Transfer of Property Act (TPA)
Rights and Liabilities of Buyer and Seller under Section 55: A Clause-by-Clause Treatment
Section 55 is the longest working provision in the Act and the one a conveyancer uses most. It sets out, in the absence of a contract to the contrary, everything the seller must do, everything the buyer must do, the covenant for title that the law reads into every sale, and the two statutory charges that secure the price on one side and the advance on the other. Every clause of it is a default rule, which is why a well-drawn sale deed spends most of its length displacing the ones the parties do not want.
Figure 1: The seller's list, the buyer's list, the two charges, and the implied covenant for title
1. The Opening Words
The phrase that governs the whole section 'In the absence of a contract to the contrary, the buyer and the seller of immoveable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold …' Every duty and every right in the section may be varied or excluded by agreement, and many are. The section supplies the terms the parties did not think to write. |
2. The Seller's Duties — Section 55(1)
Clause | Duty | Note |
|---|---|---|
(a) | To disclose to the buyer any material defect in the property or in the title of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover | The classic distinction is between latent defects, which must be disclosed, and patent defects, which the buyer must find for himself |
(b) | To produce to the buyer, on request, all documents of title relating to the property which are in the seller's possession or power | For examination; the buyer is entitled to investigate the title he is being offered |
(c) | To answer to the best of his information all relevant questions put to him by the buyer as to the property or the title | An untrue answer may found rescission or damages, and may amount to fraud |
(d) | On payment or tender of the amount due in respect of the price, to execute a proper conveyance when the buyer tenders it to him at a proper time and place | The obligation is reciprocal with payment |
(e) | Between the contract and the delivery of the property, to take as much care of the property and the title deeds as an owner of ordinary prudence would take | He holds them in the meantime for the buyer's benefit |
(f) | To give possession of the property to the buyer | The duty arises after the sale |
(g) | To pay all public charges and rent accrued due up to the date of the sale, the interest on encumbrances then due, and to discharge all encumbrances then existing | Subject to the property being sold expressly subject to them |
3. The Implied Covenant for Title — Section 55(2)
The seller is deemed to contract with the buyer that the interest which he professes to transfer subsists, and that he has power to transfer it. Two features are important. Where the sale is made by a person in a fiduciary character, the covenant is that he has done no act by which the property is encumbered or by which he is hindered from transferring it. And the benefit of the covenant runs with the land, so that a subsequent owner may sue on it.
4. Delivery of the Title Deeds — Section 55(3)
Where the whole of the purchase money has been paid, the seller must deliver the documents of title to the buyer. Where he retains part of the property, he is entitled to retain the documents; where the property is sold to several buyers, the buyer of the largest interest is entitled to them — in each case the person retaining them must, on reasonable request, produce them and furnish copies at the cost of the person requiring.
5. The Seller's Rights — Section 55(4)
- (a) Rents and profits. The seller is entitled to the rents and profits of the property till the ownership passes to the buyer.
- (b) The seller's charge. Where the ownership has passed to the buyer before payment of the whole of the purchase money, the seller has a charge upon the property in the hands of the buyer, and of any transferee without consideration or with notice of the non-payment, for the unpaid amount, with interest from the date on which possession was delivered.
6. The Buyer's Duties — Section 55(5)
Clause | Duty |
|---|---|
(a) | To disclose to the seller any fact as to the nature or extent of the seller's interest of which the buyer is aware, and of which he has reason to believe the seller is not aware, and which materially increases the value of that interest |
(b) | To pay the purchase money to the seller or as he directs, at the time and place of completing the sale — subject to a deduction where the property is subject to an encumbrance the seller has to discharge |
(c) | Where the ownership has passed to the buyer, to bear any loss arising from the destruction, injury or decrease in value of the property not caused by the seller |
(d) | Where the ownership has passed, to pay the outgoings and public charges and the interest on encumbrances subject to which the property is sold |
7. The Buyer's Rights — Section 55(6)
- (a) The buyer's charge. Where he has properly declined to accept delivery, he has a charge on the property, as against the seller and all persons claiming under him, for the purchase money properly paid in anticipation of delivery, with interest, and for the earnest and the costs awarded to him in a suit to compel specific performance or to obtain a decree for rescission.
- (b) The benefit of increase in value. Where the ownership has passed to him, the buyer is entitled to the benefit of any improvement in or increase in value of the property, and to the rents and profits of it.
8. The Two Charges Compared
The seller's charge — s. 55(4)(b) | The buyer's charge — s. 55(6)(a) | |
|---|---|---|
When it arises | Ownership has passed, but the whole price has not been paid | The buyer has paid in anticipation of delivery, and has properly declined to accept it |
What it secures | The unpaid purchase money, with interest | The money so paid, with interest, and the earnest and costs |
Against whom | The buyer, and a transferee without consideration or with notice of the non-payment | The seller, and all persons claiming under him |
Its character | A statutory charge on the property, not a mortgage | The same |
Retention aid Seven duties for the seller, four for the buyer, one covenant and two charges. And the phrase that qualifies all of it — in the absence of a contract to the contrary. Learn clause (a) on each side together: the seller discloses defects that reduce value, the buyer discloses facts that increase it. |
9. Landmark Cases
📖 Vidhyadhar v. Manikrao, (1999) 3 SCC 573 Held: Where the whole of the price has not been paid but the sale has been completed, the ownership passes to the buyer, and the seller is entitled to a charge upon the property in the hands of the buyer for the amount of the unpaid purchase money with interest. Ratio: The seller's charge for unpaid purchase money is the counterpart of the passing of ownership. |
📖 Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247 Held: The distinction between a sale and a contract for sale governs the operation of the section: the statutory duties and rights attach to a completed sale, while the position under an agreement remains contractual. Ratio: The section operates upon a sale, not upon an agreement to sell. |
10. Related Topics and Provisions
- Sale, Section 54 — the definition and the mode of sale
- Rights and Liabilities of Buyer and Seller: the Scheme Before and After Ownership Passes — the companion treatment
- Section 100, TPA — charges, and how the statutory charges under section 55 are enforced
- Section 49, TPA — the transferee's right under an insurance policy
- Doctrine of Part Performance, Section 53A — the buyer in possession before conveyance
- Specific Relief Act, 1963 — specific performance, rescission and the buyer's remedies