assignment transfer of property act definition

Transfer of Property Act: Notes, Case Laws and Reading Materials

Subject-wise Law Notes Transfer of Property Act
Aishwarya Agrawal
October 19, 2024

Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and other living persons.

Hello Readers!

This article provides Transfer of Property Act notes with case laws . The Act provides provisions for transfer of movable or immovable property. As a learner, you can consider it as a free, online, and self-placed course. As a competitive exams aspirant, you will find it perfect for Judicial Service Exams, UPSC CSE Law Optional, etc. And as a reader, this article on Transfer of Property Act notes is sufficient for you to learn or research on Transfer of Property Act!

For books on Transfer of Property Act, click here .

Happy Learning!

Meaning and Definition of Property

General rules and doctrines regarding transfer of property, sale under transfer of property act, mortgage under transfer of property act, lease under transfer of property act, gifts under transfer of property act, other points.

For notes on other subjects, click here .

For case briefs and analysis, click here .

We hope you found Transfer of Property Act notes’ on every topic related to Transfer of Property Act . If you think we missed anything, help us by mentioning the details in this form .

Disclaimer:

We have done our best to provide the right information. However, we don’t claim the content to be genuine. We suggest readers to do check it.

assignment transfer of property act definition

You might like

Shareholders’ Rights and Responsibilities

Deepak Gulati v State of Haryana

Geeta Hariharan v Reserve Bank of India (1999)

Actionable Claim Under Transfer Of Property Act, 1881

Coverage of this article

1. Introduction - An actionable claim is a term that is included in the Transfer of Property Act, 1881, which regulates real estate transactions in India.

2. UNDERSTANDING ACTIONABLE CLAIM - Existence of a Debt or Obligation - Legal Action Required - Transferability

3. TRANSFERABILITY OF ACTIONABLE CLAIMS - Under the Transfer of Property Act of 1881, actionable claims are not only enforceable but also transferrable from one party to another.

4. MODES OF TRANSFER OF ACTIONABLE CLAIMS

A. Assignment The Act's Section 130 addresses the assignment of actionable claims and lays out the procedures for doing so.

B. Negotiation Another transfer method that may be used in some types of actionable claims is negotiation, especially when it comes to claims involving negotiable instruments like promissory notes and bills of exchange.

C. Endorsement Endorsement is frequently applied to negotiable instruments and is strongly related to negotiation.

D. Transfer Methods in Special Circumstances Respecting these clauses guarantees the transfer of actionable claims' validity and enforceability, supporting the smooth operation of real estate deals and the transfer of rights and obligations between parties.

5. RIGHTS AND DUTIES OF THE PARTIES INVOLVED

6. REMEDIES IN CASE OF BREACH

7. CASE LAWS RELATED TO THE TOPIC Satyam Computer Services Ltd. v. Upaid Systems Ltd. [2008] EWHC 31

8. CONCLUSION - Overall, actionable claims are essential in real estate transactions because they give parties flexibility and legal protection.

KEY TAKEAWAYS

The Transfer of Property Act, 1881 requires valid transfers to meet specific criteria, such as written consent, registration, and signature, ensuring their enforceability
The Act recognizes various ways to transfer property ownership, including sale, gift, exchange, lease, and mortgage, giving individuals flexibility in choosing the appropriate mode.
The Act defines the rights and liabilities of both the transferor and transferee, ensuring that parties fulfill their obligations regarding the condition of the property, consideration, and adherence to any restrictions.

INTRODUCTION

An actionable claim is a term that is included in the Transfer of Property Act, 1881, which regulates real estate transactions in India. According to Section 3 of the Transfer of Property Act, a claim or right to obtain a debt, money, or movable property by legal action is referred to as an actionable claim. It includes a variety of legal rights that can be enforced through legal action, including debts, mortgages, and contracts. Actionable claims cover both current and upcoming claims, and their reach is extensive. Future claims involve potential or contingent debts or obligations, whereas existing claims are currently due and enforceable. By facilitating the transfer of rights and interests in movable property, they play a significant part in real estate transactions.

It is crucial to remember that claims based on interpersonal ties or torts are not actionable claims under the Transfer of Property Act. The Act excludes claims relating to the transfer of immovable property, which are governed by different rules, and principally concentrates on claims relating to the transfer of movable property. People interested in real estate transactions must comprehend the extent and definition of actionable claims. A legal foundation for the transfer of these claims is provided by the Transfer of Property Act, which also makes it possible to transfer debts, contracts, and other obligations. This promotes the smooth flow of real estate transactions.

UNDERSTANDING ACTIONABLE CLAIM

According to the Transfer of Property Act of 1881, a claim or right to obtain a debt, money, or moveable property through legal proceedings is referred to as an actionable claim. Since it enables the transfer of rights and interests in movable property, it is a crucial idea in real estate transactions. The Transfer of Property Act, which controls the transferability and enforceability of such claims, provides the legal framework for actionable claims. Debts, Mortgages, and Contractual Claims are some examples of Actionable Claims.

Certain features and traits must be present for a claim to be actionable. These consist of:

Existence of a Debt or Obligation : When there is a debt or obligation due by one party to another, a claim becomes actionable. This can apply to debts, unpaid invoices, contracts, and other claims of a similar nature.
Legal Action Required : The assertion must be capable of being upheld in court. To recover the debt or acquire the movable property, the party with the actionable claim has the right to file a lawsuit.
Transferability : Claims that are actionable can be passed from one party to another. The Transfer of Property Act offers methods for transferring these claims, such as endorsement, negotiation, and assignment.

TRANSFERABILITY OF ACTIONABLE CLAIMS

Under the Transfer of Property Act of 1881, actionable claims are not only enforceable but also transferrable from one party to another. The ease of transferring rights and interests in movable property is made possible by the transferability of actionable claims, which offers flexibility in real estate transactions. The Transfer of Property Act offers several channels for the transfer of claims that can be brought to court. The assignment of rights by the claim holder to another person is one such technique. The claimant's right to recover the debt or acquire the movable property is effectively transferred to the assignee through the assignment, which can be made either in writing or by operation of law.

Negotiation is another method of transfer in which the claimant endorses the claim to a third party. The actionable claim is legally transferred by endorsement, which also gives the endorsee the right to seize the movable property or pursue the debtor. Bills of exchange and promissory notes are two examples of instruments that frequently use this mechanism of transfer. The Transfer of Property Act also acknowledges the idea of endorsement in blank, which is when the claimant approves the claim without indicating who the endorsee is. This makes it possible to further negotiate the claim or transfer it through delivery. It is crucial to remember that there might be limitations and exceptions to the transferability of actionable claims, including contractual terms or legal requirements. The transfer of actionable claims should also adhere to the formalities and legal conditions set forth by the law.

MODES OF TRANSFER OF ACTIONABLE CLAIMS

A. assignment.

Under the Transfer of Property Act of 1881, assignment is one of the main ways to transfer actionable claims. It entails giving another individual, referred to as the assignee, the claimant's rights. Either a written assignment or the operation of law may transfer the property. The Act's Section 130 addresses the assignment of actionable claims and lays out the procedures for doing so.

B. Negotiation

Another transfer method that may be used in some types of actionable claims is negotiation, especially when it comes to claims involving negotiable instruments like promissory notes and bills of exchange. It entails the claimant, often referred to as the endorser, endorsing the claim on behalf of the endorsee. Endorsement and delivery of the negotiable instrument are acceptable methods of making this transfer. Sections 131 to 135 of the Transfer of Property Act contain provisions relating to the negotiation of actionable claims.

C. Endorsement

Endorsement is frequently applied to negotiable instruments and is strongly related to negotiation. It describes the action of the endorser signing the document's reverse, transferring ownership to the endorsee. Sections 131 to 135 of the Act contain provisions that address the endorsement of actionable claims. These sections cover endorsement in blank, special endorsement, and restrictive endorsement.

D. Transfer Methods in Special Circumstances

The Transfer of Property Act permits particular means of transfer of actionable claims under special situations in addition to assignment, negotiation, and endorsement. Insolvency, bankruptcy, or transfer by operation of law are a few examples of these situations. The Act has procedures to deal with these circumstances, making sure that the transfer of actionable claims is done within the bounds of the law. It is crucial for those involved in real estate transactions to comprehend these modalities of transfer as well as the relevant sections and clauses of the Transfer of Property Act. Respecting these clauses guarantees the transfer of actionable claims' validity and enforceability, supporting the smooth operation of real estate deals and the transfer of rights and obligations between parties.

