If you have, or are planning to enter the real estate market, you will likely come across the Transfer of Property Act, 1882 (also the TP Act). As the name indicates, it is the primary legislation in India that governs certain transactions in immovable property, and the rights and obligations that they create.
The TP Act applies to both movable and immovable property, but its provisions are especially significant when it comes to the transfer of real estate. An understanding of this law is crucial not just in transferring land or property, but also to fully understand the extent of your rights over property that is already in your possession or control.
In this article, we shall dive into the key provisions of the Transfer of Property Act, its history, and its significance for your new and existing real estate.
The Transfer of Property Act: Meaning, Importance, and Background
Before the introduction of the Transfer of Property Act (also known as TP Act), property transactions in India were largely governed by local customs, personal laws, and English common law.
The TP Act was introduced in 1882, to streamline and unify this regime across India.
It primarily defines the manner in which individuals may ascertain their rights or title to a given property, and the process through which such title may be legally transferred.
What Are the Provisions of the TP Bare Act?
The primary feature of the TP Act is that it requires a transfer to occur through an act of living parties.
Applying this definition, certain types of transfers fall within the purview of the TP Act, while several familiar forms of transfer also fall outside its jurisdiction.
To be governed by the TP Act, the transfer of property must meet the following criteria-
1. Living parties
It governs voluntary transfers between living individuals. This excludes any transfers that include deceased or unborn individuals. Transfer of property that occurs under will or testament is not under the purview of this legislation.
2. Voluntary transfers
It excludes transfers that occur through the operation of law. This includes any transfer that takes place pursuant to a court order, by inheritance, or as a result of insolvency or other legal proceedings.
Which Transfers Are Governed by the TP Act?
The TP Act primarily defines and regulates the following transfers.
1. Sale of property
The Transfer of Property Act, 1882 applies to the sale of houses, land, and other forms of real estate. A valid transfer is enacted through a written contract of sale, its registration, and the payment of relevant duties.
When executing a sale, the seller is required under the TP Act to:
1. Deliver complete possession to the buyer, along with all the documents relating to the title of the property.
2. Maintain the property until such possession has been delivered.
3. Clear all dues relating to the property, including the payment of applicable tax, and the repayment of any mortgages created on it.
The buyer, on the other hand, is required to:
1. Make timely payments for all the expenses that the property incurs, including taxes, from the date of transfer.
2. Take responsibility for any subsequent damages and repairs.
3. Make full and timely payment to the seller under the sale contract.
2. Mortgages on property
A mortgage is created when the owner of a property uses it as a collateral to obtain a loan, essentially a loan against property. The TP Act outlines the conditions under which mortgages can be created and enforced. Once the debt is paid, the mortgage is extinguished, and the mortgagor can regain full possession and control of the property.
A mortgage has significant advantages over other types of loans. Such a loan is deemed secured, often providing better interest rates and repayment terms for the borrower. The value of the property may also factor positively towards the amount of money sanctioned under the loan.
In conclusion
Even in a fast changing and evolving economy, real estate remains one of the most reliable and secure assets. Understanding your rights and obligations towards your property is essential whether you are buying, selling, renting or mortgaging property; and the TP Act provides the primary framework.
By knowing your property rights, you can access financing options like a loan against property. Tata Capital offers an easy process with competitive loan against property interest rates, minimal documentation, and quick approvals. Whether you need funds for a personal goal or business, this option provides flexibility.
For more details, visit the Tata Capital website, or download the app.
FAQs
Section 7 of the Transfer of Property Act defines who can transfer property and the conditions for a valid transfer. It states that a person must be: (a) competent to contract (b) entitled to the property being transferred (c) authorized to dispose of the property being transferred, and (d) not under any legal disqualification.
A valid transfer of property cannot take place if any of these conditions are not met.
Section 6 of TPA provides for property which cannot be transferred. Future maintenance rights; rights personal to the individual who receives them and cannot be transferred. For example, a wife's right to maintenance from her husband. Transfer of interests in property that are restricted to the owner's personal use, and transfer of easements separately from the dominant heritage are also prohibited.
Both parties involved in the transaction must be competent – meaning they must be of sound mind, above 18 years of age, and not disqualified by law. Additionally, the transfer must be voluntary, lawful, and involve a valid contract, ensuring clarity and compliance with the TP Act.
According to article 65 of the Limitation Act 1963, the limitation period for transfer of property is 12 years, after which a suit claiming possession of property will not be entertained by the courts.
20 February 2025
4 mins read
Previous Post
