Introduction

In a sale, there is transfer of ownership in a property in exchange of price. The price can be a price paid, or promised, part-paid or part-promised. The transferor is called the seller, and the transferee is called the buyer.

Right and Liabilities of Buyer and Seller (Section 55)

• Section 55 of the Transfer of Property Act, 1882 (TPA). confers certain rights and liabilities on the Seller and the Buyer.
• The rights and liabilities of seller and buyer, are divided into two categories
  • The rights and liabilities before the Sale.
  • The rights and liabilities after the Sale.

Seller ‘s Liabilities

Seller’s Liabilities Before Completion of Sale

• Before the Sale is completed, the seller’s liabilities are as under: -
  • To disclose material defects in the property or title, if any, [Section 55(1) (a)]
    • Before completion of sale, the seller is bound to disclose to the buyer and latent material defect in the property or any defect in his own title (ownership rights).
  • To produce the title-deeds for inspection [Section 55(1)(b)]
    • If the buyer requests the seller for the title-deeds for the inspection, the seller has a duty to produce not only those documents which are in his possession but also to make arrangements for the inspection of those documents which are within his power.
  • To answer relevant questions as to title [Section 55(1) (c)]
    • The Seller’s duty is to answer all questions put by the buyer which are relevant for passing of the title.
  • Duty to execute Conveyance [Section 55(1) (d)]
    • The seller’s duty is to execute the conveyance. That is to say, he must effect the transfer of ownership. This is done by signing or affixing thumb –impression on the sale-deed by the seller.
  • Care of title deed and Property [Section 55(1) (e)]
    • After execution of the conveyance, the next duty of the seller is to take care of the property and the documents of title. They are to be handed over to the buyer after the sale.
  • Payment of the out goings [Section 55(1) (g)]
    • Before completion of the sale, the seller continues to be the owner of the property. Therefore, the government dues etc. are to be paid by him. The seller's last duty before completion of the sale is to pay all the outgoings.

Seller’s Liabilities After Completion of Sale

• To give possession to the buyer [Section 55(1) (f)]
  • On being required by the buyer, the seller has a duty to give possession of the property to buyer or to such person as he (buyer) directs. There is an implied contract to give the possession of the property to buyer.
• To covenant for title [Section 55(2)]
  • In every sale, the seller impliedly undertakes a guarantee that the interest which he is transferring subsists and he has authority to transfer the same. Technically, this is known as implied covenant for title.
• To deliver title-deeds on receipt of the price [ Section 55(3)]
  • The seller has to deliver the title-deeds of the property to the purchaser after completion of the sale.
  • After sale, the title-deeds are to be passed on to the buyer as a natural consequences of the transfer of ownership.
  • The seller is liable to hand over not only those documents which are in his possession but also those which are important and within his power.

Seller’s Rights

Seller’s Right Before Completion of Sale [Section 55(4) (a)]

• Before completion of Sale, the seller is entitled to all the rents, profits, or other beneficial interests of the property.
• Until ownership is transferred, the seller continues to be owner and as such he has every right to enjoy the profits of the property.
• The contract of sale does not create any proprietary interest in favour of the buyer.

Seller’s Right After Completion of Sale [Section 55(4)(b)]

• After the completion of sale, if the price or any part of it remains unpaid, the seller acquires a lien or charges on the property.
• The completion of sale of an immovable property does not depend on the payment of price, the price or part of it may also be paid after the sale. Therefore, under Section 55(4) (b) the seller is given a right to recover the unpaid purchase-money from out of the property. This is called as a statutory charge of the seller for unpaid price.

Buyer's Liabilities

Buyer's Liabilities Before Completion of Sale

• Before completion of sale, the duties (liabilities) of the buyer are as under:
  • To disclose facts which materially increases the value of property [Section 55(5) (a)]
    • The buyer is liable to disclose to the seller the facts (Kind of Property, its location etc.) which materially increases the value of property. This liability is limited to disclosure of only those facts which relate to title or interest of the buyer.
  • Payment of price [Section 55(5) (b)]
    • The completion of sale in favour of buyer, the seller has the duty of execution of deed and buyer has corresponding duty of payment of price. But, the buyer is not bound to pay the full amount before transfer of ownership.

Buyer’s Liabilities After Completion of Sale

• After completion of sale, the buyer has following two liabilities:
  • To bear the loss to property, if any, [Section 55(5) (c)]
    • If there is any loss to property subsequent to sale, it is the buyer who shall suffer that loss as owner of property. He cannot hold the seller to bear the loss unless it is proved that loss was caused by seller himself.
  • To pay the out goings [Section 55(5) (d)]
    • After completion of Sale, since the buyer becomes owner of the property, he is liable to pay the outgoings e.g., Government dues, rents, revenue or taxes.

Buyer's Rights

Buyer's Right Before Completion of Sale [Sec. 55(6)]

• This right occurs when the seller refuses to sell, and the buyer already paid some amount in advance. This situation creates buyers’ charges, and the buyer is entitled to get his money back with interest on it, and interest will be paid from the date of transfer of money from the date of delivery of possession.
  • But if due to the fault of the buyer, the sale doesn’t execute, then the buyer doesn’t have a charge on it and can’t claim his money back.

Buyer’s Right After Completion of Sale [Section 55 (6) (a)]

• According to Section 55 (6) (a) of the Act, the buyer is entitled to get all the rights over the property inclusive of all rents, profits, and also any other benefits over the property.
• The buyer becomes the property owner after completion of the sale or, in other words, after the transfer of ownership, and he/she is entitled to all the benefits from the date of transfer of ownership.