Transfer and its types under

transfer of property act 1882

Definition and Meaning of transfer
Section 5 defines the expression "transfer of property" as

it 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, or to himself and one or

more other living persons.

It also defines the expression "to transfer property" as meaning to perform

such act.

Section clarifies that 'living person' includes a company or association or

body of individuals, whether incorporated or not, but nothing herein
contained shall affect any law for the time being in force relating to transfer
of property to or by companies, associations or bodies of individuals.

Here, Transfer includes various modes such as sale, mortgage, lease,

actionable claim, gift, or exchange.

But it does not apply to transfers that occur through the operation of law,
such as inheritance, forfeiture, insolvency, or sale through a decree's
execution.

Additionally, transfer does not govern property disposal through wills or

cases related to the succession of the property.

Essentials of transfer of property

essentials of transfer of property are as follows: –

1. Transfer must be between Two or More Living Persons

(Section 5)
The transfer must be inter vivos. Therefore transfer can
only be possible between living persons and not to a
person who is not in existence. The living person including
company or Association or body of individuals whether
incorporated or not

.
2. The Property must be Transferable (Section 6)
Property of any kind may be transferred, except
mentioned in Section 6 (a) to (i) cannot be transferred.

3. The Transfer must not be: –

A. for unlawful object and consideration as per provision of
Section 23 of the Indian Contract Act 1872, which
provides a consideration or object is unlawful.
B. To a person legally disqualified to be a transferee. As per
Section 136 of Transfer of Property Act, a Judge, a legal
practitioner, or an officer who is connected with Court of
Justice are disqualified from purchasing in actionable
claim.

4. Persons Competent to Transfer (Section 7)

A. “The person who is allowed to sign the contract is also
allowed to transfer a property and after that he will be
allowed to enjoy the property to the fullest and legally
permitted and prescribed for the time being.”
B. Here are some of the individuals who may be enabled to
transfer: – The capable, sound mind of the contract, the
transferor should be entitled to the transferable property.
Transfer prohibited under transfer of property
act 1882
Sec 6 states that property of any kind may be transferred.
However, Clauses (a) to (i) of section 6 mention the properties
which cannot be transferred.
1. Clause (a) describes spes succession cannot be transferred.
This clause states that the transfer of a bare chance of a
person to get a property is prohibited under this section.

2. Clause (b) mentions that the right of re-entry cannot be

transferred. The right to re-entry implies a right to resume
possession of the land which has been given to someone else
for a certain time. The section mentions that the right of re-
entry cannot be transferred by itself apart from the land.

3. Clause (c) mentions that easement cannot be transferred. An

easement is a right to use or restrict the use of land of another
which cannot be transferred.

4. Clause (d) mentions that an interest restricted in its

enjoyment of himself cannot be transferred. For instance, if
a house is lent to a man for his personal use, he cannot
transfer his right of enjoyment to another. Clause (dd) restricts
the transfer of the right to maintenance. Such a right cannot be
transferred as such right is for the personal benefit of the
concerned person.

5. Clause (e) provides that mere right to sue cannot be

transferred. The prohibition has been imposed as the right to
sue is a right which is personal and exclusive to the aggrieved
party.

6. Clause (f) forbids the transfer of public offices. The

philosophy behind the prohibition is that such a transfer may
be opposed to public policy in general. A person is eligible to
hold a public office on the grounds of his personal qualities,
and such qualities cannot be transferred.

7. Clause (g) of section 6 provides that pensions cannot be

transferred. Pensions allowed to military and civil pensioners of
government and political pensions cannot be transferred as it
is only on account of the past services offered by the
pensioner.
8. Clause (h) of this section is titled as nature of nature. This
clause prohibits transfer which will oppose the interest affected
thereby. The transfer is also forbidden if the object or
consideration of the transfer is unlawful. Moreover, a transfer
by a person who is legally disqualified from being a transferee
is also forbidden.

9. Clause (i) of section 6 was inserted by the Amendment Act of

1885. The clause declares that certain interests are
untransferable and inalienable. For example, a farmer of an
estate, in respect of which default has been made in paying the
revenue, cannot assign his interest in the holding.
Transfer of property based on acts of parties
1.Absolute transfer-
Where a property Is transferred without any limitation.

2. Conditional transfer-
Section 25 of the Transfer of Property Act, 1882 states that any
transfer that happens on fulfillment of a condition that is imposed on
another party for the transfer of property.

