TRANSFER OF PROPERTY ACT, 1882 – LAWS OF TRANSFER MOVABLE/IMMOVABLE PROPERTY
Transfer of property must typically take place in accordance with the Transfer of Property Act 1882, which streamlines the process of property transfer between individuals.
Transfer of Property Act
Transfer of Property Act 1882 is legislation formed by the Indian government, brought into effect on July 1, 1882. The act deals with all the aspects of property transfer between living beings (inter vivos). According to the act, transfer of property means the conveyance of a property from one individual to one or more persons or to himself. The transfer can also include a company or body or association of individuals, and this act of property transfer (of an existing property) may be performed in the present or decided to be exercised in the future.
Properties are broadly divided into two categories under the Indian legal system – immovable and movable property. The Law of Transfer of property act includes regulations for the transfer of both movable and immovable property. The term ‘transfer’ in the act basically involves transfer through a mortgage, exchange, gift, sale, actionable claim or lease.
What is Movable and Immovable Property?
Movable property: Movable property refers to property that can be moved from one place to another without causing any change to its quality, capacity or quantity. Personal property, growing grass/crops, vehicles, books, standing timber, etc., are a few examples of movable property.
Just the delivery of movable property with an intention to transfer it completes the process of its transfer. Additionally, the registration of the movable property is optional under the Indian Registration Act, 1908.
Immovable property: Immovable property refers to property that cannot be moved; it can be moved only after altering or destroying it. Some examples of immovable property include real estate, houses, property rights, things attached to the land, and so on.
Mere delivery of immovable property does not suffice for the transfer of immovable property. It needs to be registered in the name of the transferee. It is mandatory to register an immovable property under the Indian Registration Act, 1908, subject to the condition that the property’s value exceeds a hundred rupees.
Scope of Transfer of Property Act
Generally, the transfer of property can take place in two ways – by an act by the operation of law or by an act of two or more parties. Transfer of property act primarily applies to the transfer of immovable property.
The act, however, does not cover property transfers by the operation of law, i.e., transfer in the form of forfeiture, sale via the execution of an order, inheritance or insolvency. The act is also inapplicable on the disposal of properties in case of wills or succession of the property.
Eligible to Transfer Property
Section 7 of the transfer of property act has laid down rules with regard to the eligibility criteria for transferring one’s property. According to the transfer of property rule, only an individual who is competent to enter into a contract with others is eligible to perform property transfer. Furthermore, an individual willing to transfer property should have the authority to perform the transfer, though he/she is not the property’s real owner.
In addition to the above, any property transfer must be performed by a competent person who is above 18 years of age. The person transferring a property must be of a sound mind should be someone who is not disqualified by law and must not be intoxicated. Besides, property transfer must take place between living beings (it can be an association, a company or a body of individuals).
Key Elements of the Transfer of Property Act 1882
The key elements of the transfer of Property Act 1882 are:
- Property transfer must be done by a competent person. He/she should not be intoxicated, must be of a sound mind, and should be a major or someone who is not disqualified by law.
- For conveyance of property, it’s necessary that the transfer is not done before the title. Conveyance can be performed in the present or decided to be exercised in the future.
- For property transfer, the property should be ‘transferrable’. Some properties like the right to sue, the right to future maintenance, stipends to the air force/navy/political prisoners/civil pensioners and the chance of an heir-apparent to succeed to an estate are not transferrable.
- The property must comply with the mentioned conditions in order to be transferrable. In the event of the condition becoming forbidden by law, immoral, impossible or opposed to public policy, the transfer would be considered void.
- Property transfer to an unborn child is not allowed. However, it can be first transferred in favour of an individual who is alive on the transfer date. The property will vest in this person’s name until the child is born.
- The transfer of property must take place during an individual’s lifetime, and the perpetuity rule must not be followed during the transfer.
- Property transfer can be done via verbal/oral agreement, except in cases that require a written agreement. For instance, sale of movable property whose value exceeds a hundred rupees, transfer of actionable claims, immovable property lease that exceeds more than a year, a gift that’s in the form of immovable property, etc.
Section 52 of the Transfer of Property Act
One of the 137 sections covered under the transfer of Property Act 1882 is Section 52, which discusses ‘lis pendens’ or property pending suit in any court of law. It says that any immovable property under a title dispute cannot be transferred or disposed of until the litigation is pending or until the court of competent jurisdiction makes a judgement in the matter.
However, if such property has already been transferred, the sale is not invalidated, and the buyer is expected to obey the court’s decision thereafter.