RIGHTS AND DUTIES OF THE PARTIES INVOLVED

The parties involved in the transfer of actionable claims under the Transfer of Property Act, 1881, are granted several rights and obligations. The interests of both the transferor and the transferee are safeguarded by these rights and obligations.

Rights of the Transferor: The party transferring the actionable claim, or the transferor, is entitled to money or recompense in exchange for the transfer. Depending on the specifics of the actionable claim, the transferor may also have the right to hold the movable property or to seek to have the claim enforced against the debtor.
Duties of the Transferor: The transferor has a responsibility to inform the transferee of any important information or flaws pertaining to the actionable claim. Transparency and fairness in the transfer procedure are guaranteed by this responsibility of disclosure.
Rights of the Transferee: The rights and advantages related to the actionable claim are transferred to the transferee, or the party who receives the actionable claim. This includes all applicable rights to payment, possession, and enforcement of the claim against the debtor.
Duties of the Transferee: The transferee is responsible for carrying out the duties and obligations connected to the transferred actionable claim. This includes making all required payments, abiding by all conditions of any contracts, and behaving in good faith towards the transferor.

REMEDIES IN CASE OF BREACH

In the event of a breach of the transfer of actionable claims, there are legal remedies available to the aggrieved party. These remedies aim to provide compensation or restore the party to their rightful position.

Damages: The harmed party has the right to pursue damages, which entails requesting monetary compensation for any losses sustained as a result of the violation. Normally, the awarded damages would be equal to the loss incurred as a result of the breach.
Specific Performance: In some circumstances, the court may impose a requirement that the party who violated the transfer fulfil its duties by specific performance. Usually, where monetary compensation is not sufficient to undo the harm, this remedy is provided.
Revocation: Revocation enables the person that was injured to revoke the transfer of the actionable claim resulting from the breach. This remedy aims to annul the transfer and put the parties back in their pre-contractual positions.
Injunction: An injunction may be requested to stop a breach from happening again or to compel one party to carry out or refrain from doing something. When it comes to actionable claims, an injunction may be requested to stop the transferor from giving the identical claim to a different party or to stop the transferee from using the claim in any other way.

CASE LAWS RELATED TO THE TOPIC

Satyam computer services ltd. v. upaid systems ltd. [2008] ewhc 31:.

In this decision, the Supreme Court of India ruled that even though a contract expressly forbids such assignment, it is nonetheless permissible to assign an actionable claim based on a breach of that contract. The court emphasised that, barring clear statutory prohibition, the Transfer of Property Act permits the transfer of actionable claims.

Bank of India v. Arthur Anderson & Co. (2019):

The Bombay High Court decided that a consultancy agreement's actionable claim might be transferred by endorsing and delivering the relevant documents. The court explained that even if actionable claims relating to contractual commitments are not expressly designated as negotiable, the Transfer of Property Act nonetheless enables their transfer.

The law surrounding actionable claims has been significantly impacted by recent court judgements, which have clarified and expanded the parameters of such claims' transferability and enforceability. These rulings have strengthened the idea that actionable claims can be transferred, excluding situations in which doing so is specifically banned by law or agreement. The decisions have also shown how crucial it is to take into account the specific requirements of the Transfer of Property Act when determining whether actionable claims can be transferred. Courts have acknowledged the necessity of striking a balance between the parties' legitimate interests and the flexibility to transfer claims.

Additionally, the rulings have offered helpful advice on the transfer of actionable claims in particular situations, like contract breaches or consulting agreements. They have emphasised that a variety of actionable claims, including those resulting from contractual responsibilities, are covered by the Transfer of Property Act.

Finally, under the Transfer of Property Act of 1881, actionable claims are crucial in property exchanges. They stand for rights over obligations or moveable property, and they can be exchanged via endorsement, negotiation, or assignment. For people and enterprises involved in real estate, contracts, and financial instruments, understanding actionable claims is essential. Actionable claim jurisprudence has been clarified and broadened by recent court decisions, which also recognise their transferability and offer guidance in particular situations. Actionable claims make it easier for debts to be paid off and property rights to be protected, but following the law is essential. Overall, actionable claims are essential in real estate transactions because they give parties flexibility and legal protection.

Click here to Get More Content on LCI Android App

Category Others , Other Articles by - Charchit Pathak

Browse by Category

Business Law
Constitutional Law
Labour & Service Law
Legal Documents
Intellectual Property Rights
Property Law

Top Members
Share Files
LCI Online Learning

Member Strength 983380 and growing..

We are Hiring
Terms of Service
Privacy Policy

Lawyersclubindia Search

Whatsapp groups, login at lawyersclubindia.

Alternatively, you can log in using:

Transfer of Property Act, 1882: Comprehensive Law Notes

Law Drishti
September 25, 2024
No Comments

The Transfer of Property Act, 1882 governs how property is transferred in India and lays down clear rules for both movable and immovable properties. As a law student, understanding this Act is essential for both your academic success and your future legal practice. These Transfer of Property Act, 1882 notes aim to help you grasp the key concepts, making your preparation for Semester Exams and Judiciary exams much easier.

Key Highlights of the Notes:

Important Definitions: The Act covers essential legal terms such as property , immovable property , instrument , attestation , and more. These definitions are the foundation for understanding the rights and obligations in property transfers.
Movable vs. Immovable Property: A critical distinction exists between movable and immovable property. These notes explain what qualifies as immovable property, like land, buildings, and hereditary allowances. On the other hand, movable property, including stocks, crops, and machinery, is covered under different regulations.
Transfer of Property Rules: Not all properties can be freely transferred. These notes explain the rules regarding what can and cannot be transferred. Moreover, you’ll find explanations on the rules against perpetuity and exceptions under the Act.
Types of Transfers: The Transfer of Property Act outlines various forms of property transfers, including sale , mortgage , lease , and gift . Each of these is discussed with practical examples and real-world applications, ensuring you fully understand how the law operates.
Mortgage and Lease Agreements: Two significant aspects of the Act include mortgages and leases. These notes will guide you through the various kinds of mortgages—like simple mortgages and usufructuary mortgages —and how lease agreements should be drafted and executed under the Act.

Download Transfer of Property Act Notes PDF

To help you study more effectively, we have compiled these notes into a PDF format that you can download and access anytime. Whether you’re preparing for competitive law exams or just revising, these notes will serve as a valuable resource.

In conclusion, having a thorough understanding of the Transfer of Property Act, 1882 is indispensable for every law student. This Act forms the backbone of property law in India, and mastering its concepts will not only help you excel in your exams but also give you a solid foundation for legal practice.

Stay updated by joining our law student community for more notes, case studies, and legal materials . sources .

Explore More Law Notes : Click Here

Join Our WhatsApp Channel for Opportunity Updates

Get Daily Updates

Join our Telegram Channel for Opportunity Updates

Complete Handwritten Notes on Transfer of Property Act (TPA)

September 28, 2024

Are you looking for concise notes on the Transfer of Property Act to help with your law studies? These handwritten notes provide a clear, easy-to-understand overview of the key provisions of the Act, helping students focus on important concepts efficiently.

Why These Handwritten Notes Are Essential

Understanding the Transfer of Property Act is vital for law students, especially when studying property law. These notes simplify complex legal provisions, making them easier to grasp. Moreover, they are well-organized to ensure you can quickly review critical topics during your exam preparation.

Topics Covered in the Notes

Overview of the Transfer of Property Act This section explains the significance of the Act and its applications in property law.
Legal Requirements for Property Transfers The notes provide insight into the essential legal conditions for valid property transfers under the Act.
Important Sections Explained Sections like 5 (Transfer of Property), 6 (What May Be Transferred), and 53A (Part Performance) are thoroughly covered.

Why You Should Use These Notes

These notes not only break down complex topics but also make legal jargon easier to understand. Additionally, they are perfect for quick revisions before exams, as they are concise and focus on the most important aspects of the Transfer of Property Act . Whether you’re deep into your studies or doing last-minute prep, these notes are an excellent resource.

Download the more notes from our Telegram channel or check out our Law Notes Page for more legal study materials. Share them with your classmates to help everyone succeed in their law exams.

For submitting a Post

[email protected], for banner ads & admission campaigns.

