Understanding the Transfer of Property Act: Key rights and responsibilities of buyers and sellers.

Transferring property involves several rules and legal requirements to protect both the buyer and seller. Understanding your rights and duties can prevent disputes and ensure a smooth transaction. Infinity Housing explains the responsibilities of both parties during the property transfer process.

How to Transfer a Property

Property transfer or registration can occur through different instruments depending on the situation:

1. Sale Deed

• The most common method to transfer property from seller to buyer.
• Offers absolute and undisputed ownership to the buyer.
• Prepared based on prior ownership documents and registered with the sub-registrar.

2. Will or Gift Deed

• Gift Deed: Used to transfer property within the family. Registration is mandatory under Section 17 of the Registration Act, 1908.
• Once gifted, the transfer is irreversible.
• Will: Takes effect only after the executor’s death and is executed as per the Will’s terms.

3. Relinquishment Deed

• Used when an owner transfers their rights to a co-owner.
• Requires signatures of both parties and is irreversible once executed.

Seller’s Duties or Liabilities

Before the Sale

1. Disclosure of Defects: Sellers must disclose all material defects that could affect the property’s value or pose safety risks.
2. Inspection of Title Deeds: Sellers must provide access to all relevant ownership documents and answer genuine queries regarding the property.
3. Clear Taxes and Dues: Sellers should clear all property taxes, loans, or other encumbrances before the sale.

After the Sale

1. Hand Over Possession: Sellers must give possession to the buyer or their nominee.
2. Deliver Title Deeds: All ownership documents must be handed over after receiving the sale price. Sellers should ensure there are no unregistered mortgages.

Seller’s Rights

• Rents and Profits: Sellers can receive rents or profits from the property before the sale.
• Payment of Consideration: Sellers are entitled to receive the agreed consideration as per the contract of sale.

Buyer’s Duties or Liabilities

Before the Sale

• Timely Payment: Buyers must pay the agreed amount at the specified time and as per the seller’s instructions. Failure to do so can lead to legal action.

After the Sale

1. Bear Property Costs: Once ownership transfers, buyers are responsible for maintenance and repair costs, even if possession is not yet delivered.
2. Pay Public Charges: Buyers must pay property taxes or other charges levied by authorities.

Buyer’s Rights

• Agreed Property Value: Buyers are protected from price hikes after finalising the deal.
• Charge for Prepaid Consideration: Buyers can claim a lien on the property for any advance payments made.
• Earnest Money: Deposit made during agreement indicates intent to purchase.
  • If the buyer defaults, the seller may forfeit the amount.
  • If the seller commits fraud, the buyer can recover the deposit through legal action.
• Encumbrances: Buyers can withhold payment or cancel the contract if the property has undisclosed charges.

Tip: Sale agreements often include a penalty clause for defaulting buyers, usually 10–20% of the total price.

Frequently Asked Questions (FAQs)