefits of ownership from the seller to the purchaser, if the latter has paid the price and has taken possession on the agreement. However, it does not transfer the ownership. This act is enforceable by a decree for specific performance. The purchaser does not become the owner by mere contract for sale. However, he is entitled to a statutory charge under Section 55 (6) (b) of the ‘Transfer of Property Act, 1882’ for the advance made against the property and is protected from dispossession on the strength of his rights under Section 53 (a) of the said Act.