Hours: 9 AM - 9 PM (Mon-Sat)

LAW DRISHTI

Law Drishti – Your Insight into the Legal World. Navigate the intricacies of law with us! Tailored for law aspirants, students, advocates, and lawyers, Law Drishti offers a comprehensive platform where knowledge meets guidance. Stay updated on legal trends, access valuable resources, and embark on your legal journey with clarity and confidence. Illuminate your path with Law Drishti – where the vision of legal excellence comes to life.

Subscribe to our newsletter

Useful links.

Contact Us »
Advertise »
© 2024 – Law Drishti
Privacy Policy
Copyright Policy

For Submitting a Post

Hours: 9 am – 9 pm (mon-sat), see the below animation to allow notifications., start getting lawdrishti updates useful for you.

Home / clat pg / Actionable Claim and Transfer of Actionable Claim under Transfer of Property Act

Actionable claim and transfer of actionable claim under transfer of property act, introduction.

The code of contract with respect to the law of property was completed with the enactment of the Transfer of Property Act in the year 1882 (‘ToPA’) . It codified the laws pertaining to the transfer of property. However, TOPA does not cover all kinds of properties and their transfer.

An actionable claim represents a legal right that can be the subject of a lawsuit, and the transfer of actionable claims involves the assignment of these rights from one party to another. This post deals with actionable claim and their transferability under the Transfer of Property Act.

Actionable Claim under Transfer of Property Act

The term “Actionable Claim” is a legal concept that is defined under Section 3 of the Transfer of the Property Act . According to said provision, an actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing confidential or contingent.

Thus, as per the aforesaid provision, an actionable claim is a claim to:

i) any unsecured debt, or

ii) any beneficial interest in a movable property that is not in the claimant’s possession, either actual or constructive.

Apart from aforesaid types of claims, there are other kinds of claims as well that are actionable in nature and can afford relief. However, several kinds of claims are not actionable claims as per the definition enumerated under the TOPA, and therefore, they cannot be transferred.

For instance, in Jugal Kishore Saraf v. Raw Cotton Limited , the Apex Court found that since the action is necessary in case of a decree or a judgment debt, it cannot be termed as an actionable claim.

In the case of Moti Lal v. Radhey Law , the Apex Court held that the right of claiming damages, whether it arises out of contract or un-liquidated damages arising out of tortuous liability, cannot be regarded as an actionable claim. This is undoubtedly an obligation but does not amount to unsecured debt. It is attributable to the uncertain sum of money involved.

Furthermore, it is also not a part of an original transaction, which is a must for a claim to become actionable. However, it includes the principal money and the interest charged thereupon for them being a specific nature of the debt. On the other hand, damages are of an uncertain nature and, therefore, not an actionable claim.

Similarly, in Jai Narayan v. Kishun Dutta , the Court found that mesne profit cannot be regarded as an actionable claim as it is un-liquidated in nature. Further, it is neither a claim to a beneficial interest in movable property. Thus, it is a “ mere right to sue “.

Moreover, rights under trademark, patent and copyright are also not termed as actionable claims. This is due to the fact that they already vest in the individual who possesses them. They are the individual’s intellectual property, and hence, another person cannot be permitted to claim under them. They are governable under their respective legislation and cannot be transferred as actionable claims.

Transfer of Actionable Claim

Since an actionable claim is not considered “property” under the TOPA, it cannot be transferred in the same way that property can be transferred. Sections 130 to 137 of Chapter VIII of the TOPA deal with the transfer of actionable claims. This Chapter provides general principles that must be borne in mind while transferring actionable claims. The provisions are analysed hereinunder.

Section 130 of Transfer of Property Act

This section states that an actionable claim can be transferred:

i) with or without consideration

ii) by way of an instrument in writing duly signed by the transferor or his agent duly authorised in this respect .

Thus, oral transfer of actionable claims is not permitted. However, its registration is not necessary, and no separate instrument of transfer is to be effected.

Section 131 of Transfer of Property Act

The notice is not necessary to ensure perfection of the transferee’s title of actionable claim. However, the dealings of the debtor with the creditor are protected until the former receives the notice of such an assignment in observance of the conditions enumerate under Section 131 of the TOPA. It states that:

i) The notice of transfer of the actionable claim has to be made in writing.

ii) It must be signed by the transferor or his agent authorised on his behalf.

iii) However, if the transferor refuses to sign it, then, in that case, it must be signed by the transferee of actionable claim or his duly authorised agent.

The Hon’ble Apex Court has clarified in Sadasook Ramprotap v. Hoar Miller & Co . that Section 131 of TOPA does not prescribe any time limit for the service of notice. It must be within a reasonable period of time and unconditional.

Section 132 of Transfer of Property Act

The principle behind this section is that the transferee gets no better title than the transferor. Thus, the transferee takes all the equities and also the liabilities of the transferor to which the latter was subject at the time of such assignment.

Section 133 of Transfer of Property Act

This provision deals with the warranty of solvency of debtor. In the case of assignment of a debt, the transferee runs the risk of losing the claim when the debtor becomes insolvent. Therefore, as a precaution, the transferor of the actionable claim warrants the solvency of the debtor at the date of assignment. But this is subject to contract to the contrary. Further, it is limited only to the amount or value of the consideration for which it is transferred.

Section 134 of Transfer of Property Act

Since an actionable claim is a property, its transfer by way of a mortgage is possible. When one debt is transferred to cover an other debt, whether existent debt or future debt, it is referred to as a transfer of actionable claim by way of a mortgage. This section provides the below-mentioned preposition under which the amount so realised could be appropriated:

i) the debt received by the transferor or recovered by the transferee is to be applied in payment of the cost of such recovery.

ii) it is to be applied towards satisfaction of the amount secured by the transfer.

iii) if any residue remains after the above-mentioned payments, the remainder is to be given to the transferor.

Section 135 of Transfer of Property Act

This provision was inserted by the Amendment Act of 1944. It states that the asignee of fire insurance policy in whom the property of the subject matter of policy is absolutely vested at the date of assignment, it would have the effect of transferring and vesting in him all the rights to sue just as if the insurance policy was entered into by him.

Section 136 of Transfer of Property Act

The persons mentioned under this section are not legally qualified to make transfers of actionable claims. The object behind this disqualification of “ Judges, legal practitioners and officers connected with Courts of Justice ” is to ensure that the judiciary remains impartial.

Section 137 of Transfer of Property Act

Furthermore, this Chapter is not applicable to negotiable instruments and other instruments mentioned thereunder. This is because they are governed by other laws and statutes.

After studying every relevant provision of the TOPA it can indeed be concluded that actionable claims as defined under Section 3 of the TOPA are transferable in nature. It is a movable property of intangible nature that could be assigned as per the provisions and rules mentioned in Chapter VIII of the TOPA. Thus, one must be evident as to the nature of the property, the process of transfer of the actionable claim and the law laid down under various judgements of the Indian courts to effectuate a valid transfer of actionable claim.

For more such notes on Transfer of Property Act, click here!

Balfour v. Balfour: Intention to Create Legal Relationship

By Khushi Malviya Dec 03 | 4 min read

CLAT PG 2025 Analysis, Answer Key, Exam Pattern, Expected Cut-off

CLAT PG 2025 Analysis: Answer Key, Difficulty Level, Expected Cut-off and More!

By Ruchika Mohapatra Dec 02 | 4 min read

CLAT PG 2025 Question Paper: Download PDF for FREE!

By Ruchika Mohapatra Dec 02 | 1 min read

Webinar on ‘Last Month Strategy on Cracking UGC NET’ by LLS [Dec 1; 12 PM]: Register Now!

By Ruchika Mohapatra Nov 27 | 3 min read

Arvind Kejriwal v. Central Bureau of Investigation

Last Minute Revision for CLAT PG: Important Judgements for the Month of September- Part III

By Indrasish Majumder Nov 26 | 3 min read

Important Questions on Bharatiya Nyaya Sanhita (BNS) for CLAT PG

By Ruchika Mohapatra Nov 24 | 5 min read

Subscribe to our newsletter and get daily news & updates directly to your inbox!

Please provide a valid email address.

Join our WhatsApp Channel

Join our Telegram Group

Difference Between Assignment and Transfer

The difference between assignment and transfer is that assign means it's legal to transfer property or a legal right from one person to another. 3 min read

The difference between assignment and transfer is that assign means it's legal to transfer property or a legal right from one person to another, while transfer means it's legal to arrange for something to be controlled by or officially belong to another person.

