CUET Legal Studies Understanding Property Transfer: Sale, Lease, Exchange, and Gift Explained

Property transfer is the legal process of conveying ownership of property from one person to another. There are various ways to transfer property, each with its own set of rules and implications. This blog post will explore the four most common methods of property transfer: Sale, Lease, Exchange, and Gift.

Ways of Transferring Property

》Sale

》Lease

》Exchange

》Gift

Sale

A sale is the most common method of transferring property ownership. It involves the transfer of ownership of a property from a seller to a buyer in exchange for a price (usually money).

➡Means a transfer of ownership in exchange for a price 

➡Section 54 of the TPA

Seller is the person who transfers the property and 

Buyer is the person to whom the property is transferred.

The consideration in a sale is usually money 

Illustration 

A sells his house for Rs. 2 lakhs to B. This is called sale. Here, A is the seller and B is the buyer. Rs. 2 lakhs is the consideration. 

Essentials for a valid sale:

 ➡There should be two different parties- the seller and the buyer;

 ➡Both the parties should be competent to transfer;

➡The property to be transferred should be in existence;

➡Consideration for the transfer should be money;

 ➡The contract should be in accordance with law. 

Rights and Liabilities of Buyer and Seller

Liabilities of Seller:

➡Disclose defects of the property;

➡ Produce to the buyer all documents of title relating to the property;

➡Answer all the questions put to him by the buyer in relation to the property; 

➡Take care and preserve the property and the documents of title between the date of the contract of sale and the delivery of the property;

➡Bear all public charges and rent with regard to the property up to the date of sale;  

➡To give the buyer possession of the property. 

Rights of Seller:

➡Collect the rents and profits of the property till the ownership passes to the buyer;

➡When ownership has passed on to the buyer from the seller before payment of money in full, claim the amount from the buyer that is due to him.

Liabilities of Buyer:

➡ Disclose to the seller any fact with regard to the property that will increase the value of the property that is known to him;

➡Pay to the seller purchase money at the time of completing the sale;  

➡To bear any loss that arises from the destruction, injury or decrease in value of the property after the ownership has passed to the buyer;

➡To pay all public charges and rent that becomes payable after the ownership passed to the buyer.

Rights of Buyer:

 ➡After the ownership has passed to the buyer, perform any lawful action to increase the value of property and the rents and profits with regard to the property;

➡Where the buyer has paid the purchase money, he can compel the seller for registration of sale.

➡In Madam Pillai V. Badar Kali, the plaintiff being the first wife made a

claim for maintenance to her husband. 

➡The husband orally transferred his lands of the value of Rs. 100/- to the plaintiff. 

➡Later, he executed an instrument of sale in favour of the defendant for the same property. 

➡The plaintiff initiated a suit stating that the transfer was initially made in her favour and the subsequent sale to the defendant was not valid. The defendant stated that the transfer in favour of the plaintiff failed for want of a registered instrument. 

The Court held that - the plaintiff acquired a title by way of oral transfer, and she is entitled to the property though the instrument of sale was not registered.

Lease

➡ Lease is a transfer of right to enjoy a property for a specific period of time in consideration for a price. 

➡Lessor is the person who lets out the property for lease or

transferor, and 

➡Lessee is the person to whom the property is leased or the transferee in a lease. 

The lessee can also sub-let the lease and the relation between the lessee and the sub-lessee will be that of lessor and lessee.

Illustration 

A for a period of  3 years lets out his property for use to B for a sum of Rs. 5,This is called lease. A is the lessor and B is the lessee. If B sublets the property to C, then B will be the lessee and C will be the sublessee.

Rights and Liabilities of Lessor and Lessee

Rights and Liabilities of the Lessor

➡Disclose defects of the property  

➡Give possession of the property to the lessee;  

Rights and Liabilities of the Lessee

Lessee's Rights:

➡Include any additions made during the lease period in the lease agreement.

➡Terminate the lease if the property is destroyed by unforeseen events.

➡Make repairs and recover costs from the lessor if they fail to do so.

➡Get reimbursed by the lessor for any property-related payments made by the lessee.

➡Return the property to the lessor in its original condition at the lease end.

➡Transfer, rent, or sub-let the property with the lessor's consent.

➡Disclose any property details known to them that could increase its value.

Lessee's Liabilities:

➡Pay rent at the designated time and place.

➡Maintain the property in good condition during possession.

➡Rectify any defects within three months of receiving a notice.

➡Use the property and its products responsibly, avoiding damage.

➡Not erect permanent structures without the lessor's consent.

Illustration:

Amit leasing his office to Brenda for 3 years at ₹5,000 per month. Here, Amit is the lessor, and Brenda is the lessee. If Brenda sub-lets the office to Chris, Brenda becomes the lessor, and Chris becomes the sublessee.

Ajadhar v. Rombhaee 

A theatre was sub-leased and the sub-lessee was prevented from using the theatre by the original lessor on the ground that a notice was served on the lessee for determining the lease. The sub-lessee had to pay an additional amount to the proprietor (the original lessor) and then take the lease. It was held that there is violation on the part of the original lessor and the sub-lessee can sue the original lessor for damages for violation of quiet enjoyment of the property.

Exchange

An exchange occurs when two people transfer ownership of one property for another. It's essentially a barter system for property ownership, governed by Section 118 of the Transfer of Property Act (TPA). The rights and liabilities of the parties depend on the value of the properties exchanged.

➡When two persons transfer ownership of one thing for the ownership of another, it is called exchange

➡Section 118 of the TPA– 

–Transfer of property by exchange can be made only by way of sale. 

–The rights and liabilities of the parties to exchange shall be  defined on the extent of receiving and giving.

Illustration 

➡A offers to sell his cottage to B. B in consideration of the cottage sells his farm to A. 

➡Instead of getting money for his cottage, A has received a farm from B. This is an example for exchange. 

Gift

➡A transfer of ownership of property that is made voluntarily and without consideration is called Gift

➡Section 122 of the TPA. 

➡The person making the transfer is called the donor

➡the person to whom it is made is called the donee. 

If the donee expires before accepting the gift, it becomes void.

Illustration : 

A gives his car to B. B accepts the car. But B does not pay anything in return for the car. This is known as Gift. In this case, A is the donor and B is the donee.

Difference between Sale, Lease, Exchange and Gift

 

MCQ on CUET Legal Studies: Property Transfer- Sale, Lease, Exchange, and Gift