Transfer of Property Act (TPA)
Apportionment under Sections 36 and 37: By Time, and By Estate
When property changes hands in the middle of a rent quarter, who is entitled to the rent? And when a field let to a tenant is divided among three purchasers, to whom must he deliver? The Act answers both questions with a single idea — apportionment — applied in two different directions. Section 36 divides a single periodical payment between two holders of the same interest, by reference to time. Section 37 divides a single obligation among several owners of a divided property, by reference to the value of their shares.
Figure 1: One payment split at the date of the transfer, and one duty split among the owners of the divided property
1. Section 36: Apportionment by Time
Section 36, TPA 'In the absence of a contract or local usage to the contrary, all rents, annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportioned accordingly, but to be payable on the days appointed for the payment thereof.' |
- The payments covered are rents, annuities, pensions, dividends and other periodical payments in the nature of income. A capital sum is not within the section.
- They are deemed to accrue from day to day. The transferor takes the portion attributable to the days before the transfer, the transferee the portion attributable to the days after.
- But they remain payable on the appointed days. The section changes who is entitled, not when the money falls due; the payer is not required to pay in instalments.
- It operates as between transferor and transferee. It is a rule for adjusting accounts between them, and it does not by itself compel the payer to split his payment between two people.
- It yields to a contract or local usage to the contrary. The parties may allocate the income as they please, and an established local usage displaces the section.
2. Section 37: Apportionment by Estate
Section 37, TPA Where, in consequence of a transfer, property is divided and held in several shares, and the benefit of any obligation relating to the property as a whole passes from one to several owners, the corresponding duty shall, in the absence of a contract to the contrary among the owners, be performed in favour of each of them in proportion to the value of his share — provided that the duty can be severed, and that the severance does not substantially increase the burden of the obligation. If the duty cannot be severed, or if severance would substantially increase the burden, the duty shall be performed for the benefit of such one of the owners as they shall jointly designate. Proviso — no person on whom the burden of the obligation lies is answerable for failing to discharge it in the manner provided by the section unless and until he has had reasonable notice of the severance. |
3. The Three Qualifications in Section 37
Qualification | Effect |
|---|---|
The duty must be capable of severance | A money payment splits easily; the delivery of an indivisible thing, or the performance of a single act, may not |
Severance must not substantially increase the burden | The person bound should not find his obligation multiplied merely because the property has changed hands |
Where severance is impossible or oppressive, the owners must designate one of them | The person bound then performs in favour of the designated owner, and the owners settle among themselves |
And in every case, notice | The person bound is not answerable until he has had reasonable notice of the severance — he cannot be expected to pay the right people before he knows who they are |
4. The Two Compared
Point | Section 36 — by time | Section 37 — by estate |
|---|---|---|
What is divided | A single periodical payment | A single obligation relating to the property as a whole |
Among whom | The transferor and the transferee of the same interest | Several owners of shares in the divided property |
The basis of division | Time — the payment accrues from day to day | The value of each owner's share |
The occasion | A transfer of the interest of the person entitled to receive | A transfer in consequence of which the property is divided and held in shares |
What displaces it | A contract or local usage to the contrary | A contract to the contrary among the owners |
Protection of the payer | The payment remains payable on the appointed days | No liability until reasonable notice of the severance |
5. Worked Examples
The facts | Result |
|---|---|
A lets property to T at a yearly rent payable on 31 March. A sells the property to B on 30 September | The rent accrues from day to day: roughly half belongs to A and half to B, but the whole remains payable by T on 31 March |
The same facts, the sale deed providing that the whole year's rent shall belong to A | The contract displaces section 36; A takes the whole |
A field let to T is sold to three purchasers in shares of one half and two quarters | The rent is apportioned among them in proportion to the value of their shares — section 37 — once T has had reasonable notice |
The obligation is to deliver one indivisible article annually | The duty cannot be severed; the owners must jointly designate one of them to receive delivery |
T pays the whole rent to the original lessor, knowing nothing of the sale | He is not answerable under section 37 until he has had reasonable notice of the severance; and see section 50 on rent paid in good faith |
6. Where These Sections Fit
- They follow the doctrine of election and close the general part of Chapter II before the block of special-circumstance provisions beginning at section 38.
- They are rules of adjustment, not of title. Neither section decides who owns the property; each decides how an income stream or an obligation is to be divided once ownership has changed.
- They are default rules. Both yield to agreement, and section 36 yields also to local usage.
- They connect with the lease provisions. Section 109, on the transfer of the lessor's rights, and section 50, on rent paid in good faith to the holder under a defective title, deal with the same practical problem from other directions.
Retention aid Thirty-six divides a payment by the calendar; thirty-seven divides a duty by the shares. And each has a protective rider: the payment still falls due on the appointed day, and the person bound owes nothing differently until he has had notice. |
7. Related Topics and Provisions
- Doctrine of Election, Section 35 — the provision immediately preceding
- Transfers in Special Circumstances, Sections 38 to 53A — the block that follows
- Section 8, TPA — rents and profits accruing after the transfer, which pass with the property
- Section 50, TPA — rent paid in good faith to the holder under a defective title
- Section 109, TPA — the rights of a transferee of the lessor's interest
- Section 11, TPA — the wider theme of default rules yielding to the terms of the transfer