Rights And Liabilities Of Buyer And Seller Under The Transfer Of Property Act, 1882

Author: LawSphereX

Category: Property & Real Estate

Published: 2026-08-23T20:58:57.682774+00:00

Updated: 2026-08-26T17:09:35.873+00:00

RIGHTS AND LIABILITIES OF BUYER AND SELLER

UNDER THE TRANSFER OF PROPERTY ACT, 1882

Oiendrila Chowdhury, B.A. LL.B., KIIT School of Law, KIIT University

ABSTRACT

The rights and obligations of purchasers and sellers in real estate transactions in India are outlined in the Transfer of Property Act, 1882. The rights of the seller include getting the agreed-upon amount, keeping the item until payment is received, and filing a lawsuit for breach of contract. Their obligations include the need to guarantee a clear title, reveal material faults, and grant possession free from claims by third parties. The rights of the buyer are to demand a legitimate title, obtain possession upon payment, and, in the event of a seller default, to pursue specific performance. On the other hand, the buyer's liabilities consist of having to pay the purchase price, take ownership of the property after it is possessed, and investigate any potential flaws. By encouraging fairness and clarity, this paradigm reduces conflict and guarantees seamless real estate transactions.

Introduction One of the main pieces of Indian property legislation, the Transfer of Property Act, 1882, regulates the transfer of property between individuals. The Act particularly outlines the obligations and rights of buyers and sellers in transactions involving immovable property in Sections 55 and 120. This article seeks to clarify these clauses in order to provide readers a thorough grasp of the governing legislation. In a sale, ownership of a piece of property is transferred in return for money. The price may be promised, paid in whole, partially promised, or partially paid. The buyer is called the transferee, and the seller is called the transferor. The Transfer of Property Act, 1882 (henceforth referred to as the Act) outlines a contract for sale, what is considered a sale, and how a sale is to be made under Section 54.

In a "sale," ownership is "transferred" from the transferor to the transferee in return for a sum of money or other payment. In cases where there is a transfer of immovable property, Section 55 of the Act specifies the obligations, liabilities, and rights of the buyer and seller, respectively, "in the absence of a contract to the contrary. " Section 55's primary goals are to maintain equitable transactions, stop fraud, and keep the property in use (avoid the property becoming stagnant and going to waste). The provisions of Section 55 do not need to apply as long as there is a language in the contract of sale defining the rights, obligations, and duties of the buyer and seller. Section 55 is applicable only in the absence of a contract to the contrary. Context Rights and Liabilities of Buyer and Seller according to Section 55

1. Seller’s Obligations:

1. Disclosure of Defects

Any substantial flaws in the property or the seller's title that the buyer is unaware of or could not reasonably have discovered are the seller's responsibility to

disclose. This guarantees openness and shields the purchaser from unanticipated problems.

2. Production of Title Documents:

Upon the buyer's request, the seller must produce all documents of title relating to the property for examination. This allows the buyer to verify the legitimacy of the seller's claim to the property.

3. Answering Relevant Questions:

The seller must answer all relevant questions posed by the buyer regarding the property or its title to the best of their knowledge. This facilitates informed decision-making by the buyer.

4. Execution of Conveyance:

Upon payment or tender of the purchase price, the seller is required to execute a proper conveyance of the property when the buyer tenders it for execution at a proper time and place.

5. Care of Property:

Between the date of the contract of sale and the delivery of the property, the seller must take as much care of the property and all related documents as an owner of ordinary prudence would.

6. Delivery of Possession:

The seller must give possession of the property to the buyer or a person directed by the buyer, as its nature admits, upon being required to do so.

7. Payment of Charges:

The seller is responsible for paying all public charges and rent accrued up to the date of the sale, as well as discharging all encumbrances on the property unless the property is sold subject to such encumbrances.

2. Buyer’s Obligations:

1. Disclosure of Facts:

The buyer must disclose any fact regarding the nature or extent of the seller's interest in the property that the buyer is aware of but believes the seller is not, and which materially increases the value of such interest.

