Sale under the Transfer of Property Act, 1882

Definition of Sale
According to Section 54 of the Transfer of Property Act, 1882, a sale is defined as a transfer
of ownership in exchange for a price paid or promised or part-paid and part-promised. This
means that the ownership of immovable property is transferred from one party to another
in consideration of a price. The key elements of a sale include the agreement between the
parties, the consideration (price), and the transfer of ownership.

Essential Elements of a Sale

1. Parties: There must be two parties - a seller (vendor) and a buyer (vendee).

- *Example*: Mr. A sells his house to Mr. B.

2. **Subject Matter**: The subject matter of the sale must be immovable property.

- *Example*: A house, land, or building.

3. **Consideration**: The consideration for the sale must be a price in money, paid or
promised, or partly paid and partly promised.

- *Example*: Mr. B agrees to buy Mr. A's house for ₹50,00,000, with ₹25,00,000 paid
upfront and the remaining ₹25,00,000 to be paid in installments.

4. **Transfer of Ownership**: The sale must result in the transfer of ownership of the
property from the seller to the buyer.

- *Example*: Once Mr. B pays the full price, the ownership of the house is transferred to
him.

5. **Execution of Sale Deed**: A sale of immovable property of the value of one hundred
rupees and upwards can be made only by a registered instrument.

*Example*: The sale deed for Mr. A's house is registered at the local sub-registrar's office.

Process of Sale
1. **Agreement to Sell**: This is a preliminary agreement where the seller agrees to sell
and the buyer agrees to buy the property on certain terms and conditions. It is also known
as a sale agreement or contract for sale.

- *Example*: Mr. A and Mr. B sign an agreement to sell Mr. A's house for ₹50,00,000.

2. **Payment of Consideration**: The buyer pays the consideration amount as agreed in

the contract.

- *Example*: Mr. B pays ₹25,00,000 upfront and agrees to pay the remaining ₹25,00,000
in six monthly installments.

3. **Execution of Sale Deed**: The final document that transfers ownership from the
seller to the buyer is the sale deed. It must be executed by both parties and registered as
per the Registration Act, 1908.

- *Example*: Mr. A and Mr. B execute and register the sale deed at the sub-registrar's
office.

4. **Delivery of Possession**: The seller delivers possession of the property to the buyer.
- *Example*: Mr. A hands over the keys and possession of the house to Mr. B.

Rights and Liabilities of Buyer and Seller under the Transfer of

Property Act, 1882
The Transfer of Property Act, 1882, provides a comprehensive framework for the transfer
of immovable property. Under Section 55 of the Act, the rights and liabilities of the buyer
and seller are clearly delineated in the absence of a contract to the contrary. This ensures
fairness and transparency in property transactions.

Rights and Liabilities of the Seller:

A. Liabilities of the Seller:

1. Disclosure of Defects (Section 55(1)(a)): The seller must disclose to the buyer any
material defect in the property or in the seller’s title, of which the seller is aware and the
buyer is not, and which the buyer could not discover with ordinary care.

Example: If the seller knows that the property has a termite infestation, they must inform
the buyer. If the buyer later finds out about the termites, and it was something they couldn't
have known through a simple inspection, the seller would be liable for not disclosing this
information.
2. Production of Documents (Section 55(1)(b)): The seller must produce all documents
of title relating to the property for examination by the buyer.

Example: Before finalizing the sale, the buyer asks to see the original title deed. The seller
must provide this document for the buyer's examination.

3. Answering Questions (Section 55(1)(c)): The seller must answer all relevant
questions put to them by the buyer regarding the property or the title thereto.

Example: If the buyer inquires about past disputes over the property, the seller must
provide truthful and complete answers to the best of their knowledge.

4. Execution of Conveyance (Section 55(1)(d)): On payment of the price, the seller must
execute a proper conveyance of the property when the buyer tenders it at a proper time
and place.

Example: Once the buyer has paid the agreed price, the seller must sign the sale deed and
complete the formal transfer of ownership.

5. Care of Property (Section 55(1)(e)): Between the contract of sale and delivery of the
property, the seller must take as much care of the property and its documents of title as
an owner of ordinary prudence would.

Example: If there is a delay between the signing of the sale agreement and the transfer of
possession, the seller must maintain the property, ensuring that it does not suffer any
damage or neglect during this period.

6. Delivery of Possession (Section 55(1)(f)): The seller must give possession of the
property to the buyer or as directed by the buyer.

