Author: Shivam Srivastava,
School of Law, IIMT – 4th year
Section 54 of the act defines the term “Sale” as… “Sale is a transfer of ownership in exchange for a price paid or promised or part – paid or promised.
HOW IS SALE MADE?
It can be made in two ways:
- In case where value of tangible immovable property is ₹100or more, or in case of reversion, or in cases of other intangible things, It can be only made by a REGISTERED INSTRUMENT.
- In case where value of tangible immovable property is less than ₹100, sale can be made through DELIVERY OF POSSESSION.
Hereby, Delivery of Tangible immovable property is said to be completed when the seller handover or such person as he directs.
CONTRACT OF SALE
A contract for the sale of an immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not create any interest in or charge on such property.
Transfer of an immovable property by way of sale can only be by a deed of conveyance. In the absence of a deed of conveyance, no right, title or interest in an immovable property can be transfereed.1
In a case including the question as to the settlement of terms between the parties to be a condition essential for the completion of a contract. It was held that there was no concluded contract between the parties, as the appellant was not a contracting party, he was only acting on behalf of a third person and hence unless the third person, i.e. the party, agreed to the terms and conditions, there could be no concluded contract.
ESSENTIAL ELEMENTS OF SALE
PARTIES TO SALE
There must be a Transferor (Seller) and also a Transferee (Buyer) of the immovable property. They both must have mutually agreed upon the Terms and Conditions. Also, they must be legally competent to enter into a contract of sale. Legal competency to contract include that the age must be of majority, capable of giving a valid consent, not intoxicated or under any threat or undue influence while giving the consent.
SUBJECT MATTER OF SALE
The subject matter of sale means the property which is being dealt with i.e. the property which is being transferred in the sale. The subject matter of sale is always an immovable property, whether it be tangible or intangible. Thus, it a necessary that an immovable property be involved in the transaction, the transfer which will give effect to the contract of sale.
PRICE OR CONSIDERATION
This requires there that must be an amount of consideration that has been or is to be paid by the transferee to the transferor in lieu of the transfer of the immovable property. This is an essential condition mainly to distinguish “Gift” transactions from the ones of “Sale”.
RIGHTS AND LIABILITIES OF BUYER AND SELLER
DUTIES OF SELLER BEFORE SALE
- He is bound to disclose all the material defects to the buyer of property which the buyer is not aware of and cannot find in ordinary course of action.
- He is bound to produce all documents relating to property to the buyer if he ask for those documents which are in the possession or power of the seller.
- The seller is bound to give answer of all the question to the best of his knowledge which are put before him by the buyer in respect of the property.
- He is bound between the date of the contract of sale and the delivery of the property to take as much care of the property and the documents of title relating thereto, which are in his possession as an owner of ordinary prudence would take of such property and documents.
- He is bound to pay all the charge and rent, dues or government fees up to the date of sale.
DUTIES OF SELLER AFTER SALE
- After completion of the sale, it is the seller’s duty to give possession to the buyer. The seller is bound to give, on being so required, the buyer or such person as he directs, such possession of the property.
- When the whole of the purchase money has been paid by the buyer, seller is bound to deliver to the buyer all documents of title relating to the property which are in the seller’s possession or power.
SELLER’S RIGHT BEFORE SALE
Seller has the right to receive all the rents and profits out of the property.
SELLER’S RIGHT AFTER SALE
Seller has the right to lien or charge on the property, if any amount is unpaid by the seller. According to Section 55(4)(b), if the price remains unpaid the seller cannot refuse delivery of possession or claim back the possession if already given to buyer, but seller is given a right to recover unpaid money from and not of the property.
DUTIES OF BUYER BEFORE SALE
- He is bound to disclose all facts which materially increase the value of sale that the buyer knows and seller doesn’t.
- Buyer is bound to pay the price of the property to the seller.
DUTIES OF BUYER AFTER SALE
- He is bound to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller where the ownership of the property has been passed to the buyer.
- He is liable to pay outgoing. Example: Rents, Taxes, etc.
BUYER’S RIGHT BEFORE SALE
He is entitled to:-
- A charge on property for the purchase money properly paid by him in anticipation not the delivery.
- Interest on such purchase money.
- The earnest, and cost awarded to him in the suit compel the performance of the contractor to obtain a decree for its recession in case he properly declines to accept delivery.
BUYER’S RIGHT AFTER SALE
He is entitle to receive any benefit of any appreciation of the property or increase in its value and to the rents and profits thereof.