Transfer of Property Act (TPA)
Section 55 Arranged Around the Moment Ownership Passes: Who Bears What, and When
Section 55 is usually learned as two lists, one for the seller and one for the buyer. There is a better way to hold it, and it is the way a problem question is actually answered. Almost every clause in the section is keyed to a single moment — the passing of ownership. Before it, the seller carries the property and takes its income; after it, the buyer carries the property, takes its income, and bears the loss. Find the moment, and the section sorts itself out.
Figure 1: The handover, and the duties and rights on each side of it
1. When Does Ownership Pass?
The pivot on which the section turns For a sale requiring a registered instrument, ownership passes on the execution and registration of the conveyance; and by section 47 of the Registration Act the registered deed operates from the date of execution. For tangible immoveable property worth less than ₹100 sold by delivery, ownership passes on delivery of possession. Neither payment nor possession is the test where a conveyance is required. A buyer may be in possession and not the owner — that is the section 53A situation — and may be the owner without possession, in which case the seller's duty under clause (f) is to give it to him. And the parties may provide otherwise, since the section operates in the absence of a contract to the contrary. |
2. Before Ownership Passes
Who | Position | Clause |
|---|---|---|
Seller | Must disclose material defects in the property or title known to him and not discoverable by the buyer with ordinary care | 55(1)(a) |
Seller | Must produce the title deeds on request, and answer questions as to the title | 55(1)(b) and (c) |
Seller | Must take care of the property and the title deeds as an owner of ordinary prudence | 55(1)(e) |
Seller | Must pay the outgoings and rent accrued up to the sale, and discharge encumbrances then existing | 55(1)(g) |
Seller | Must execute a proper conveyance on payment or tender of the price | 55(1)(d) |
Seller | Is entitled to the rents and profits of the property till ownership passes | 55(4)(a) |
Seller | Bears the risk of loss or damage to the property | by implication from 55(5)(c) |
Buyer | Must disclose facts materially increasing the value of the seller's interest which he believes the seller does not know | 55(5)(a) |
Buyer | Must pay the purchase money at the time and place of completing the sale | 55(5)(b) |
3. After Ownership Passes
Who | Position | Clause |
|---|---|---|
Seller | Must give possession of the property to the buyer | 55(1)(f) |
Seller | Must deliver the title deeds on payment of the whole of the purchase money | 55(3) |
Seller | Has a charge on the property for unpaid purchase money with interest, against the buyer and against a transferee without consideration or with notice | 55(4)(b) |
Buyer | Bears any loss from destruction, injury or decrease in value not caused by the seller | 55(5)(c) |
Buyer | Must pay the outgoings and public charges, and the interest on encumbrances subject to which the property was sold | 55(5)(d) |
Buyer | Is entitled to the benefit of any improvement or increase in value, and to the rents and profits | 55(6)(b) |
Buyer | Has a charge for purchase money paid in anticipation of delivery, with interest, and for earnest and costs, where he properly declines to accept delivery | 55(6)(a) |
4. Risk Follows Ownership, Not Possession
This is the proposition the arrangement is designed to fix. Under section 55(5)(c) the buyer bears the loss from destruction, injury or decrease in value where the ownership has passed to him, and only then. A buyer who has been let into possession under an agreement for sale, and whose conveyance has not yet been executed and registered, is not the owner; if the house burns down, the loss is the seller's. Conversely, a buyer who has taken a registered conveyance but has not yet been given possession bears the risk although the keys are still with the seller — and it is against exactly that situation that section 49 gives him the right to have fire insurance money applied in reinstating the property.
5. Using the Scheme on a Problem
- Fix the date on which ownership passed. Execution and registration of the conveyance, operating from execution; or delivery, in the small-value case.
- Place the event on one side of that date. A defect discovered, a fire, an unpaid municipal demand, an improvement made, a rent received.
- Read off the clause. Before: the seller's duties of disclosure, production, care and payment, and his right to the income. After: possession, deeds, loss, outgoings, improvements and income to the buyer.
- Then check the two charges. Was the price unpaid when ownership passed? Was money paid in advance and delivery properly refused?
- And check the contract. Every one of these is displaced by an express term, and most sale deeds contain several.
6. Worked Examples
The facts | Result |
|---|---|
The house is damaged by fire after the agreement but before the conveyance is registered | The seller bears the loss; ownership has not passed. The buyer's remedies are on the contract, and section 49 may apply to insurance money |
The house is damaged after registration but before possession is given | The buyer bears the loss — section 55(5)(c) keys the risk to ownership, not possession |
Municipal taxes for the period before the sale are demanded afterwards | The seller must pay — section 55(1)(g) |
The buyer, in possession after conveyance, receives rent from a tenant | The buyer keeps it — section 55(6)(b) |
The conveyance is registered with a quarter of the price unpaid | The seller has a charge on the property for the unpaid money with interest — section 55(4)(b) |
The buyer paid an advance, the seller's title proves defective, and the buyer properly refuses delivery | The buyer has a charge for the advance with interest, and for his earnest and costs — section 55(6)(a) |
Retention aid Everything hangs on one moment. Before it, the property and its income and its risk are the seller's; after it, they are the buyer's. Then two charges secure what each of them is out of pocket — the seller for the price, the buyer for the advance. |
7. Landmark Cases
📖 Vidhyadhar v. Manikrao, (1999) 3 SCC 573 Held: Ownership may pass to the buyer although the whole of the price has not been paid, and from that moment the incidents of ownership, including the statutory charge in favour of the unpaid seller, take effect. Ratio: The passing of ownership, and not the payment of the price, is the pivot of the section. |
📖 Suraj Lamp & Industries (P) Ltd. v. State of Haryana, (2012) 1 SCC 656 Held: Ownership in immoveable property passes only by a registered deed of conveyance; possession delivered under an agreement to sell does not make the holder the owner. Ratio: A buyer in possession under an agreement is not the owner, and the risk has not passed to him. |
📖 Narandas Karsondas v. S.A. Kamtam, (1977) 3 SCC 247 Held: A contract for sale creates no interest in the property, so a buyer holding under an agreement, even in possession, has no title; the seller remains the owner until the conveyance is executed and registered. Ratio: Until ownership passes, the property and its risk remain the seller's. |
8. Related Topics and Provisions
- Rights and Liabilities of Buyer and Seller, Section 55 — the clause-by-clause treatment
- Sale, Section 54 — how a sale is made, and when title passes
- Section 49, TPA — insurance money applied in reinstating the property
- Doctrine of Part Performance, Section 53A — the buyer in possession who is not yet the owner
- Section 100, TPA — charges, and the enforcement of the statutory charges in section 55
- Section 47, Registration Act, 1908 — a registered deed operates from execution