When used as verbs, assign means to set apart or designate something for a purpose while transfer means to pass or move from one person, place, or thing to someone or someplace else. When used as nouns, assign means the assignee and transfer is the act of removing or conveying something from one person, thing, or place to another. Transfer generally refers to titles whereas assignment is used with obligations and rights.

Definitions of Assignment and Transfer

Assignment: Assignment is used in real estate law and contracts law. It covers the transfer of rights held by the assignor to the assignee.
Transfer: To remove or convey from one person or place to someone or somewhere else.

Distinction Between Assignment and Transfer

When distinguishing between assignment and transfer, take licenses, for example. Licenses are contracts that don't allow legal action for infringement. They fall under state law. Therefore, state law will decide whether the license is an obligation or right that can be transferred or assigned legally.

One way to distinguish this example is that an individual contract under an agreement cannot be assigned, like entitlement to grant back royalties . In addition, the contract cannot be transferred. You need to break it down and figure out what the actual issue is — the parties' intent. An additional distinction is when the contract holder is an entity and the business owners want to transfer a portion or all of their stock. This can be seen as an implied transfer of the whole contract. However, it would not likely be an assignment of the rights covered under this agreement.

Difference Between Assign and License

The key difference between assign and license is that with a license, the person who grants permission, known as the licensor, keeps an interest in the product being licensed . In an assignment, the assignor will transfer his or her rights to the product or property being assigned.

Another difference is that assignments must be in writing and a license can be executed without being written. Consider, for example, intellectual property such as patents. Patents can be licensed verbally in some instances, but assignments for patents must be in writing and filed with the United States Patent and Trademark Office .

Assignments grant the assignee full ownership of a product or property. Therefore, an assignment will typically cost more to acquire than a license.

Frequently Asked Questions

Are there ever situations in which a license can be transferred but is not assignable?

Yes, in the case of allowing an assignment to one of your affiliates, the assignor would still be liable for the performance of the agreement under general assignment law. In this situation, you would not typically permit a transfer, because in a transfer, the person transferring would not maintain any obligations related to performance. Don't rely solely on this general understanding, but still expressly detail your agreement on what a licensee can legally do.

How will transfer and assignment rights affect someone's ability to sublicense?

In theory, if a licensee has the authority to assign license rights to someone else, you could argue that it also provides the right to sublicense it. The issue here is that with a sublicense, the person sublicensing it keeps a license right, therefore effectively creating two licensees. With an assignment, only one right is assigned, and the assignee is the one who has possession of the license. With well-drafted licenses, the right to sublicense is not typically implied, as the licensor is the one who reserves all rights that are not expressly granted.

What is the effect of poorly drafted licenses?

A poorly drafted license could result in giving someone implied rights to also sublicense. An example is a software license that allows a licensee to access the software without clarifying any restrictions or clearly defining the word “use.” This means that, depending on what this software is supposed to do, someone could think the term “use” means the licensee has permission to grant a sublicense as part of their usage rights.

If you need help understanding the difference between assignment and transfer, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

UpCounsel has successfully supported over 1577 clients in navigating Lawsuits & Disputes, connecting them with a network of 598 specialized Lawsuits & Disputes lawyers ready to assist you every day. With 555 client reviews, you can confidently find the right lawyer to meet your needs. Clients have consistently rated our lawyers highly for their expertise in Lawsuits & Disputes, reflecting a strong overall satisfaction score of 5.0.

Assignment Law
Legal Assignment
Assignment Legal Definition
Assignment Of Contracts
Assignment of Rights and Obligations Under a Contract
Partial Assignment of Contract
Assignment of Rights Example
What Is the Definition of Assigns
Transfer of Intellectual Property
Assignment of Contract Rights

Primary tabs

Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .” This concept is used in both contract and property law. The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise. For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C. That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C. In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law. First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee . That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C. Second, rights cannot be assigned when they materially change the obligor ’s duty and rights. Third, the obligor can sue the assignee directly if the assignee does not pay him/her. Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

(2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor. It can only be delegated if the promised performance is more commonplace. Further, an obligee can sue if the assignee does not perform. However, the delegee is secondarily liable unless there has been an express release of the delegee. That is, if B does want C to teach guitar but C refuses to, then B can sue C. If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor. If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .

Property Law

Under property law, assignment typically arises in landlord-tenant situations. For example, A might be renting from landlord B but wants to another party (C) to take over the property. In this scenario, A might be able to choose between assigning and subleasing the property to C. If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term. Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not.

[Last updated in May of 2020 by the Wex Definitions Team ]

business law
landlord & tenant
property & real estate law
trusts, inheritances & estates
wex definitions

Transfer of Property Act Notes and Study Material

When studying for exams or delving deeper into the subject of the Transfer of Property Act (TOPA), having comprehensive and well-organized notes and study materials can make a significant difference. The Transfer of Property Act, 1882, with its detailed provisions and legal principles, governs the transfer of property in India and covers a wide array of topics including sale, mortgage, lease, gift, and actionable claims. Understanding these facets is crucial for students, legal practitioners, and property professionals alike.

The Transfer of Property Act (TOPA), 1882, is a fundamental piece of legislation that regulates the transfer of property between living persons. It defines and amends the law relating to the transfer of property by act of parties, ensuring clarity and legality in property transactions. Key aspects of the Act include the definitions of property, the essential elements of valid transfers, and specific provisions related to different types of property transfers such as sales, mortgages, leases, and gifts.

In this blog post, we aim to provide you with essential notes and study materials that cover key areas of the Transfer of Property Act. These resources are designed to help you grasp the fundamental concepts, navigate through legal texts, and prepare effectively for your exams. From the definitions and classifications of property to detailed discussions on the essential elements of a valid transfer, different types of mortgages, the doctrine of lis pendens, and the rule against perpetuity, we offer a structured overview that caters to both beginners and advanced learners.

Join us as we explore the intricate world of the Transfer of Property Act, offering insights and clarity to support your academic and professional journey.

Definition of Property

Property is categorized into movable and immovable for legal clarity.

Legal Title : Property is any item over which a person or business has legal title.
Tangible and Intangible : Property can be either tangible or intangible.

Raichand v. Dattarya Case

Court Ruling : Property includes all rights of a person except personal rights determining societal status.

Movable Property

“Movable property shall mean property of every description, except immovable property.”
Includes standing timber, growing crops, grass, fruits upon, and juice in trees.
Movable when severed from the land.
Crops : Usable once harvested, thus considered movable.
Grass : Generally used as cattle feed, considered movable.
Timber : Used in construction after being cut from land, considered movable.
“Moveable property” includes corporeal property except land and things attached to the earth or permanently fastened to anything attached to the earth.
Can become movable upon severance from the earth.

Immovable Property

Typically includes land and things attached to the earth or permanently fastened to anything attached to the earth.
Trees bearing fruits when planted in the earth are considered immovable.

Transfer of Property Act

Focus : Regulates transfer of immovable property by sale, mortgage, lease, gifts, or actionable claims.
Definition : Does not define movable property.

Important Case Laws Dealing with Movable and Immovable Property

Definition and Issues

Interpretation Room : Definitions of movable and immovable property have room for interpretation.
Profit Prying : The right to take something from someone else’s territory.

Landmark Cases

1. Smt. Shantabai v. State of Bombay [1958] :

Holding : The right to enter the land, cut, and carry away wood for 12 years is a benefit arising from land, thus considered immovable property.

2. Anand Behera v. Province of Orissa [1956] :

Holding : Profit arising from land is immovable property. The right to walk on the land, draw fish from a lake, and grazing cattle are considered immovable properties as benefits arising from the land.

3. Bamdev v. Manorma [1973] :

Holding : Equipment embedded in the earth for enjoyment rather than for permanent use does not become immovable property. The temporary cinema equipment was deemed movable property.

4. Duncans Industries Ltd. v. State of UP [2000] :

Holding : Property is classified based on the owner’s intention. Equipment installed for long-term use, which cannot be removed without significant damage, is considered immovable property.

Concept of Annexation

Establishment : Property lying on the land by its own weight is movable.
Significant Damage : If removing an item causes significant damage, it is considered immovable.
Intention and Timeframe : The degree of annexation is determined by the intention and the period of use.

Judicially Recognized Properties

Right to collect rent for immovable property
Hereditary office
Right to ferry
Right of fishery
Equity of redemption
Interest of mortgage in immovable property
Government promissory notes
Right of worship
Decree of sale of mortgaged property
Standing timber
Growing crops

Essentials of a Valid Transfer

1. Inter-Vivos Transfer

Section 5 : The transfer must be between living persons. This includes individuals, companies, corporations, or associations.

