Transfer of Property

A transfer of property, in the sense of the Transfer of Property Act, 1882, is an act by which a living person conveys property — in present or in future — to one or more other living persons, or to himself or to himself and one or more other living persons. The transferor is the person who conveys; the transferee is the person to whom the property is conveyed. The TPA governs transfers of property inter vivos (between living persons); succession to property on death is governed by personal laws (Hindu Succession Act, Muslim Personal Law, Indian Succession Act).

The TPA covers five primary modes of transfer of property: (1) sale (Sections 54-57) — the absolute transfer of ownership in exchange for a money price; (2) mortgage (Sections 58-104) — transfer of an interest in immovable property as security for a loan, with the right to redeem; (3) lease (Sections 105-117) — transfer of a right to enjoy immovable property for a specified time or in perpetuity, in consideration of a price or rent; (4) exchange (Sections 118-121) — transfer of property for another property; and (5) gift (Sections 122-129) — transfer without consideration, made voluntarily. Each mode has different legal requirements, formalities, and consequences.

The doctrine of part performance (Section 53A TPA) protects a transferee in possession who has performed their obligations under an unregistered agreement to transfer immovable property. Where a person has taken possession of immovable property in part performance of a contract for transfer, and has done some act in furtherance of the contract, the transferor cannot enforce any right inconsistent with the transferee's rights under the contract — even if the transfer documents are not registered. This equitable doctrine prevents the transferor from using the absence of registration as a weapon against a party who has fully performed.

Registration requirements are a critical feature of property transfers in India. The Registration Act, 1908, read with the TPA, mandates registration of: all non-testamentary instruments purporting to create or declare rights in immovable property; leases of immovable property for terms exceeding one year; gifts of immovable property; and other documents listed in Section 17 Registration Act. An unregistered document that requires registration has no effect in law for the purpose of creating or declaring the title it purports to transfer — though it may be admissible for collateral purposes. Stamp duty on documents is separately governed by the Indian Stamp Act.

For advocates advising on property transactions, the essential due diligence requires: (1) title search — verifying the chain of title through registered documents at the Sub-Registrar's office; (2) encumbrance search — checking for mortgages, charges, and pending court orders affecting the property; (3) verification of possession — who is actually in possession, and under what right? (4) checking for RERA registration — in real estate projects, is the project registered under the state RERA? (5) stamp duty compliance — ensuring the stamp duty is correctly paid on all instruments. A property transaction without thorough due diligence risks the client acquiring title subject to undisclosed encumbrances or third-party rights.