RIGHS AND LIABILITIES OF BUYER AND SELLER – SECTION 55 OF TP ACT
In a sale there is a transfer of ownership of the property from the seller to the buyer the seller may transfer an absolute interest in the property e to the buyer on some of the rights. When we say that the sale is subject to contrary intention it means that the terms and conditions of the sale deed will be applicable to transfer of ownership however Section 55 itself has given detailed rights and liabilities of both the seller and the buyer and not only before the sale but after the completion of the sale.
Section 55 deals with rights and liabilities of both the buyers and sellers; the obligations imposed by this section are covenants and are in the nature of statutory obligations. Rights and liabilities of the buyer and the seller can be categorised into two:
(I) Before completion of sale.
(II) After completion of sale.
(I) Before completion of sale
(1)Liabilities of seller :-
(a) Seller’s duty to disclose material fact: this clause states that seller is bound to disclose to the buyer any material defect which is present either in the property or in the title of the seller to the property and about such a defect only the seller is aware but not the buyer and the buyer could not discover that defect with ordinary care. It is necessary the defect must be a material defect about which if the buyer had known he would not have purchased that property.
In the case of Flight v. Booth (1834) the court held that the material defect must be of such a nature that it might be reasonably supposed that if the buyer had been aware of it he might not have entered into the contract at all for he would be getting something different from what he contracted to buy.
(b) To produce title deeds : this clause states that the seller is bound to bring all the Documents of Title relating to the property in his position or power for the inspection of the buyer. The seller is bound to produce all the documents demanded by the buyer for his examination and the buyer should examine all the documents relating to the property for his own protection. The documents may be examined either at the sellers place or at the buyers place and if the buyer does not demand any such documents the seller is under no duty to produce them.
In the case of Mathuri Bewa V. Prafulla Routray (2003) the court held that the mere entry in record of right showing names of predecessor in interest of the vendor and vendee will not be conclusive to draw conclusion that suit property was joint family property the vendee would derive indefensible right by virtue of sale deed from the vendor.
(c) To execute a proper conveyance : this clause states that it is the duty of the buyer to execute a proper conveyance on the payment or tender of the amount due in respect of the price. Conveyance means the transfer of ownership and this is done by the timing of the sale deed or putting a thumb impression on the sale deed by the seller. The duties of both the seller and the buyer under this clause are reciprocal.
(d) To answer questions as to title : this clause states that the seller is bound to answer to the best of his information all the relevant questions put to him by the buyer in respect of the property or its title and since the buyer is getting the ownership of the property it is his interest that he must be fully satisfied about the ownership rights of the seller and his authority to make the transfer.
(e) To take care of property and title- deeds : this clause says that between the date of contract of sale and the delivery of property the seller is bound to take as much care of the property and all Documents of Title relating to it which are in his possession as an owner of ordinary prudence would take care of such property and documents.
(f) To pay outgoings: this clause says that the seller is bound to pay all public charges and rent accrued due in respect of that property upto the date of sale and the interest on all encumbrances on such property due on such date and accept whether the property is sold subject to encumbrances to discharge all encumbrances on the property then existing.
(2) Rights of sellers
(a) Right to take rents and profits: this subsection says that the seller is entitled to the rents and profits of the property till the ownership of it passes to the buyer. Till the ownership is transferred the cellar continues to be the owner of the property and in that capacity he becomes entitled to the rents and profits of the company.
(3)Liabilities of a buyer
(a) To disclose fact materially increasing value of the property : subsection 5 under clause a a provides that the buyer is bound to disclose to the seller any fact as to the nature or extent of the seller’s interest in the property of which the buyer is aware but of which he has reason to believe that the seller is not aware and which materially increases the value of such interest.
(b) To pay the price : clause b says that the buyer is bound to pay or tender at the time and place of completing the sale and purchase money to the seller or to such person as he directs provided that when the property is sold free from encumbrances the buyer may retain out of the purchase money e the amount of any encumbrances on the property existing at the date of the sale and shall pay the amount so written to the persons entitled thereto.
(4) Rights of the buyers
(a) To charge for price prepaid: according to this clause the buyer is entitled to charge on the property unless he has improperly declined to accept delivery of the property as against the seller and all persons claiming under him to the extent of the seller’s interest in the property for the amount of any purchase money properly paid by the buyer in anticipation off the delivery and for interest on such amount.
(II) After completion of sale
(1)Liabilities of seller
(a) To give possession: this clause states that the seller is bound to give on being so required the buyer or such person as he directs such position of the property as its nature admits and the seller is to give possession of the property e idea to the buyer or is authorized person whenever the buyer so requires.
(b) Implied Covenant for Title: subsection to says that the seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has the power to transfer the same.
(2) Rights of seller:
(a) Charge upon property for unpaid price : This clause states that the ownership of the property has passed to the buyer before payment of the whole of the purchase money . Then the seller becomes entitled to a charge upon the property-
● In the hands of the buyer
● Any transferee without consideration.
● Any transferee with the notice of non- payment.
● For the amount of the purchase money or if any part of the purchase money remains unpaid.
● For interest on such amount of purchase money or any part and paid from the date on which the possession has been delivered.
(3) Liabilities of buyer
(a) To bear loss to the property: this clause says that where the ownership of the property has passed to the buyer and the buyer is bound to be there any loss arising from the destruction injury e or decrease in value of the property not caused by the seller.
(b) To pay outgoings: This clause says that where the ownership of the property has passed to the buyer as between himself and the seller the buyer is bound to pay all the public charges and rent which may become payable in respect of the property the principal moneys due on any and encumbrances subject to which the property is sold and interest theron afterwards accruing due.
(4)Rights of the buyers
(a) Benefit of Increment: according to this clause the ownership of the property E has passed to the buyer and the buyer is entitled to the benefit of any improvement in the property or increase in the value of property and to the rents and profits thereof.
● In the case of Rogers v. Hosegood the purchaser of a plot of land covenant and not to erect more than one doing house on the plot which would be used for residential purpose only the court held that such a government runs with the land and can be enforced by an assignee of the covenantee.
Author: sarthak udaipuria,
ICFAI LAW SCHOOL HYDERABAD, 4TH YEAR