A major financial decision is buying land, a house, a flat, or an apartment. In our country, most homeowners opt for long-term loans and funding to afford a residential property. As such, it becomes very important for every prospective homeowner to understand the laws and legislations governing the transfer of ownership and inheritance of immovable property. Such an understanding helps in establishing a legal right to property. The Transfer of Property Act 1882 is one such legislation that every property owner must know about.
The Transfer of Property Act which came into effect in July 1882, is one of the oldest laws in India. Along with the prevalent succession laws and the Indian Contract Act 1872, this law defines the framework for the sale, inheritance, gift, and acquisition of property.
To understand the Transfer of Property Act (ToPA) better, let us first take a look at the types of property that can be transferred. Movable property refers to any property that can be physically moved from one location to another without changing the form in terms of quality or quantity, damaging or destroying it. The physical delivery of movable property with the intention of transferring its ownership is adequate, and registration of this transfer is not essential. In the case of immovable property such as land or house, however, delivery must be complemented by registration under the Indian Registration Act 1908.
While the ToPA largely pertains to the transfer of immovable property, some aspects also govern the transfer of movable property. The scope of the ToPA covers the voluntary transfer of property by two or more parties. It does not apply to transfer by operation of law (in case of forfeiture, insolvency, inheritance etc.)
When property transfer occurs through sale, both the buyer and seller are tasked with certain responsibilities as defined by the Transfer of Property Act 1882.
The seller must disclose all title documents related to the property and must also inform the seller of any material defects to the property. The seller must bear any rent, tax, or charges incurred before the date of transfer. Between the contract's time and the property's delivery, the seller is tasked with maintaining the property and all relevant documents. With the sale, the seller must transfer ownership and possession of the property and release all encumbrances.
The buyer, too, has certain responsibilities under the ToPA. The buyer must complete the payment for the sale as stipulated by the sale contract. The buyer must ask for and verify all the documents and titles pertaining to the property. The buyer must also bear all expenses by way of rent, tax, and any loss from damage or destruction of property from the date of the transfer.
Despite being one of the oldest laws in the country, the Transfer of Property Act of 1882 remain extremely relevant today. With the real estate market booming and most Indians aspiring to own residential property, this legislation lays down the framework for the regulated and legal transfer of property, particularly concerning sale and purchase.
As a prospective homebuyer, it is essential to understand the terms of the ToPA to ensure a smooth transfer of the property you have invested in and plan to call home. If you are unclear about the terms of the contract or transfer, it may be a good idea to consult a legal advisor.
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