What are the rights and liabilities of buyer and seller under the Transfer of Property Act, 1882?

Question: What are the rights and liabilities of buyer and seller under the Transfer of Property Act, 1882? [MPJS 2006, 2007]

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Answer

Section 54 of the Transfer of Property Act provides a clear definition of a sale, stating that it involves the transfer of property ownership in exchange for a promised or paid sum. In addition to this definition, the Act also outlines several obligations that sellers must fulfil during the property transfer process to ensure a smooth and lawful transaction. Under Section 55 of the Transfer of Property Act, 1882, the rights and liabilities of the buyer and seller of immovable property are outlined as follows:

Seller's Rights and Liabilities

Liabilities of a Seller

• Disclose material defects in the property or title that the buyer is not aware of.
• Produce all relevant documents of title for examination by the buyer.
• Answer relevant questions about the property or its title.
• Execute a proper conveyance upon payment of the price.
• Take care of the property and related documents between the contract and delivery.
• Provide possession of the property as per its nature.
• Pay public charges, rent, and discharge encumbrances.

Seller's Implied Contract

• Contract with the buyer that the interest being transferred subsists, and the seller has the power to transfer it.
• In case of a sale by a person in a fiduciary character, ensure the property is not encumbered or hindered.
• Delivery of Documents: If the whole purchase money is paid, deliver all documents of title to the buyer.

Rights of a Seller

• Entitled to rents and profits until ownership passes.
• If ownership passes before full payment, entitled to a charge on the property for unpaid amounts.

Buyer's Rights and Liabilities

Liabilities of a Buyer

• Disclose facts about the seller's interest in the property that materially increases its value.
• Pay or tender the purchase money at the agreed time and place.

Payment Retention: If the property is sold free from encumbrances, the buyer may retain the amount of any existing encumbrances from the purchase money.

Loss or Damage: Bear any loss from the destruction, injury, or decrease in value of the property not caused by the seller.

Payment Obligations: Pay public charges, rent, encumbrances, and interest on them after ownership has passed.

Rights of a Buyer

• Entitled to the benefit of improvements and increased value of the property.
• If ownership has passed, entitled to rents and profits.
• If improperly declined delivery, entitled to a charge on the property for the paid purchase-money.