Modes of Transfer of Property

Introduction

Transfer of property?is regulated under the Transfer of Property Act, 1882. It includes both movable and immovable property.?The main object of the Act is to bring the transfer of property between living person under rules and regulation.

Definition

Section 5 of the Transfer of Property Act, 1882, defines the term “Transfer of Property”?as “act by which a living person conveys property, in present or in future, to one or more living person or to himself and one or more other living persons”. ‘Transferor’ is the one who transfers the property, while the one who receive such property is ‘Transferee’. Term “Living Person” not only includes living person but legal entity such as companies, private association or body individuals.

There are 2 broad categories of property under the Transfer of Property Act-

Immovable Property

Transfer of Property Act, does not define this term, but it gives exhaustive definition in regards to immovable property. Section 3 of the act lies down that immovable property does not include standing timber, growing crops or grass.

Movable Property

Act does not define the term ‘immovable property’ properly and gives a very vague definition that movable property are those property which are not immovable property.

Kinds of Transfer

Subsequent forms of transfer under the Act are-

• Sale– It’s an out-and-out transfer of property and also the consideration is money.
• Mortgage– It’s a transfer of a limited interest during a property.
• Lease– A lease may be a transfer of a right to enjoy the immovable property for a particular time.
• Exchange– It’s the same as sale, but differs in consideration. Here the consideration is another thing not money.
• Gift– Here, there’s no consideration.

?

1) Mortgage

Mortgage is defined under Sec.58 (a) of the Act. A mortgage is a” transfer of an interest” in some immovable property for securing the repayment of money of loan.

Parties –

1) Mortgagor – Transferor is called mortgagor in this transaction.

2) Mortgagee – Transferee is called as Mortgagee.

3) Mortgage Money – Principal money & interest of which is payment is secured in such transaction.

4) Mortgage Deed – is the instrument by which transaction is effected.

Essentials –

i) transfer of an interest

ii) specific immovable property

iii) purpose of securing payment of debt.

How effected –?

Except for the mortgage by deposit of title deeds, all other forms of mortgage must be made through a registered instrument if the sum assured is 100 or more. A simple mortgage is affected only by registered documents even if the sum is less than 100. When registration is necessary it must be in writing, attested by at least two competent persons, signed by mortgagor & registered according to provisions of Registration Act.

Types –

1) Simple Mortgage

2) Mortgage by Conditional Sale

3) Usufructuary Mortgage

4) English Mortgage

5) Mortgage by deposit of title deeds

6) Anomalous Mortgage

2) Sale

Sale is defined under Sec. 54 of the Act. The rights, as well as liabilities of buyer and seller, are also mentioned in Sec.55 of the Act. Sale is a “transfer of ownership” for consideration or for the price paid by the buyer of that property.

When the value of such tangible immovable property is not more than a hundred rupees transfer may be done either by a registered instrument or by delivery of property. On the other hand when the value of such immovable property is more than a hundred rupees then transfer has to be made only by a registered instrument.?

Contract for sale –

It is a contract in which terms & conditions are mentioned between the parties,?According to which such transfer of immovable property will happen in the future at the time & place decided as per contract. Such a contract for sale does not create any charge, title, interest in such property.

The main difference between sale & contract for sale is in sale transfer takes place immediately & in the contract for sale transfer of immovable property takes place at a later stage or in the future. Also in sale, the buyer gets possession, title in the property as soon as the transaction is completed.

3) Lease

Lease is defined under Sec.105 of the Act. In a contract of lease, there is “transfer of right ” to enjoy the particular immovable property for a certain time or in perpetuity for consideration in price which is paid or promised & instead of the price it may be a share of crops, any service to be provided periodically or on occasion, as specified between parties.

Parties to the Contract of Lease –

1) Lessor – Lessor means the transferor.

2) Lessee – Lessee means the tranferee.

3) Price – The price in case of lease, means the premium.

4) Rent – Rent in context of lease means money, share, service or any other thing to be so rendered.

Duration of a lease for which no period is specified in the contract is for agriculture & manufacturing purpose, is deemed to be a lease for the year to year which can be terminated by either of the parties on giving a six-month notice. For any other purpose, such period is month to month which can also be terminated by either of the parties on fifteen days notice. (Sec.106)

The contract of lease for a period of the year to year or exceeding one year is to be effected only by a registered instrument and all other lease contracts can be effected by a registered instrument or even by oral agreement along with delivery of possession.(Sec.107)

Modes of determination of lease – (sec.107)

1) by efflux of time

2) on happening of some event

3) termination of interest of lessor in such property

4) when interests of lessor & lessee become vested in one person in same right

5) by express surrender

6) by implied surrender

7) by forfeiture i.e.when lessee breaches any express condition.

8) on expiration of notice to terminate the contract of lease by either?party.

4) Gift

The gift is defined under Sec.122 of Act. A gift means the transfer of certain existing moveable or immoveable property made voluntarily which is without any consideration.

Parties –??

Donor- (transferor) who transfers such property in gift.

Donee – who accepts or on his behalf accepts?such property in gift from donor(transferor).

It is essential that such acceptance by donee must be made during the lifetime of the donor. The gift is void,?if the donee dies before acceptance of such gift.

5) Exchange

Exchange is defined under Sec.118 of the Act.?When two persons mutually transfer the ownership of one property for the ownership of another property, such a transaction is called an exchange.

But a transfer of ownership of the money in return of money is called an exchange. It cannot be called a transaction of sale. In the transaction of exchange, the subject matter i.e.properties need not be immovable.

How Effected –?For transfer by way of transaction of exchange has same rules & formalities applicable of sale.

Conclusion

Before transfer of any property if affected it has to be taken into consideration that what kind of properties is transferable. Therefore it is concluded that before considering the question of mode of transfer it has to be first ascertained that what kind of properties can be transferred.?If the property is transferable property the same can be transferred via using different modes of transfer.