2. Payment of Purchase Money:

The buyer is required to pay or tender the purchase money at the time and place of completing the sale to the seller or a person directed by the seller.

3. Bearing Loss:

Once ownership has passed to the buyer, they must bear any loss arising from the destruction, injury, or decrease in value of the property not caused by the seller.

4. Payment of Charges Post-Ownership:

After ownership has passed, the buyer is responsible for paying all public charges and rent, as well as the principal and interest on any encumbrances subject to which the property was sold.

3. Seller’s Right:

1. Rents and Profits:

The seller is entitled to the rents and profits of the property until ownership passes to the buyer.

2. Charge on Property:

If ownership has passed to the buyer before full payment of the purchase money, the seller has a charge on the property for the unpaid amount and interest.

4. Buyer’s Right:

1. Benefit of Improvements:

Once ownership has passed, the buyer is entitled to any improvements or increase in value of the property, as well as its rents and profits.

2. Charge for Prepaid Purchase Money:

If the buyer has paid any part of the purchase money in anticipation of delivery, they have a charge on the property for the amount paid and interest, against the seller and all persons claiming under him. Case Reference In Haryana Financial Corporation v. Rajesh Gupta (2010) The seller "A" desired to sell a factory through an auction. The buyer, "B," deposited a specific sum with "A," subject to "A" making sure that there is a separate route or path leading to the unit. Frequent communication between the parties produced the tacit agreement regarding this condition. But in reality, this section was neither broad enough nor small enough to satisfy 'B's' needs. In the end, "A" was unable to set up a suitable route to the unit. As a result, "B" declined to settle the outstanding balance on the property.

In response, "A" put the property back up for auction and considered the sum that "B" had previously deposited to be forfeited. In this case, the court determined that seller "A" was at fault for neglecting to disclose a major defect—that is, the lack of a suitable route to the factory—in accordance with Section 55(1)(a) of the Transfer of Property Act, 1872. The seller would not be permitted to pocket the money that was deposited by taking advantage of this injustice. In Jamshed Khodaram Israni v. Burijori Dhunjibhai (1915) The buyer and seller had a contract in which they agreed to transfer property (a specific plot of land) for Rs. 85,000. The buyer made a deposit of Rs. 4000. The conveyance had to be signed and Rs. 80,500 paid by the buyer within two months of the agreement's date. The buyer would pay the outstanding balance of Rs. 500 after registration and transfer.

On the other hand, the buyer may forfeit the deposited funds if they do not make payment within the stipulated time frame in the agreement. In the end, the vendor lost the money that was put because the buyer did not pay within the allotted two months. For specific performance, the customer sued the seller. The Court decided

that the parties' desire to condition their rights on the observance of specified time restrictions had to be clearly indicated in the plain language of the stipulation. Conclusion The Transfer of Property Act, 1882, through Sections 55 and 120, provides a detailed framework for the rights and liabilities of buyers and sellers in property transactions. These provisions aim to ensure transparency, fairness, and protection for both parties, thereby facilitating smooth and legally sound property transfers. Unless there is a contract to the contrary, Section 55 of the Transfer of Property Act, 1882, enumerates the rights, obligations, and duties of the buyer and seller with regard to a transaction where there is a transfer of immovable property.

It is not sufficient to read Section 54 of the Act, which defines what is a sale, how a sale is made, and what is a contract of sale, in order to comprehend the transfer of property. For a full understanding of the complexities involved in the entire transfer procedure between the buyer and seller, Sections 54 and 55 must be studied in tandem. Both the seller and the buyer can safeguard their unique interests under Section 55 without having to worry about losing money through dishonest or fraudulent tactics. In order to keep property from becoming idle or stagnant, Section 55 promotes fair negotiations and facilitates the transfer of property. In addition, the concepts of equity, fairness, and moral conscience serve as the foundation for this section.