Part III of the transfer of property act deals with the sales of immovable property. Sale is the transfer of ownership. Such transfer in the case of tangible immovable property of the value of hundred rupees and upwards or in the case of or another intangible thing, can be made only by a registered instrument. A contract for the sale of immovable property is a contract that a sale of such property shall take place or terms settled between the parties. 

Definition of sale 

Sale is a transfer of ownership for money consideration. According to section 54, sale is a transfer of ownership in exchange for price paid or promised to be paid. The elements which are necessary to constitute a sale are: 

Transfer of ownership:

Sale is a transfer of ownership. Ownership is absolute interest in the property. Therefore in a sale, there is transfer of all rights in the property sold; no rights in respect of property are left with the transferor (seller).

In the case of Vijay Kumar Sharma vs Devesh Behari Saxena, the ownership of a plot was transferred for a consideration of Rs.20 lakh. The document was held to be a sale not a lease. 

Money consideration:

In the case of Pappu Singh and another vs Prahlad Badri Lal Sen (2020), in a sale, payment of consideration was made through cheque and there was no stipulation on the sale deed that in case the check gets dishonoured the sale would be liable to be annoyed. In this situation, it will be treated that the realisation of consideration or part thereof was not the essence of sale, and therefore, sale would not stand cancelled.  

Where ownership is transferred in exchange of ownership of some other property, the transaction is exchange. When ownership is transferred without any consideration, the transaction is a ‘gift’. 

Essentials of a valid sale

• The parties that is the seller and the purchaser are competent
• The subject matter that is the property is in existence.
• The money consideration that is the price has been fixed or referred 
• The conveyance that is the transfer has been made as prescribed under the law.

Parties: seller and purchaser- competent

There are two parties in a sale. The transfer is called seller and the transferee is called purchaser. Seller and purchase are also known as vendor and vendee.

Seller and purchaser, both must be competent on the date when the sale is made. The seller must be competent to contract that is must be of sound mind and must have attained the age of majority. Competency alone is not sufficient. The seller must also have the right to sell the property. A tenant is not competent to sell the property. The property must be transferable within the meaning of section 6 of the act. In the case of Ram Das vs Sitabai it was held, a seller has no right to transfer or non-transferable property. 

Subject matter: immovable property: 

Transfer of Property act deals with sale of only immovable property. Sale of movable property our dealt with under the sales of goods act, 1929. The subject matter of sale under section 54 is transfer of immovable property. Accordingly, the immovable property which may be subject matter of sale means land, benefits arising out of land and the things attached to the earth. Mortgage debt or intangible immovable property and can be sold within the meaning of section 71. Equity of redemption is a tangible immovable property. In the case of Sona Lal vs Mohanlal it was held that sale of equity of redemption is a sale of tangible immovable property. 

Money consideration: the price:

The money consideration which is called price is an essential element of sale. The price must be fixed or referred to be in the sale deed. Its payment is not necessary for the completion of transfer but its reference is necessary. The price must be paid on the execution of a sale deed in advance or after execution of the sale deed. 

In the case of Kammana Sambamurthy vs Kalipathapu Atchumma, held, some part of price may also be paid at the time of execution and the rest may be promised to be paid in future. 

Conveyance: mode of transfer: 

Part II of section 54, provides 2 modes of transfer of property – 

Delivery of possession: writing and registration is not essential 

Registration of sale deed: except in the cases of sale of property value in less than hundred rupees in all other cases of sale of immovable property, registration is compulsory. 

Responsibilities of the seller during a property transfer under the Transfer of Property Act 

Section 54 of the Act addresses the responsibilities of a property seller: 

Any serious flaw in the property must be disclosed to the buyer. 

To deliver all title documents pertaining to the property to the buyer upon his request for perusal. 

To answer, to the best of his knowledge, all pertinent questions about the property or title posed by the buyer. 

When the buyer tenders it to him for execution at a proper time and place, on payment or tender of the amount payable in respect of the price, he must execute a proper conveyance of the property.

Between the date of the contract of sale and the delivery of the property, he must take as much care of the property and all documentation in his possession as an owner of ordinary wisdom would take of such property. 

To transfer ownership of the property to the buyer. 

To pay all public charges and rent owed on the property up to the date of the transaction. 

To clear any encumbrances on the property at the time.

Duties of the buyer during a property transfer under the Transfer of Property Act 

To reveal to the seller any truth regarding the property that the buyer is aware of but has reason to believe the seller is not, and that considerably improves the value of such interest. 

To pay the purchase price to the seller at the time and location where the sale is completed. 

To suffer any loss resulting from the destruction, harm, or fall in value of the property that was not caused by the seller, where ownership has passed to the buyer.

To pay all public charges and rent that may become payable on the property, as well as the principal payments owing on any encumbrances subject to which the property is sold and any interest accumulating thereon after ownership has passed to the buyer.

Seller’s Rights [sec-55(1)(2) & (3)] 

The Rights of seller can also be divided into two categories:

Seller’s Rights Prior to Sale Completion [Sec 55 (4) (a)] Right to the property’s rentals and profits-The seller has the right to the property’s rents and profits until ownership passes to the buyer. 

Seller’s Rights Following Sale Completion [Sec 55 (4) (b)] Charge upon property for unpaid price- where ownership of the property has passed to the buyer prior to payment of the entire purchase-money, to a charge upon the property in the hands of the buyer, any transferee without consideration, or any transferee with notice of the non-payment, for the amount of the purchase-money, or any part thereof, remaining unpaid, and for interest on such amount or part thereof from the date on which ownership passed to the buyer.

Encumbrances And Court Sale

The Kerala High Court issued a significant ruling on 9 August 2020, outlining the legal method indicated in section 57 of the TP Act 1882 relates to eliminating encumbrances established on immovable property. 

Section 57 allows any party to the sale of immovable property who is troubled by prior encumbrances to apply to the court for a declaration that the property is free of such impediments in exchange for the deposit of a certain sum adjudged by the court and the issuance of an order of conveyance or vesting order, appropriate to give effect to the sale. As a result, the Kerala High Court’s decision includes the following components of the provision: 

The Court has elucidated that the object of section 57 of the Act is to aid any party in effecting a sale of immovable property subject to an encumbrance to effect the sale at its proper value, by permitting the buyer of the immovable property to obtain, in deposit, either the capitalised value of the periodical charges or the capital sum on the property, as the case may be. 

Section 57 recognises both “court sale” and “out of court sale”- The High Court has clarified that section 57 provides for the sale of immovable property, both made pursuant to a court judgement or out of.

Consent of the encumbrancer is not required- The HC clarifies in the judgement that the TP Act allows the court to affirm a property is free of encumbrances even without the will or consent of the encumbrancer if the prerequisites are met.