Types of conditions -
1. Condition precedent- it is a condition imposed by the
transferor that is to be fulfilled prior to transfer.
A transfer is dependent on the fulfillment of condition
precedent even if there is substantial compliance thereof.
For example, For example, A is ready to transfer his
property to B on the condition that he needs to take the
consent of X, Y and Z before marrying. Z dies and afterward,
B takes the consent of X and Y so the transfer can take
place as there has been substantial compliance.

2.Condition subsequent-
It is to be fulfilled after the transfer of property has already
taken place. Here interest of the transferee shall cease, if a
condition is fulfilled.
for example- A transfers a farm to B with the condition that
he should go to England within three years of transfer.
If he does not go, his interest shall cease in the property.
 3.Condition collateral- it is required to be fulfilled
simultaneously with operation of transfer of any property. It
needs to be strictly followed otherwise the transfer will break
down. For example, A transfers property to B with condition
that he shall maintain his wife C for 10 years. If B complies
with it, the transfer will be valid.

Conditional transfer being made void are under section

10,11,12,17.

Where property is
3. transferred without any
4. subjection or limitation
5. Where property is
6. transferred without any
7. subjection or limitation
 types of transfer based on nature of
transfer of interest

1.Sale-
Section 54 Transfer of Property Act defines sale as a transfer of
ownership in exchange for a price paid or promised or part-paid
and part-promised.

A transfer of ownership refers to the transfer of all rights in the

properties which are possessed by the transferor to transferee
with free consent.
Furthermore, the subject matter of a sale must always be
identifiable and undisputed immovable property.

The section also provides that the price need not be paid
simultaneously with the transfer.
It may either be paid in full or partially, or partly paid and partly
promised. The transfer will be deemed complete in all three
cases.
Here, immediate payment is not relevant but when and how the
payment is to be made.
As stipulated in the Transfer of Property Act, the two recognized
mode of transfer is-
(1) Registered instrument, the process of which is mentioned in
the Registration Act, 1908; and
(2) Delivery of possession.
No other way is legally recognized.

contract for sale is an agreement between the parties that a sale

will be effectuated in the future by executing a sale deed on
mutually settled terms.

2. Lease-
Section105 of the TPA defines a lease as
a transfer of a right to enjoy immovable property,
made for a certain time, express or implied, or in
perpetuity,
in consideration of a price paid or promised, or of money,
a share of crops, service, or any other thing of value,
to be rendered periodically or on specified occasions to
the transferor by the transferee, who accepts the transfer
on such terms.

A lease is a transfer of partial interest (and not absolute interest) in an

immovable property and not a transfer of ownership.

A lease is considered a transfer of property since interest in an immovable

property is considered property.

The right to enjoyment of property is transferred for some consideration for

a fixed period.

A person who transfers the property is called the lessor (landlord),A person
to whom it is transferred is known as the lessee (tenant), the price is called
the premium, and the money, service, share or any other thing to be
rendered is called the rent.

In leases, the nature of the relationship between the lessor and lessee
implies the right of possession of land to lie with the lessee.
Such lessee is entitled to remain in possession of the property till the lease
is lawfully terminated as long as the rent is being paid timely.

Essential ingredients to constitute a ‘valid lease’ of an immovable property:

1. The parties to the lease i.e., lessor and lessee, are necessary. A
valid lease is an agreement between parties competent to contract.
A lease made by a minor is void.
2. The Demise: A lease is a transfer of an limited interest (right of
enjoyment) in an immovable property and it is called demise.
3. Duration of lease: The interest that is created in the property could
be for a specified period or in perpetuity. The parties to the lease
are free to decide the duration of the lease.
4. Consideration: There should be a valid consideration paid to the
lessor by the lessee, either periodically or on specified occasions.

Section 106 of the Act lays down that in the absence of a contract, both
parties can end the lease by issuing a notice to quit. The date when the
notice to quit is received the prescribed time period commences.

This notice is written and conveyed to the party and the party is required to
abide by it.

Section 107 Transfer of Property Act, 1882, provides two modes of creation
of leases

(a) Leases which can be made only by registration and

(b) Where registration is optional.

In the event, the same is not made through a registered instrument, then,
contrary to what is mentioned in the said lease, the duration of the lease
will be assumed to be of a month, and the same may be terminated by
either party by providing a fifteen days’ notice.

However, in case the term is less than a year, then the said lease may be
made either by oral agreement accompanied by delivery of possession of
the immovable property, or by a registered instrument.

3. Mortgage-

Section 58 Transfer of Property Act, 1882 defines mortgage as

the transfer of an interest in specific immovable property
for the purpose of securing the payment of money advanced or
to be advanced by way of a loan, an existing or future debt,
or the performance of an engagement which may give rise to a pecuniary
liability.