2. Transferable Property

Heir-Apparent Chance : Cannot transfer the possibility of inheriting an estate.
Right of Re-Entry : Cannot transfer a right of re-entry for breach of a condition subsequent except to the property owner.
Easements : Cannot be transferred separately from the dominant heritage.
Personal Enjoyment : Interest restricted to personal use cannot be transferred.
Future Maintenance : Right to future maintenance cannot be transferred.
Right to Sue : Cannot transfer a mere right to sue.
Public Office and Salary : Cannot transfer a public office or the salary of a public officer.
Pensions : Military, naval, air force, civil, and political pensions cannot be transferred.
Opposed Transfers : No transfer opposed to the nature of the interest, for unlawful objects or consideration (as per Section 23 of the Indian Contract Act, 1872), or to legally disqualified persons.
Exceptions : Certain tenants, farmers in default of revenue payment, and lessees under court management cannot assign their interest.

3. Competent Persons to Transfer

Section 7 : Persons competent to contract under Section 11 of the Indian Contract Act can transfer property. They must be of sound mind, not disqualified (e.g., insolvent, alien enemy).

1. Sadiq Ali Khan vs. Jai Kishore, 1928

Privy Council Ruling : A deed executed by a minor is null and void. The principle of estoppel does not apply to minors. While minors cannot transfer property, transfers to minors are valid.

2. Amina Bibi vs. Saiyid Yousuf, 1922

Allahabad High Court Ruling : A contract made by a lunatic is void under Section 11 of the Indian Contract Act. Consequently, any transfer of property by a lunatic is void.

Transfer in Perpetuity

When property is transferred in a manner that makes it inalienable for an indefinite period, it is known as a transfer in perpetuity. This can occur in two ways:

By taking away the transferee’s power to transfer.
By creating future improbable interests.

Section 10 of the Transfer of Property Act states that any condition restricting the transferee’s power to transfer is void.

Rule Against Perpetuity

The rule against perpetuity prevents the property from being tied up indefinitely. This rule is codified in Section 14 of the Transfer of Property Act.

Period of the Rule

Lives in Being : The interest must vest within 21 years after the death of the person.
Plus Twenty-One Years : This is an additional period, known as the period in gross.
Periods of Gestation : Includes gestation periods at the beginning and end of the “lives in being” and at the end of the 21-year period.

Object of the Rule

The rule aims to ensure the free circulation of property by:

Preventing property from being tied up indefinitely.
Promoting trade and commerce.
Enhancing property utilization.
Protecting the owner’s interest, allowing property disposal in emergencies.

Principle Behind the Rule

The rule is based on public policy. Without it, property would become static and unusable, negatively affecting the economy.

Conditions Necessary for the Rule

Alienation of property.
Transfer benefits an unborn child, giving them absolute interest.
Transfer interest to the beneficiary is preceded by the life interest of living persons.
The unborn beneficiary must be born before the death of the last preceding living person.
Conferring of interest to the beneficiary can be postponed only to the life of the living person plus the minority of the beneficiary, not beyond that.

Exceptions to the Rule Against Perpetuity

Benefit of Public : Property transferred for public benefit, such as advancing religion, knowledge, commerce, health, safety, etc.
Personal Agreement : Personal agreements that do not create any interest in property are exempt from the rule.

Relevant Cases

1. Supreme Court Observation :

The rule against perpetuity applies to contracts creating rights in property.
Rights under a contract are assignable.
The rule restricts the creation of future unconditional interests in property.
The rule does not apply to an agreement of pre-emption without a time limit.

2. Bombay High Court Case :

Declared void a gift of movable property to a son with a gift of shares to the son’s grandson upon reaching the age of 21.

The rule against perpetuity limits the period for certain restrictions on the use and transfer of property. It ensures that property interests cannot be postponed beyond the lifetime of any living person at the date of the transfer. While the rule has exceptions, it generally aims to prevent the destruction of the liberty of alienation.

Vested and Contingent Interest

The Transfer of Property Act, 1882, addresses vested and contingent interests, which are types of property interests based on the certainty or uncertainty of events.

Vested Interest

Section 19 of the Transfer of Property Act, 1882, defines vested interest. It is created when an interest in property is granted in favor of a person upon the occurrence of a specified certain event, even if the time is not specified. The person with the vested interest does not immediately possess the property but is expected to receive it when the specified event happens.

Example : A promises to transfer his property to B when B attains the age of 21. B has a vested interest in A’s property until he turns 21 and takes possession. If B dies at 20, the vested interest passes to B’s legal heirs, who will receive the property at the specified time.

Important Aspects of Vested Interest:

Interest Should Be Vested : The interest must be created in favor of a person upon a condition of a specified certain event, even if no time is specified.
Right to Enjoy Property is Postponed : The person with a vested interest does not immediately gain possession of the property and cannot enjoy it until the specified event occurs. If the person is a minor, they are entitled to the vested interest upon attaining majority.

Example : X agrees to transfer property ‘O’ to Y and instructs Y’s guardian Z to give the property to Y when Y turns 20. Y gets a vested interest upon reaching the age of majority (18), but can only possess and enjoy the property when he turns 20.

Contingent Interest

Contingent interest, as defined by the Transfer of Property Act, is created when an interest in property is granted upon the occurrence of an uncertain event. If the specified event does not happen, the interest fails.

Example : A promises to transfer his property to B if B marries C. B’s interest in A’s property is contingent upon B marrying C. If B does not marry C, B’s interest fails, and he does not get the property.

Key Differences Between Vested and Contingent Interest

1. Certainty of Event :

Vested Interest : Based on the occurrence of a certain event.
Contingent Interest : Based on the occurrence of an uncertain event.

2. Possession :

Vested Interest : The beneficiary expects to receive possession upon the event’s occurrence.
Contingent Interest : The beneficiary only receives possession if the uncertain event occurs.

3. Transferability :

Vested Interest : Transferable to legal heirs if the beneficiary dies before the event.
Contingent Interest : Does not transfer to heirs if the event does not occur.

Legal Implications

Understanding the nature of vested and contingent interests is crucial for legal professionals dealing with property law, as it affects inheritance rights, property disputes, and the execution of wills and trusts. The specifics of these interests help determine how property is distributed and who has the right to possess it under various circumstances.

Doctrine of Lis Pendens: Definition and Concept

Lis Pendens : Latin term meaning “pending litigation.”
It is a legal principle concerning immovable property under Section 52 of the Transfer of Property Act, 1882 in India.
This doctrine ensures that the subject matter of a lawsuit cannot be transferred to a third party during the litigation.
To protect the interests of the parties involved in a pending lawsuit concerning immovable property.
To prevent the transfer of property rights that could affect the outcome of the litigation.

Legal Framework: Section 52 of the Transfer of Property Act, 1882

Text : “During the pendency of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.”
Property transfers are restricted during the pendency of a lawsuit.
The court must authorize any transfer of property during the litigation.
The lawsuit must be genuine and not collusive.

Essential Conditions for Application

Pending Suit : There must be an ongoing lawsuit or legal proceeding.
Jurisdiction : The suit must be within the jurisdiction of a competent court.
Direct Involvement : The lawsuit must directly involve rights to immovable property.
Non-collusive : The lawsuit must not be collusive.
Party to Suit : The transfer must involve a party to the suit.
Impact on Rights : The transfer must affect the rights of other parties involved in the litigation.

Judicial Interpretations

Dev Raj Dogra v. Gyan Chand Jain : Essential elements for the doctrine’s application were outlined.
Balwant Singh v. Buta Ram : Affirmed that transfers during a pending lawsuit require court permission and are subject to the court’s ruling.
Court’s Consent : Transfers authorized by the court are exceptions to the doctrine.
Vinod Seth v. Devinder Bajaj : The court allowed property transfer during litigation with conditions, such as a security deposit.

