Procedure and Essential Elements of a Valid Transfer – Transfer of Property Act

“TRANSFER OF PROPERTY ACT – PROCEDURE AND ESSENTIAL ELEMENTS OF A VALID TRANSFER”

INTRODUCTION

The Transfer of Property Act 1882 came into force on 1st July 1882 that regulates the transfer of property in India. A “living person” includes companies, an association of persons whether incorporated in India or not, or a body corporate. The property transferred can either be movable or immovable. The objective of the Act is to regulate the law relating to the transfer of properties. A transfer of property is a contract, so it is important to fulfill all necessary requirements of a valid contract. This article talks about the procedure and essential elements of a valid transfer.

TRANSFER OF PROPERTY

Transfer of Property Act defines “transfer of property” under the Section 5. It states that:

“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 one or more other living persons; and to transfer property is to perform such act”

The Act does not define the word ‘property’, but it has a broad meaning that incorporates properties of all descriptions. It includes both movable and immovable properties. It incorporates intangible properties as well, such as ownership, tenancy, intellectual property rights, etc.

ESSENTIALS OF A VALID TRANSFER

Transfer of a property is a contract and therefore, all the essentials are needed to be fulfilled for a valid transfer. The essential elements are:

1. The transfer of property must take place between two or more living persons:

A transfer of property must take place inter vivos, i.e., the property must be transferred between two or more living persons. Both the transferor and transferee must be living on the date of the transfer. There should be an act of conveyance by some living person to constitute a transfer as mentioned in the case of Harish Chandra v. Chandrashekhar, 1977.

2. The property transferred must be transferable

Section 6 states that those properties cannot be transferred which has been enumerated in the section. Those properties are:

• The chance of heir- apparent succeeding to an estate called as spes successionis, or chance of a relation obtaining the legacy on the death of a kinsman, or any other thing of similar nature is not a property, so they are not transferable.
• Right of re-entry cannot be transferred to anyone except the owner of the property affected thereby.
• An easement cannot be transferred apart from the dominant heritage.
• A right to future maintenance in any manner arising, secured, or determined, cannot be transferred.
• An interest which is restricted in its enjoyment to the owner for his personal use, for example, religious offices, tenure of services etc. cannot be transferred.
• A mere right to sue cannot be transferred.
• A public office or the salary of a public officer, before or after it becomes payable cannot be transferred.
• Stipends allowed to military or defense personnel, and civil pensioners of the government and political pensions cannot be transferred.
• No transfer can be made which is opposed to the nature of interest affected thereby, like air or water from a river will be void.
• No transfer can be made to a person who is disqualified to be a transferee.

3. The transfer must not be opposed to the nature of the interest affected thereby or for an unlawful object or consideration.

Such things which are res communes that have no particular owner, and belongs to each and every one cannot be transferred by people, such as air, water, sunlight etc. Things which are res extra commercium, that means the things throughout of commerce, like a property dedicated to a deity are not transferable.

4. The transferor must be competent to contract and entitled to transfer property or authorized to dispose of transferable property which does not belong to him.

Section 7 of the Act states that a person needs to be competent to transfer the property. Hence, he should fulfil the criteria under Section 11 of the Indian Contract Act 1872 which states that a person is eligible to contract when he is a majority by age and is of sound mind

5. The transfer should be made in accordance with the mode prescribed by the Act.

Section 9 of the Act mentions that a transfer of property can be executed orally without a written instrument where writing is not expressly necessary.

6. Transfer must not offend the rule against perpetuity.

Section 14 of the Act states the rule of perpetuity which means eternity or infinity. The transfer of property cannot be affected to create an interest which is to take place after the lifetime of one or more persons living at the date of transfer, that means, one cannot postpone the vesting of property by a transferee beyond a certain limit.

7. Transfer for benefit of unborn person

Section 13 of the act states that transfer cannot be executed directly in favor of an unborn child. His interest must be backed by prior interest to one or more living persons, and the unborn person must be a living person when the prior interest comes to an end. He must have the interest latest by the time when he attains majority.

8. If the transfer is conditional, such condition should not be impossible or forbidden by law or against public policy.

Section 25 of the Act states that when the condition imposed on the transfer becomes unlawful or immoral, the transfer of the property dependent on such condition also fails.

MODES OF TRANSFER

There are two broad categories of property that can be transferred under the Transfer of Property Act. They are movable and immovable properties. Various modes of Transfer of Property have been introducing under Transfer of Property Act to transfer such properties. They are:

• Sale: It is defined under Section 54 as a transfer of ownership in exchange for a price paid or promised, or partly paid or promised.
• Mortgage: Section 58(a) states the definition of Mortgage as a transfer of an interest in a specific immovable property for the purpose of securing payment of money advanced by the way of loan, an existing or future debt and the performance of an engagement which may give rise to a pecuniary liability
• Lease: The transfer of a right, expressed or implied, to enjoy immovable property for a certain time, in consideration of a price paid or promised or money or a share of crops, service or any other thing of value, to be rendered periodically or on a special occasion to the transferor by the transferee, who accepts the transfer on such terms.
• Exchange: Section 118 defines Exchange as the transfers the ownership of one thing for the ownership of other between two persons. The exchange of money will be just for money or it will be a thing for a thing, i.e., either money for money, or thing for thing.
• Gifts: A gift is transfer of movable and immovable property made voluntarily without any consideration, by one person to another and accepted. When a gift is made of an immovable property, the property should be a registered instrument signed by the donor and donee and attested by at least two witnesses.

Author: APURVA .,
3rd Year, Fairfield Institute of Management and Technology, GGSIPU