Transfer of Property Act (TPA)
Transfer by a Person Having Authority to Revoke a Former Transfer: Section 42
A transferor may part with property and keep back a power to take it again if a stated event occurs. Section 42 answers a narrow question about such a power: what happens when, instead of formally revoking, he simply transfers the same property to somebody else for value? The answer is that the second transfer operates as a revocation of the first, to the extent of the power and subject to any condition attached to its exercise. The section recognises that a power may be exercised by an act inconsistent with the earlier transfer, rather than only by words of revocation.
Figure 1: The first transfer, the power reserved, and the second transfer that revokes it
1. The Section
Section 42, TPA 'Where a person transfers any immoveable property, reserving power to revoke the transfer, and subsequently transfers the property for consideration to another transferee, such transfer operates in favour of such transferee (subject to any condition attached to the exercise of the power) as a revocation of the former transfer to the extent of the power.' |
2. The Four Essentials
- A transfer of immoveable property. The section is confined to immoveable property.
- A power of revocation reserved. The power must have been validly reserved in the first transfer. Section 42 does not create a power; it tells you how an existing one may be exercised.
- A subsequent transfer of the same property, for consideration. This is the act relied on as the exercise of the power. A later gratuitous transfer does not, of itself, work a revocation under this section.
- The revocation operates only to the extent of the power, and subject to any condition attached to its exercise. If the power was exercisable only in certain circumstances, or with somebody's consent, or only as to part of the property, the second transfer revokes no further than the power allowed.
3. The Act's Illustration
The house and the surveyor A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor, B should make a use of it detrimental to its value. Afterwards A, thinking that such a use has been made, lets the house to C. This operates as a revocation of B's lease — but subject to the opinion of the surveyor as to B's use of the house having been detrimental to its value. The condition attached to the power is not dispensed with by the second letting; the letting is the exercise of the power, and the power was conditional. |
4. What the Section Does and Does Not Decide
Question | Answer |
|---|---|
Does the second transfer revoke the first? | Yes, to the extent of the power — an act inconsistent with the first transfer may amount to the exercise of a reserved power |
Must the transferor say that he is revoking? | No. That is the point of the section: the exercise may be implied from the inconsistent transfer |
What if the second transfer is a gift? | The section requires the later transfer to be for consideration; a gift does not attract it |
What if the power was conditional? | The revocation takes effect subject to the condition; if the condition is not satisfied, the first transfer stands |
What if the power extended only to part of the property? | The revocation is limited accordingly |
Does the section validate the reserved power? | No. Whether the power was validly reserved is a separate question, answered by the general law and by sections 25 to 34 |
5. The Limit of a Reserved Power: Section 126
A power of revocation must be a real and defined power, not a licence to change one's mind. Section 126 puts this beyond doubt for gifts: a gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void; but a gift may be made subject to a condition that it shall be suspended or revoked on the happening of a specified event which does not depend on the will of the donor. Section 42 therefore operates on powers of the second kind, and a purported power of the first kind gives the transferor nothing to exercise.
6. Where the Section Sits
- In the protective group of the chapter. Sections 38, 41, 42 and 43 all deal with transfers by persons whose authority is incomplete or conditional, and each of them settles the position of the later transferee.
- With the conditional-transfer sections. Sections 31 and 32 govern a condition that an interest shall cease on a specified uncertain event, and section 42 supplies the machinery where the transferor has reserved a power rather than imposed a condition of cesser.
- And with section 126. For gifts, that section fixes the outer limit of what may be reserved.
Retention aid The power is exercised by using the property again. But only if the second transfer was for consideration, only to the extent of the power, and only if any condition attached to the power is satisfied. |
7. Related Topics and Provisions
- Transfers in Special Circumstances, Sections 38 to 53A — the chapter scheme
- Section 41, TPA — the ostensible owner, and the neighbouring protective provision
- Section 43, TPA — feeding the grant by estoppel
- Section 126, TPA — suspension and revocation of gifts, and the limit on a reserved power
- Sections 31 and 32, TPA — conditions that an interest shall cease
- Section 111, TPA — determination of a lease, including by forfeiture