Effects of Doctrine

Voidable Transfers : Transfers during a pending suit are not void but voidable. They are subject to the litigation’s outcome and the court’s final judgment.
Binding Effect : Any party acquiring property during pending litigation is bound by the court’s judgment, even if they were not aware of the ongoing lawsuit.
Faiyaz Hussain v. Munshi Prag Narrain : Emphasized the necessity for final adjudication to avoid endless litigation.
Iqbal Singh v. Mahendar Singh : Established that arbitration proceedings make the property sub-judice.
Swaran Singh v. Arjun Singh and Ors. : Applied the doctrine to arbitral proceedings enforceable in court.
Simla Banking Industrial Co. Ltd. v. Firm Luddar Mal, Tek Chand : Clarified that lis pendens binds buyers to the litigation’s outcome.
Aswathnarayana Setty v. State of Karnataka & Ors. : The principle is based on justice, equity, and good conscience.
Hardev Singh v. Gurmail Singh : Section 52 does not render transfers void but makes parties bound by the judgment.
Gouri Datt Maharaj v. Sheikh Sukur Mohammed & Ors. : The section aims to maintain the status quo during litigation.
The Doctrine of Lis Pendens is crucial in ensuring the fairness and integrity of legal proceedings involving immovable property.
It safeguards against undermining the litigation process by preventing unauthorized property transfers.

Doctrine of Election: Definition and Concept

Election : Choosing between two alternative rights.
A person endowed with two rights under an instrument must choose one if one right is preferable to the other.
Section 35 of the Transfer of Property Act, 1882 : Deals with the Doctrine of Election.
This doctrine also includes Sections 180-190 of the Indian Succession Act, 1925.

Theme behind Section 35

Allegans contraria non est audiendus : He is not to be heard who alleges things contradictory to each other.

Legal Framework: Section 35 of the Transfer of Property Act, 1882

Text : When a person professes to transfer property they have no right to transfer and confers any benefit on the property’s owner, the owner must elect either to confirm or dissent from the transfer. If dissenting, the owner must relinquish the benefit conferred.
The rule applies whether the transferor believes they own the property or not.
Persons taking indirect benefits under a transaction do not need to elect.
A person benefiting in one capacity can dissent in another.

Understanding the Doctrine of Election

Universal Application : Applicable to Hindus, Muslims, Christians.
Principle : One must accept or reject an entire instrument or transaction.

From Dhanpati v. Devi Prasad and others (1970) :

A person with no right to transfer property does so.
The transferor confers a benefit on the property’s owner as part of the same transaction.
The owner must choose to confirm or dissent from the transfer.

Effect of Election Against the Transfer

The owner must forgo the benefit.
The benefit reverts to the transferor.

Exceptions to the Doctrine of Election

If a benefit is conferred in lieu of the property, the owner is not bound to relinquish other benefits from the same transaction.
Acceptance of the benefit implies election to confirm the transfer if the owner is aware of their duties and the circumstances.
Knowledge is assumed if the benefit is enjoyed for more than two years without dissent.
The transferor may require the owner to elect if no choice is made within a year.
For minors, the election period is postponed until majority unless represented by a guardian.

Modes of Election

Direct Election : Simply communicate the choice.
Knowledge of the responsibility to elect.
Knowledge of circumstances influencing prudent judgment.

Differences Between English Law and Indian Law

English Law : Based on compensation; the original owner retains property and benefits, compensating the donee for losses.
Indian Law : Based on forfeiture; the donee forfeits the benefit if the original owner does not confirm the transfer.

Compensation

Compensation is the approximate value of the property attempted to be transferred, evaluated at the time the instrument comes into force, not at the time of election.
Section 35 : Explains the Doctrine of Election with essential conditions and judicial interpretations.
Foundation : A person taking a benefit under an instrument must also bear the burden. One cannot benefit under and against the same instrument.

Section 53 of the Transfer of Property Act, 1882: Understanding Fraudulent Transfers

Definition and Context

Fraudulent Transfer : A transfer made to defeat or delay creditors of the transferor or without consideration with the intent to defraud subsequent transferees.
Section 53 : Deals with voidable transfers in such cases.

Provisions of Section 53

1. Voidability : Transfers made to defeat or delay creditors are voidable at the option of the defeated or delayed creditor.

Does not affect rights of a transferee in good faith and for consideration.
Does not override insolvency laws.

2. Voidability for Fraudulent Transfers : Transfers without consideration to defraud subsequent transferees are also voidable at the option of such transferees.

Section 53 of the Transfer of Property Act addresses fraudulent transfers with the aim of protecting creditors’ interests. It outlines conditions for voidable transfers and provides legal recourse for creditors affected by such transfers. Judicial interpretations have further clarified the scope and applicability of this section in cases of fraudulent transfers.

Section 54 of the Transfer of Property Act, 1882, defines the sale of immovable property as a transfer of ownership in exchange for a price paid, promised, or part-paid and part-promised.

Sale Defined: The section defines a sale as a transfer of ownership of tangible immovable property worth Rs. 100 or more, or intangible property, through a registered instrument. For property valued less than Rs. 100, the transfer can be by a registered instrument or delivery.
Requirements for Sale Deed: A valid sale deed must be executed in writing, attested, and registered for tangible immovable property worth Rs. 100 or more.
Contract of Sale: This is distinct from a sale deed and doesn’t require registration. It gives the right to obtain a sale deed but doesn’t create a charge or interest in the property.
Equities in Contract of Sale: Even without registration, equities may arise in favor of the transferee. For example, if a subsequent transferee with notice of an earlier agreement holds the property, they hold it in trust for the prior agreement holder.
Protection of Possession: In cases where possession is given under a contract of sale, the possessor may protect their possession against third parties, subject to certain conditions like those mentioned in Section 53A.
Mortgage Defined: The definition of mortgage as per the Transfer of Property Act is a conveyance of land or assignment of chattels as security for debt or other obligations.
Statutory Provisions: The entire law of mortgage in India, including contribution arising from mortgage transactions, is statutory and governed by the Transfer of Property Act along with the Code of Civil Procedure.

The essential elements of the sale of immovable property are:

Parties: There must be a competent seller and buyer who are capable of entering into a contract under the Indian Contract Act. The seller should have the authority to transfer the property.
Subject Matter: The sale pertains only to immovable property, which can be tangible (e.g., land, house) or intangible (e.g., right of way, fishery).
Transfer of Ownership: There must be a clear transfer of ownership from the seller to the buyer.
Price: The contract must involve a price, which is essential for the sale. The price can be paid in various forms, including lump sum or installments, as agreed upon by the parties.
Consideration: The consideration for the sale can include various aspects like a compromise, decretal amount, advances, agreements to protect and defend the property, or family settlements.
Payment of Consideration: Normally, the consideration is paid simultaneously with the execution of the sale deed. However, parties can agree to pay it at different times, such as during registration or afterwards.
Genuine Payment: The payment or promise of payment must be genuine. If the buyer tries to evade payment using dubious means, the sale may not take effect.

Section 55 of the Transfer of Property Act, 1882 delineates the rights and liabilities of both buyers and sellers in the context of immovable property transactions.

Duties of Seller:

Disclosure of Defects: The seller must disclose any material defect in the property or title to the property.
Production of Documents: The seller is required to provide all documents of title for examination.
Answering Questions: The seller must answer relevant questions regarding the property or its title.
Execution of Conveyance: After receiving the sale price, the seller must execute the sale deed.
Payment of Outgoings: The seller is responsible for paying public charges, taxes, and rent due on the property before the sale.
Lis Pendens: The seller should inform the buyer of any pending legal proceedings related to the property.
Delivery of Possession: The seller must deliver possession of the property at the time of sale execution.

Rights of Seller:

Right to Rent and Profit: The seller has the right to receive rents and profits from the property until ownership transfers to the buyer.
Right to Interest on Unpaid Money: If the buyer takes possession before paying the full purchase price, the seller has a right to charge interest on the unpaid amount.

Liabilities of Seller:

Liability to Disclose Defects: The seller must reveal any material defects that the buyer is not aware of and could not have discovered with ordinary care.
Liability to Submit Documents: The seller must provide all documents of title upon the buyer’s request.
Liability to Answer Questions: The seller must answer relevant questions about the property or its title.
Liability to Execute Conveyance: Upon receiving the payment, the seller must execute a proper conveyance of the property.
Liability to Protect Documents: The seller is responsible for taking care of the property and all related documents until delivery.
Liability to Deliver Possession: The seller must provide possession of the property as agreed upon.

Rights of Buyer:

Right to Benefits and Rents: Upon ownership transfer, the buyer has the right to benefit from any improvements or increased value of the property, as well as to receive rents and profits.
Right to Interest: Unless the buyer improperly declines property delivery, they have a right to charge the property for any purchase-money paid in anticipation of delivery, along with interest on that amount.

