The term property is interpreted in numerous ways. Everything that revolves around an individual can be considered as property. However, in law, the definition of property broadly differs. According to law, the term Property includes the following:
- Only an individual’s proprietary rights and not his personal rights.
- All the legal rights in relation to his property i.e. complete ownership of material as well as incorporeal things.
- According to the Apex Court of India, the term property includes both “corporal materials” such as land, machinery and also the “incorporeal things” such as the trademarks and patents. This definition of property was given under the case of “RC Cooper vs. Union of India 1970.”
The term “property” can be divided into two:
- Corporal Property
- A corporal property is tangible in nature, which means such property is physical and can be seen and touched by an individual.
- It involves the right of ownership in material things.
- For example: Land, machinery, ornaments are considered to be corporal properties.
Further Corporal Properties are categorized into Movableproperty and Immovable property.
- Incorporeal Property
- Incorporeal property is intangible in nature, which means there is no physical existence of such property.
- The owner of an incorporeal property has the right of ownership in “rem”.
- For example: Right of easement and Copyrights.
The transfer of Property Act, 1882, was enacted on 17th February 1882 and came into force on 1st July 1882. This act deals with the regulation of transfer of property in India. Basic Principles related to the transfer of Property Act are listed through this article.
A proprietor who has the exclusive rights on the things that are owned by him when he is free to claim, dispose, and use them as he pleases. The proprietor also has the right to exchange the property or to gift it. The proprietor enjoys the advantage to rent, sell, mortgage, transfer, exchange, consume or even destroy them.
Following are the basic principles of Property Rights:
- Right to exclude any other person from the property.
- The right to sell or transfer the property to any other person.
- Exclusive rights over the property enjoyed by the owner or the proprietor.
- Free to derive any benefit from the property.
Conditions restricting Transfer
Section 10-18 of the Transfer Property Act, 1882, lays down the various kinds of restrictions that are imposed on the transfer of a property. “Condition Restraining Alienation” is said to exist when the transferee’s (the person to whom the property is transferred) power to dispose or transfer the property is restricted.
Section 10 of the Transfer Property Act, 1882 states that when a transferee is restricted through limitation or “absolute” restriction from alienating the property, then such contracts are void and invalid in the eyes of the law.
Exceptions to the rule:
There are two exceptions to this law. They are:
- When the property is transferred for the benefit to a woman who is (not a Hindu, Muslim, or Buddhist), put under a condition that she is not allowed to transfer or create any encumbrance in the sale of property transferred to her.
- In the cases when the agreements are of a lease, as in such agreements, the restraint is for the benefit of the lesser or the estate leased out.
Constraints are put on the alienation of the property. As per section 10 of the Transfer Property Act, 1882, “absolute restriction” is void and invalid in the eyes of the law.
As the name suggests, these restrictions are partial. They don’t put restrictions on the total alienation of the property and, thus, such restrictions are valid.
In this case, the property was transferred with the condition that the transferee further should not sell it for the next 20 years. However, the Court held that such conditions are not partial but absolute in nature, and therefore, this transfer is void. Section 10 of the Act declares any such agreements void and null.
For instance, if this period had not been of 20 years and was of 2 or 3 years, then such condition would have considered as partial restriction and then it would be not void.
Mr J B Rosher made a will to gift his son a piece of his property. In the will, he also included that in future his son would be only allowed to sell this property to his mother Mrs. Rosher, at the one-fifth rate and no one else. The court, in this case, held that by putting up the condition of selling it only to a single person leads to absolute restriction, therefore making it null and void.
Definition of Transfer of Property
As per section 5 of the Transfer of Property Act, 1882, transfer of property means “an act through which a living person transfer his property, in present or future, to one or more other living persons or himself.” A living person can be an individual or an association or a company or body of individuals, importance of the fact, that it’s incorporated or not. The word “Transfer” has a wider scope, and it covers the transfer of a single property or more than one property.
Requirements of a Valid Transfer:
- The property which is being transferred should be lawful.
- Section 5 of the Act specifies that transfer should be done between two or more living persons.
- As per section 6 of the Act, the property shall be transferable or non-transferable.
- Section 7 of the Act deals with the individuals who are competent for the transfer.
- Section 9 asks the individuals to do the transfer of property as mentioned under the Act.
Features of Transfer of Property, as mentioned under section 5 of the act are:
- The transfer of property can take place in future, but the transferor should be a living person.
- The transfer of Property can be expressed or implied.
- A transfer can happen only from living person to another living person.
- Other laws that govern transfer are not affected by the Transfer of Property Act.
- A living person also includes associations and companies.
Types of Transfer:
- Sale: It is a type of transfer, which is done in exchange for money.
- Exchange: It is under the influence of the Barter System. The property is transferred; however, the consideration is not money but something else.
- Lease: The holders of immovable property are given rights for a limited period of time.
- Mortgage: It is a limited transfer of an interest in the property.
- Gift: As the name suggests, it is given for free, under the influence of love, affection, care. It does not involve any consideration.
Person Competent to Transfer:
- The person should have attained the age of 18. In cases where there is a guardian, the age barrier becomes 21.
- The person should be of sound mind.
- A property can be disposed of under the power of attorney.
