Transfer of Property Act (TPA)
Transfers in Special Circumstances under Sections 38 to 53A: The Scheme of the Chapter
The sections from 38 to 53A look at first like a miscellany — limited owners, ostensible owners, co-owners, insurance policies, improvements, pending suits, fraud. They are not. Every one of them answers the same question in a different setting: when two innocent people cannot both be satisfied, which of them must bear the loss? A purchaser who enquired carefully, a creditor who was deliberately defeated, an earlier transferee who did nothing wrong, a buyer who built on land he thought was his — the chapter allocates the risk between them, and it does so mainly through the ideas of good faith, notice and reasonable care.
Figure 1: The four parties the chapter deals with, and the sections that govern each relationship
1. The Sections at a Glance
Section | Subject | Substance in a line |
|---|---|---|
38 | Transfer by a person authorised only under certain circumstances | The circumstances are deemed to have existed if the transferee used reasonable care to ascertain them and acted in good faith |
39 | Right to maintenance out of the profits | A transferee with notice, and a gratuitous transferee, take subject to the right |
40 | Obligations annexed to the ownership of land | A restrictive covenant or similar obligation binds a gratuitous transferee and a transferee with notice |
41 | Transfer by an ostensible owner | The transfer is not voidable if the transferee took reasonable care and acted in good faith |
42 | Transfer by a person having authority to revoke a former transfer | The exercise of the power in favour of the new transferee operates as a revocation |
43 | Feeding the grant by estoppel | Where a transferor fraudulently or erroneously represents authority and later acquires the interest, the transferee may claim it |
44 | Transfer by one co-owner | The transferee takes the transferor's share, subject to the conditions and liabilities affecting it |
45 | Joint transfer for consideration | Interests are taken in proportion to the shares of the consideration advanced |
46 | Transfer for consideration by persons having distinct interests | The consideration is shared according to the value of the interests transferred |
47 | Transfer by co-owners of a share in common property | The share passes equally from the interests of the transferors, so far as may be |
48 | Priority of rights created by successive transfers | Each later transfer is subject to the rights previously created, so far as they cannot all take effect |
49 | Transferee's right under a policy | The transferee of insured property may claim the benefit of the policy |
50 | Rent bona fide paid to the holder under a defective title | The payer is protected |
51 | Improvements by a bona fide holder under a defective title | Compensation, or the option of selling the interest to him |
52 | Lis pendens | A transfer during the pendency of a suit does not affect the rights of the parties under the decree |
53 | Fraudulent transfer | Voidable at the option of the creditor defeated or delayed; and a gratuitous transfer to defraud a later transferee |
53A | Part performance | The transferee in possession under a written contract is protected against the transferor |
2. The Chapter Grouped by Problem
2.1 The transferor's authority was defective — sections 38, 41, 42 and 43
Here somebody has transferred property he was not entitled, or not fully entitled, to transfer. The common solution is to protect the transferee who took care and acted honestly: section 38 where the transferor's power depended on variable circumstances, section 41 where he was the ostensible owner with the real owner's consent, section 42 where he held a power of revocation, and section 43 where he represented an authority he did not have and afterwards acquired the interest.
2.2 A third person's right attaches to the property — sections 39 and 40
Here the property is burdened by an obligation — a right to maintenance out of the profits, or an obligation annexed to ownership such as a restrictive covenant. The burden binds a gratuitous transferee and a transferee with notice, but not a transferee for consideration who took without notice.
2.3 Several people hold or claim together — sections 44 to 48
Transfers by and among co-owners, joint transfers, transfers by persons with distinct interests, and the rule of priority where successive transfers cannot all take effect.
2.4 The transaction is touched by litigation or fraud — sections 52, 53 and 53A
Lis pendens prevents a party to a pending suit from dealing with the property so as to affect the other party's rights under the decree; section 53 gives defeated creditors the option of avoiding a transfer made to defeat or delay them; and section 53A protects the transferee who has taken possession under a written contract and performed his part.
2.5 Practical adjustments — sections 49, 50 and 51
The transferee's right to the benefit of an insurance policy; the protection of a person who paid rent in good faith to the holder under a defective title; and compensation for improvements made by a bona fide holder under a defective title.
3. The Ideas That Run Through the Chapter
- Good faith. Honest dealing is required of the person who asks for protection, in sections 38, 41, 50, 51 and 53.
- Reasonable care. Honesty alone is not enough where the transferor's title or authority was questionable: sections 38 and 41 both require the transferee to have made an enquiry a prudent person would have made.
- Notice. The idea defined in section 3 does much of the work — in sections 39, 40, 53 and 53A a transferee with notice takes subject to the claim, while one without notice is protected.
- Consideration. A gratuitous transferee is protected less generously than one who has paid: sections 39, 40 and 53 all distinguish the two.
- Possession. Explanation II to section 3 makes possession notice of the possessor's title, which is why section 53A works at all.
Retention aid Ask who the two innocent parties are. Transferee against true owner — sections 38, 41, 43. Transferee against a claimant on the property — sections 39, 40. Transferee against transferee — sections 44 to 48. Transferee against creditors and litigants — sections 52, 53 and 53A. The chapter is an allocation of risk, not a list. |
4. Related Topics and Provisions
- Transfer by a Person Authorised Only Under Certain Circumstances, Section 38 — the first section of the chapter
- Notice under Section 3 — the definition that most of the chapter turns on
- Section 41, TPA — the ostensible owner
- Section 43, TPA — feeding the grant by estoppel
- Sections 52, 53 and 53A, TPA — lis pendens, fraudulent transfers and part performance
- Doctrine of Election, Section 35 — the neighbouring provision on transfers of another's property