All NotesCivil LawTransfer of Property Act (TPA)

Transfer of Property Act (TPA)

Improvements Made by a Bona Fide Holder Under a Defective Title: Section 51

A man buys land, believes it is his, and builds on it. Years later somebody with a better title turns him out. The building cannot be carried away, and the true owner would otherwise take it for nothing. Section 51 prevents that. The evicted transferee may require the person causing the eviction either to pay him the value of the improvement, or to sell the land to him at its market value. Everything turns on one requirement: he must have improved believing in good faith that he was absolutely entitled to the property.

Figure 1: The improvement made in good faith, the eviction, and the two courses open to the person causing it

1. The Section

Section 51, TPA

When the transferee of immoveable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of the improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market value thereof, irrespective of the value of the improvement.

The amount to be paid or secured in respect of the improvement shall be its estimated value at the time of the eviction.

Where the transferee has planted or sown crops which are growing when he is evicted, he is entitled to those crops and to free ingress and egress to gather and carry them.

2. The Four Conditions

  1. The claimant is a transferee of immoveable property. The section protects a person who took under a transfer, however defective his transferor's title. A trespasser, or a person in possession under no transfer at all, is outside it.
  2. He made an improvement. Something that adds lasting value — a building, a well, a permanent reclamation — as distinct from ordinary repairs or temporary works.
  3. He believed in good faith that he was absolutely entitled. This is the heart of the section. A person who knew that his title was defective, or who improved while the dispute was live, does not qualify; and a lessee, who knows his interest is limited, cannot claim to have believed himself absolutely entitled.
  4. He was subsequently evicted by a person having a better title. The claim arises on eviction, and the value is fixed as at that moment.

3. The Two Courses, and Whose Choice They Are

The course

Content

Pay for the improvement

Have the value of the improvement estimated and paid or secured to the transferee, valued as at the time of the eviction — not at the time the work was done

Sell the land

Sell his interest in the property to the transferee at the then market value, irrespective of the value of the improvement — so that the transferee does not pay twice for his own building

Whose election is it?

The section confers a right on the transferee to require one of the two courses — but it has generally been read as leaving the choice between them to the person causing the eviction. The true owner, being asked either to pay or to sell, decides which he prefers; the transferee cannot insist on buying the land if the owner is willing to pay for the improvement.

The point is worth stating carefully in an answer, because the wording gives the initiative to the transferee while the election lies with the owner.

4. The Crops

The third paragraph deals separately with crops. Where the evicted transferee has planted or sown crops which are growing at the time of eviction, he is entitled to those crops, and to free ingress and egress to gather and carry them away. This right does not depend on the owner's election, and it is a distinct head of relief from compensation for improvements.

5. Good Faith: the Cases That Fail

The improver

Position

A purchaser who bought believing the seller's title good, and built

Within the section — the paradigm case

A trespasser who built knowing the land was not his

Outside — he is not a transferee, and he had no belief of entitlement

A lessee who built on the demised land

Outside the section — he knew his interest was limited; his remedy is section 108(h), the right to remove what he attached

A person who continued building after receiving notice of the true owner's claim

The improvements made after notice are not in good faith

A co-owner who improved the whole property

Not evicted by a better title in the ordinary sense; his claim is worked out on partition, on equitable principles

A mortgagee in possession who improved

Governed by section 63A, not section 51

6. The Principle Behind the Section

  1. Against unjust enrichment. The true owner would otherwise recover his land with a building on it for which he paid nothing.
  2. In favour of honest improvement. The law does not wish to discourage a person who, believing the land his, puts it to productive use.
  3. But not at the expense of the true owner's choice. He is not compelled to buy an improvement he never wanted: he may instead sell the land and take its value.
  4. And good faith is the gateway. A person who built knowing of the defect took the risk, and the section leaves him where he put himself.

Retention aid

Transferee, improvement, good faith, eviction. Then the two exits — pay for the building, or sell the land at market value ignoring the building — and the separate right to the standing crops.

7. Related Topics and Provisions

  • Transfers in Special Circumstances, Sections 38 to 53A — the chapter scheme
  • Section 50, TPA — the neighbouring provision on rent paid in good faith
  • Section 63A, TPA — improvements made by a mortgagee in possession
  • Section 108(h), TPA — the lessee's right to remove what he has attached
  • Doctrine of Fixtures — why a building cannot simply be carried away
  • Notice under Section 3 — and the point at which good faith ends