Mallikarjuna vs Mareppa
In this case, the property was brought under the name of a minor child by their guardian. After a few years, the property was sold off, when the son was still a minor. The court declared the sale null and void as the guardian failed to take the permission under section 8 of the Hindu Minority and Guardianship Act, 1956, which is mandatory.
Transferrable and Non- Transferrable Property
Section 6 of the Transfer of Property Act, 1882, lays down the properties that may or may not be transferred. Property is generally transferable, however; the properties mentioned under this section are not applicable for transfer from one party to another.
The term “Spessuccessionis” means when a piece of property has the chances that it may get transferred in the future through:
- Chances when a property is transferred because of hierarchy/Legacy.
- Chance of an heir-apparent succeeding an estate.
This section is regarding the right of Re-entry. The general transferability states that a mere right of re-entry for breach of a condition subsequent cannot be transferred to anyone except the owner of the property affected. Such types of clauses are usually helpful in a lease agreement, where the lesser wants to protect or safeguard his property.
It covers the topic of an easement. It is basically a right which is connected to the property and has no existence independently. Therefore, the transfer of such properties is not possible and is restricted under clause (c) of section 6.
It says that an interest in property restricted in its enjoyment to the owner personally cannot be transferred. For example, if a person is staying on rent, he/she is not entitled to transfer that property. It is also known as the clause of restricted interest.
When a property is applicable for future maintenance, the right to future maintenance is solely for the personal benefit of the person to whom it has been granted and therefore, this very right cannot be transferred further.
A mere right to sue cannot be transferred from one party to another. If the right to sue is for indefinite amount, it cannot be transferred, and if the amount is definite, it may get transferred.
It covers the concept of Public office. The salary of a public officer is non-transferrable.
The clause mentions that Pensions given to the politicians and government officials can not be transferred. It also involves the stipends provided to the naval, air-force, and the military officials. A will cannot be executed in this case, as it can be only made in respect of an estate.
No transfer can be made insofar as it is opposed to the nature of the interest affected thereby. Thus, the things which are dedicated to public or religion uses or service cannot be transferred.
This section makes it clear that a tenant having a un-transferable right of occupancy cannot in any way transfer his interest.
Transfer to an unborn child and Rule of Perpetuity
According to section 13 of the Transfer of Property Act, 1882, a property can be transferred from a living person to an unborn person. Section 13-16 is the general exception to the rule which states that a property can be transferred from one living person to another.
Certain provisions need to be followed when a person wants to transfer property to an unborn child. These particular sections of regulations have been adopted from England is also termed as “The rule of Double Possibilities”. The provisions required are as follows:
The unborn should have come into existence before the death of the last property holder. Existence means, the unborn should have been present in the mother’s womb. If there is no pregnancy, then the property on the assumption that a future child will be born, a person cannot transfer the property.
No direct Transfers
Direct transfers cannot be made to an unborn person. As per section 13, when a transfer is to be made to an unborn person, the transfer first needs to transfer it to a living person. A living person can be trusted with the transfer unless the unborn is born or a trust can be created.
The basic principle laid down in Section 13 is that the person who is transferring the property shall not bind the free disposition of the said property for more than one generation. A person can enjoy the interest in the property, till the unborn comes into existence.
Instant Transfer of Rights
The transfer of rights should take place in a minimal amount of time. As soon as the child is born, all the transfer rights have to be vested in him/her. A transfer can be made to an unborn person, but not to the next generation of the unborn.
Section 14 of the Act, governs the rules against perpetuity.
The main objective of the rule against perpetuity is that there are people who have an interest in keeping the property in the family, from generation to generation. Such a situation leads to a significant loss for society. This activity deprives people of the benefits that arise through this property. The rule against perpetuity makes sure that there is free circulation of property, and not only do people enjoy the benefits, but also for the betterment of the property.
Under section 14, the following conditions need to be followed:
- A transfer of property is a must.
- The ultimate beneficiary should be in the benefit of the unborn child.
- The unborn person must be in existence, at the expiration of the interest of the living person.
- The vesting of an interest in favour of the unborn must be preceded by limited interest or the life of a living person.
There are certain exceptions, to the rule against Perpetuity. They are:
- Rule against Perpetuity does not bound personal agreements
- When a property is transferred for public benefit.
- Transfers which are covenants of redemption
- Certain agreements which are for perpetual lease.
Vested and Contingent Interest
As per section 19, if during the transfer of property, an interest is created without any terms and conditions, then it is said to be a vested interest.
According to section 21 of the Act, contingent interest is created when it is specified that certain event should take place for the interest to be created or when it is mentioned that an event should not take place.
There is an immediate or present right even though the enjoyment is postponed.
In this case, only a promise exists to give a right.
If the transferee dies, the interest is not influenced.
In the situation where a transferee dies, the contingent right is affected.
Vested interest is heritable as well as transferrable. Therefore, when a transferee dies without the possession, the right gets transferred to its heirs.
Contingent interest is transferrable. However, its heritability depends upon the nature of the condition. It does not automatically pass to the heir of the transferee.
The Transfer Property Act, 1882, one but many elements which need to be complied with appropriately to transfer a particular property from one person to another. Therefore, it becomes essential that a lawyer is hired when someone wants to transfer a property. It becomes an easy task for an experienced lawyer to engage in such contracts. Further, all the hidden expenses can be reduced.