Example: After completing the sale, the seller must hand over the keys and ensure that the
property is vacated for the buyer to take possession.

7. Payment of Charges (Section 55(1)(g)): The seller must pay all public charges and
rent accrued up to the date of the sale and discharge all encumbrances on the property,
unless the property is sold subject to encumbrances.

Example: If there are any outstanding property taxes or utility bills up to the date of sale,
the seller is responsible for clearing these dues.

8. Warranty of Title (Section 55(2)): The seller is deemed to contract with the buyer that
the interest professed to be transferred subsists and that the seller has the power to
transfer it. If the sale is made by a fiduciary, they are deemed to contract that they have
done no act to encumber the property or hinder its transfer.
Example: If the seller claims to have clear title to the property, they must ensure there are
no legal disputes or claims by others on the property.

9. Delivery of Documents (Section 55(3)): Upon full payment of the purchase money, the
seller must deliver to the buyer all documents of title relating to the property that are in
the seller’s possession or power. However, the seller may retain the documents if they
hold a part of the property covered by those documents. If different parts of the property
are sold to different buyers, the buyer of the lot of greatest value is entitled to the
documents, but they must produce them for inspection by other buyers when reasonably
requested and at the requesting party's cost.

Example: If the buyer pays the full price, the seller must hand over the original sale deed,
property tax receipts, and any other relevant documents. If the seller retains part of the
property, they can keep the documents but must allow the buyer to access them when
needed.

B. Rights of the Seller:

1. Rents and Profits (Section 55(4)(a)): The seller is entitled to the rents and profits of
the property until ownership passes to the buyer.

Example: If the property is rented out, the seller can collect the rent until the date of the
sale.

2. Charge for Unpaid Purchase Money (Section 55(4)(b)): If ownership has passed
to the buyer before the entire purchase money is paid, the seller has a charge on the
property for the unpaid amount and interest.

Example: If the buyer takes possession of the property but hasn't paid the full purchase
price, the seller can claim the remaining amount and interest from the property itself.

Rights and Liabilities of the Buyer:

A. Liabilities of the Buyer:

1. Disclosure of Facts (Section 55(5)(a)): The buyer must disclose any fact as to the
nature or extent of the seller’s interest in the property which materially increases
the value of such interest and which the buyer is aware of but the seller is not.

Example: If the buyer knows that a new highway is being planned near the property, which
will significantly increase its value, they must inform the seller if the seller is unaware of
this fact.
 2. Payment of Purchase Money (Section 55(5)(b)): The buyer must pay or tender
the purchase money at the time and place of completing the sale. If the property is
sold free from encumbrances, the buyer may retain the amount of encumbrances
and pay it to the entitled persons.

Example: If the sale agreement specifies that the buyer must pay by a certain date, they
must do so. If the property has an outstanding mortgage, the buyer can deduct the
mortgage amount from the sale price and pay it directly to the bank.

3. Bearing Loss (Section 55(5)(c)): The buyer must bear any loss arising from the
destruction, injury, or decrease in value of the property not caused by the seller after
the ownership has passed to the buyer.

Example: If a natural disaster damages the property after the sale is completed and
ownership has transferred, the buyer bears the loss.

4. Payment of Charges (Section 55(5)(d)): The buyer must pay all public charges
and rent due after ownership has passed to them, along with the principal moneys
and interest on any encumbrances subject to which the property is sold.

Example: After the sale, the buyer must pay property taxes and any future installments on
an existing loan against the property.

B. Rights of the Buyer:

1. Benefit of Improvement (Section 55(6)(a)): The buyer is entitled to the benefit of
any improvement or increase in value of the property and to the rents and profits
thereof after ownership has passed to them.

Example: If the property’s value increases due to nearby infrastructure development after
the sale, the buyer benefits from this increase.

2. Charge on Property (Section 55(6)(b)): The buyer has a charge on the property
for any purchase money paid in anticipation of delivery, for interest on such amount,
and for any earnest or cost awarded if they properly decline delivery.

Example: If the buyer has paid part of the purchase price in advance and the seller fails to
deliver the property, the buyer can claim this amount along with interest and any legal costs
incurred.

Key Section:

Section 55
Understanding these rights and liabilities ensures that both the buyer and the seller are
aware of their responsibilities and rights, thus facilitating a fair and transparent property
transaction process.