Liabilities of Buyer:

Disclosure of Facts: The buyer must disclose to the seller any fact about the seller’s interest in the property that materially increases its value.
Payment of Purchase Money: The buyer is liable to pay or tender the purchase-money at the agreed time and place. If the property is sold free from encumbrances, the buyer can retain the amount for encumbrances and pay it to the rightful persons.
Bearing Damages: Once ownership transfers to the buyer, they bear any loss due to property destruction, injury, or decrease in value not caused by the seller.
Payment of Due Amounts: The buyer is responsible for paying all public charges, rent, principal money on encumbrances, and interest accruing afterward after ownership transfer.

It’s crucial for the buyer’s advocate to thoroughly investigate the property’s title, tracing it for 30 years, checking for encumbrances, defects, ownership records, acquisition notices, and consider stamp duty and registration for immovable property valued at ₹100 or more.

Mortgage of Immovable Property

The term “mortgage” originates from the French language, meaning a “death contract.” This term symbolizes that the mortgage, akin to a pledge or guarantee, terminates only when the loan is repaid, the obligation is fulfilled, or the borrower either takes over or sells the collateral (mortgaged property) through foreclosure.

According to Bouvier’s Law Dictionary (8th Edition), a mortgage is a conditional conveyance of land designed as security for payment of money, fulfillment of a contract, or performance of an act, becoming void upon such payment, fulfillment, or performance. It acts as security for the loan amount, benefiting banks, financial institutions, and individuals seeking loans for various purposes.

Black’s Law Dictionary (7th Edition) defines “mortgage” as a conveyance of property title given as security for debt payment or duty performance, becoming void upon fulfilling stipulated terms. Other definitions include it as a lien against property, an instrument specifying transaction terms, the loan itself, the mortgagee’s rights, and any real-property security transaction.

Mortgage of Property in India

The Transfer of Property Act, 1882, modeled on English mortgage law, underwent changes with the Law of Property Act, 1925. In England, mortgage transformed into a lease, and discharge of mortgage money triggered a cessation of the lease term. Section 58 of the Transfer of Property Act, 1882, provides a comprehensive definition of mortgage in India.

In the case of Kottayya v Annapumamma (1945), a debtor granted the creditor a right to occupy and enjoy land for 20 years due to inability to repay the debt, deemed a lease rather than a mortgage. Lord Macnaghten in South African Territories Ltd v Wallington (1898) emphasized the unenforceability of specific performance of a contract to lend money, solidifying a fundamental legal principle.

Definitions and Types of Mortgages Under Section 58 of the Transfer of Property Act, 1882

Section 58 of the Transfer of Property Act, 1882, provides comprehensive definitions and classifications of mortgages. Let’s explore these definitions and types:

1. Definition of Mortgage (Section 58(a)):

A mortgage is the transfer of an interest in specific immovable property to secure the payment of money advanced as a loan, an existing or future debt, or the performance of an engagement leading to a pecuniary liability.
The transferor is the mortgagor, the transferee is the mortgagee, the money and interest secured are mortgage-money, and the instrument affecting the transfer is the mortgage-deed.

2. Simple Mortgage (Section 58(b)):

In a simple mortgage, the mortgagor does not deliver possession of the property but binds himself personally to repay the mortgage-money.
The mortgagee has the right to sell the property to recover the mortgage-money in case of default, either by seeking court permission for sale or by filing a suit for recovery.

3. Mortgage by Conditional Sale (Section 58(c)):

The sale becomes void upon payment of the mortgage-money.
The mortgagee retransfers the property on payment.
The sale becomes absolute if the mortgagor defaults.
The mortgagee cannot sell the property directly but can sue for foreclosure.

4. Usufructuary Mortgage (Section 58(d)):

In an usufructuary mortgage, the mortgagor delivers possession of the property to the mortgagee, who retains possession until the mortgage-money is paid.
The mortgagee can retain rents and profits to offset interest or mortgage-money.

5. English Mortgage (Section 58(e)):

The mortgagor promises to repay the mortgage-money by a specified date, transferring the property to the mortgagee absolutely but subject to retransfer upon payment.
Three essential conditions define an English mortgage: repayment commitment, absolute transfer, and proviso for retransfer.

6. Anomalous Mortgage (Section 58(g)):

Any mortgage not falling under the above categories is termed an anomalous mortgage.
The intention of the parties is crucial in interpreting terms and provisions of an anomalous mortgage.

7. Mortgage by Deposit of Title Deeds (Section 58(h)):

In certain specified towns, delivering title deeds to a creditor as security constitutes a mortgage by deposit of title deeds.
The essential elements include a debt, deposit in notified towns, and the intention to create security.

The essentials of a mortgage of property are crucial aspects that define the validity and nature of such transactions. Let’s delve into these essentials:

1. Transfer of Interest:

A mortgage involves the transfer of an interest in specific immovable property from the mortgagor to the mortgagee.
The mortgagor, as the property owner, relinquishes a portion of their interest to the mortgagee to secure a loan.
This transfer reduces the mortgagor’s ownership temporarily, as the mortgagee gains rights to recover the principal and interest from the property in case of default.

2. Specific Immovable Property:

The property being mortgaged must be clearly and distinctly mentioned in the mortgage deed.
Vague descriptions like “all of my property” are not sufficient for a valid mortgage.
Specific identification of the property allows for a decree by the court to sell that particular property to recover the loan in case of default.

3. Purpose of Securing a Loan:

The primary purpose of a mortgage is to secure the payment of a loan or the performance of an obligation leading to a pecuniary liability.
It can be used to obtain a loan or to secure the repayment of an existing loan.
The mortgagor becomes a debtor, and the mortgagee assumes the role of a creditor in this debtor-creditor relationship.

For example, if A mortgages their land to B to secure a loan of a certain amount, the mortgage deed must clearly state the land being mortgaged, the purpose of securing the loan, and the terms of repayment. This clarity ensures the validity and enforceability of the mortgage agreement, protecting the rights of both parties involved.

Section 59 of the Transfer of Property Act, 1882, outlines the requirements for effecting mortgages based on the amount of principal money involved:

1. Principal Money of Rs. 100 or More:

A mortgage, except a mortgage by deposit of title deeds, must be executed through a registered instrument.
The instrument should be signed by the mortgagor and attested by at least two witnesses.

2. Principal Money Less Than Rs. 100:

If the principal money secured is less than Rs. 100, a mortgage can be effected in two ways: a. Through a registered instrument as described above, or b. By delivery of the property, except in the case of a simple mortgage.

The amendment in 1929 added the clause “other than a mortgage by deposit of title deeds,” indicating that such mortgages do not require a registered instrument under this section. Therefore, a mortgage by deposit of title deeds falls outside the scope of Section 59, and no registered instrument is needed for its validity.

It’s crucial to note that the section considers only the principal money secured, excluding interest from the calculation of the amount secured. Additionally, a mortgage is not considered complete and enforceable until it is registered, highlighting the importance of registration in mortgage transactions under this Act.

Section 122 of the Transfer of Property Act, 1882, provides a concise yet comprehensive definition of a gift. Here’s a breakdown of the key elements outlined in this section:

1. Transfer: A gift involves the transfer of certain existing property. This property can be either movable or immovable.

2. Voluntary: The transfer of property must be voluntary, meaning it is done willingly and without any coercion or undue influence.

3. Without Consideration: Unlike a sale or exchange, a gift does not involve any consideration or payment from the donee to the donor. It is a gratuitous transfer.

4. Parties Involved: There are two parties involved in a gift transaction:

Donor: The person who voluntarily transfers the property is known as the donor.
Donee: The person who receives the property as a gift is known as the donee.

5. Acceptance: The gift must be accepted by the donee or someone on behalf of the donee. Acceptance signifies the donee’s willingness to receive the gift.