The element of a mortgage is that the right of interest created in the

property is attached to the right to recover the debt.
When such a debt is completely paid, the property can revert back to the
actual owner.
The main purpose behind such a transaction is to secure a debt. This way
if the mortgager forfeits on his debt, the interest so transferred can be used
by the mortgagee to recover such debt.

There are various kinds of mortgages available

where the basic element is the transfer of some partial interest of the
transferor
rather than the transfer of all interests as in of sale.

However, what changes with different mortgages is the nature of this

interest. For ex.-

In simple mortgages,
mortgagee agrees on a condition that in the event of not paying debt,
the mortgagee has every right to sell the property and use the proceeds of
the sale.

In conditional mortgage,the mortgagee places three conditions on the

mortgagor, and the mortgagee shall have the right to sell the property if:

1. The mortgagor defaults in payment of mortgage money on a

certain date.
2. as soon as the payment is made by the mortgagor the sale shall
become void.
3. on the payment of money by the mortgagor, the property is
transferred and such a transaction is called a mortgage by
conditional sale.

In a Usufructuary mortgage,

the mortgagor delivers the possession of the property to the mortgagee and
authorizes him to retain such property until the payment is made by the
mortgagor and

further authorizes him to receive the rent or profit arising from such
mortgaged property and to appropriate the same instead of payment of
interest.

In English mortgage,

the mortgagor transfers the property absolutely to the mortgagee and binds
himself that he will repay the mortgage money on the specified date and
lays down a condition that on repayment of money mortgagee shall re-
transfer the property.

In Deposits of title-deeds mortgage,

where a person is in Calcutta, Madras, Bombay, and in any other towns as

specified by the state government and the mortgagor delivers to a creditor
or his agent the documents of title of immovable property with an intent to
create security.

In an anomalous mortgage,

A mortgage that is not any one of the mortgages mentioned above is called
an anomalous mortgage.

4. Exchange-
Section 118 defines exchange as
When two persons mutually transfer the ownership of one thing for the
ownership of another
neither thing or both things being money only,
the transaction is called an “exchange.”

Further, it also states, “A transfer of property in completion of an

exchange can be made only in the manner provided for the transfer of
such property by sale”

In general parlance, the word “exchange” refers to give or transfer for an

equivalent.
In law, an exchange is effected in the same way as a sale.
Thus, the exchange of goods is subject to the manner laid down in
Section 54 of said Act for the purpose of registration or delivery of
possession.
Therefore, for an exchange to be valid, there must be physical delivery
of the property to the parties and
such parties to the exchange are vested with the same rights and duties
as between a seller and a buyer.

An exchange is a barter of goods, therefore either property to be

exchanged cannot be money as it would simply denote a sale.

Essentials of Exchange-
1. There must be two persons for exchange.

2. Their intention to transfer the things must be with mutual consent. If either
of them has not given consent, then it is not exchange.

3. There must be a transfer of ownership of a thing from one person to

another and vice-versa.

4. Any of the things that are getting exchanged can be any immovable
property but not money. If money is involved, it becomes a sale and not an
exchange.

But money can be exchanged if both parties exchange money. Like A gives
71 rupees to B, and receives 1 dollar from A.

4.The exchange takes place between the parties like the process of sale. One
person transfers his ownership to the other person, and vice versa.
5. Gift-
Section 122 defines a gift as
the transfer of certain existing moveable or immovable property made
voluntarily and without consideration,
by one person, called the donor,
to another, called the donee, and accepted by or on behalf of the donee.
Such acceptance must be made during the lifetime of the donor and while
he is still capable of giving, If the donee dies before acceptance, the gift is
void.”

Gift, essentially is the transfer of existing property in the favor of another

person without any consideration or expectation of the same.

The words “during the lifetime of the donor” shows that gift, as envisioned
by the TPA deal with inter vivos gift i.e. a gift between people who are alive.

The main tenets that make a gift valid is that it is voluntarily made by the
transferor, made without consideration or apprehension of the same and it
is accepted by the donor within his lifetime. Conditional gifts are also
permitted as long as the condition is not prohibited by law.

In cases of gifts, the maxim “qui sentit commodum, debetet et sentire

onus” is of prominence which lays the principle for onerous gifts.

Onerous gifts are those within which subsists a burden or obligation. The
maxim as well as Section 127 of the TPA lay down that a gift can be
accepted in its entirety, and not to the exclusion of the obligation.