Eligibility for making a gift

Competence to Contract: Any person who is competent to contract can make a gift. This includes individuals, companies, associations, or bodies of individuals. Competence to contract generally means being of sound mind, not a minor, and not disqualified by law from entering into contracts.
Oral or Written Transfer: A gift can be made orally unless specific laws require the transfer to be in writing. However, it’s generally advisable to have a written record for clarity and legal validity.
Assistance via Power of Attorney: In cases where a person is physically unable to sign a contract but is mentally competent, a lawyer or someone authorized through a power of attorney can sign the contract on their behalf.
Other Relevant Legislation: Apart from the Transfer of Property Act, there are other laws related to property rights and transfers, such as the Trusts Act, Specific Relief Act, and Easements Act, among others. These laws may intersect with the provisions of the Transfer of Property Act in certain situations.
Types of Gifts: The Act distinguishes between different types of gifts, including inter vivos gifts (gifts between living persons) and gifts mortis causa (gifts in contemplation of death). Only inter vivos or absolute gifts fall under the purview of the Transfer of Property Act.
Essential Ingredients of a Gift: For a gift to be valid under the Act, it must meet certain criteria, including lack of consideration (no payment involved), presence of a donor and a donee, clarity about the subject matter of the gift, donative intention (intent to gift), actual delivery or transfer of the gift, and acceptance by the donee.
Gift of Tangible Property: The Act specifically covers the transfer of tangible property. Intangible assets or securities may not fall under the provisions of this Act.
Effecting the Transfer: The Act specifies that for immovable property, the gift must be made through a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. For movable property, the transfer can be through a registered instrument or by delivery.

In Section 105 of the Transfer of Property Act, the term “lease” is defined as a transfer of immovable property for a specified period, agreed upon by the parties involved, in exchange for consideration. This definition encompasses several key elements of a lease agreement:

Transfer of Immovable Property: A lease involves the transfer of a property interest in immovable property (such as land, buildings, etc.) from the lessor (owner) to the lessee (tenant) for a defined period.
Specified Period: The lease agreement must specify a particular duration for which the property is transferred to the lessee. This could be for a fixed term (e.g., 1 year, 5 years) or on a periodic basis (e.g., month-to-month).
Accepted by Parties: Both the lessor and lessee must agree to the terms of the lease agreement. This agreement is usually documented in a lease contract or agreement signed by both parties.
Consideration: In exchange for the right to possess and use the property, the lessee typically provides consideration to the lessor. This consideration could be in the form of rent payments, services, or any other mutually agreed-upon benefit.
Rights and Obligations: The lease agreement outlines the rights and obligations of both parties during the lease period. This includes the use of the property by the lessee, maintenance responsibilities, payment of rent, and conditions for renewal or termination of the lease.
Legal Recognition: A lease agreement under Section 105 of the Transfer of Property Act is legally recognized, providing rights and protections to both the lessor and lessee as per the terms agreed upon.

Essential Elements of a Lease:

Parties Involved (Lessor and Lessee): A lease involves two parties—the lessor (property owner) and the lessee (tenant). Both parties must be competent to contract, and the agreement is based on their mutual consent.
Demise (Right to Enjoy Immovable Property): The essence of a lease is the transfer of a limited estate, i.e., the right to enjoy the property (demise), from the lessor to the lessee. This right forms the subject matter of the lease.
Duration of Lease (Term): The lease specifies the period for which the property is transferred to the lessee. This term can be any length, from short-term leases to long-term or even perpetual leases, as long as it is mentioned in the lease deed.
Consideration (Premium or Rent): Consideration in a lease can be in the form of a premium (paid at once) or rent (paid periodically). This consideration is typically agreed upon by the parties and forms part of the lease agreement.

Termination of Lease (Determination):

Lapse of Time: When the specified period of the lease ends, the lease is automatically terminated. The lease duration defines when the lease ends unless renewed or extended.
Happening of Specified Event: A lease may be conditional on the occurrence of a specific event. If that event happens, the lease terminates as per the agreed conditions.
Termination of Lessor’s Interest: If the lessor’s interest in the property ends or is terminated, the lease also ends simultaneously.
Merger: If the interests of the lessor and lessee merge, such as the lessee acquiring the property, the lease may terminate due to the principle that one cannot be both landlord and tenant of the same property.
Express Surrender: If the lessee voluntarily surrenders the lease before its term, the lease terminates. This surrender can be explicit or implied.
Implied Surrender: Surrender can also occur by operation of law, such as when a new lease is created or through relinquishment of possession.
Forfeiture: The lease can be forfeited if the lessee breaches express conditions, denies the landlord’s title, or becomes insolvent, depending on the terms of the lease agreement.

Rights of Lessor:

Duty to Disclose Latent Material Defect: The lessor must disclose any hidden material defects in the property to the lessee.
Duty to Give Possession: The lessor is responsible for delivering possession of the property to the lessee so that they can use and enjoy it.
Covenant for Quiet Enjoyment: The lessor implicitly guarantees the lessee’s peaceful and undisturbed enjoyment of the property during the lease term.

Liabilities of Lessor:

Duty to Disclose Facts: Just as the lessor must disclose defects, the lessee is bound to disclose any facts that increase the property’s value.
Duty to Pay Rent: The lessee must pay the rent or premium as per the lease agreement.
Duty to Maintain Property: The lessee is responsible for maintaining the property in good condition during the lease term.
Duty to Give Notice of Encroachment: If the lessee notices any encroachment on the property, they must inform the lessor.
Duty to Use Property Reasonably: The lessee must use the property reasonably, similar to how a prudent person would use their own property.
Duty Not to Erect Permanent Structures: Without the lessor’s consent, the lessee cannot build permanent structures on the leased property.
Duty to Restore Possession: At the end of the lease term, the lessee must return possession of the property to the lessor.

Rights of Lessee:

Right to Accretions: The lessee has the right to any additions or accretions made to the property during the lease term.
Right to Avoid Lease on Destruction: If the property becomes substantially unfit for use during the lease term due to uncontrollable events, the lessee can terminate the lease.
Right to Deduct Cost of Repairs: If agreed upon, the lessee may deduct repair costs from the rent.
Right to Remove Fixtures: After the lease ends, the lessee can remove fixtures they installed.
Right to Remove Crops: The lessee can harvest and remove crops they planted during the lease.
Right to Assign Interest: The lessee can transfer their right to use and enjoy the property to another person, unless prohibited by the lessor.

COMMENTS

THE TRANSFER OF PROPERTY ACT, 1882 - India Code
THE TRANSFER OF PROPERTY ACT, 1882 ACT NO. 4 OF 1882 [17th February, 1882.] An Act to amend the law relating to the Transfer of Property by act of Parties. Preamble.—WHEREAS it is expedient to define and amend certain parts of the law relating to the transfer of property by act of parties; It is hereby enacted as follows:— CHAPTER I
Transfer of Property Act: Notes, Case Laws and Reading Materials
Oct 19, 2024 · Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and other living persons.
Actionable Claim Under Transfer Of Property Act, 1881
Jul 31, 2023 · Under the Transfer of Property Act of 1881, assignment is one of the main ways to transfer actionable claims. It entails giving another individual, referred to as the assignee, the claimant's rights. Either a written assignment or the operation of law may transfer the property.
Transfer of Property Act, 1882: Comprehensive Law Notes
Sep 25, 2024 · Download detailed PDF notes on the Transfer of Property Act, 1882, covering property types, rules of transfer, and key legal definitions. Ideal for law students preparing for exams.
Transfer of Actionable Claim under Transfer of Property Act
An actionable claim represents a legal right that can be the subject of a lawsuit, and the transfer of actionable claims involves the assignment of these rights from one party to another. This post deals with actionable claim and their transferability under the Transfer of Property Act. Actionable Claim under Transfer of Property Act
Difference Between Assignment and Transfer - UpCounsel
The difference between assignment and transfer is that assign means it's legal to transfer property or a legal right from one person to another, while transfer means it's legal to arrange for something to be controlled by or officially belong to another person.
DEFINITION OF TRANSFER OF PROPERTY ... - Legal Vidhiya
Aug 2, 2023 · An important piece of Indian law that regulates the transfer of property rights from one person to another is the Transfer of Property Act, 1882. For many sorts of property transfers, such as sales, leases, mortgages, gifts, and exchanges, it offers the legal framework.
assignment | Wex | US Law | LII / Legal Information Institute
Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “assignee.” This concept is used in both contract and property law.
Transfer of Property Act Notes and Study Material - RostrumLegal
Jun 19, 2024 · The Transfer of Property Act (TOPA), 1882, is a fundamental piece of legislation that regulates the transfer of property between living persons. It defines and amends the law relating to the transfer of property by act of parties, ensuring clarity and legality in property transactions.
Transfer of Property : concept and nature - iPleaders
Oct 16, 2019 · Section 5 of the Transfer of Property Act, 1882 defines the term transfer of property. According to this section, transfer of property means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and other living persons.