Revision as of 16:14, 22 April 2017

Sale: Rights and liabilities

From the archives of The Times of India 2007, 2009

Rights and liabilities in property sale

Ashish Gupta

In any contract for sale or purchase of property, both the buyer and the seller have certain rights and corresponding liabilities to each other. The law also establishes such rights in the rule book. The main provisions that relate to this aspect are covered under the Transfer of Property Act. According to the act, in the absence of a contract to the contrary, a seller of property has certain rights and is subject to some liabilities.

A seller is bound to disclose all information related to the property to the buyer. He is bound to inform any material defect in the property or in his own title which the buyer is not aware of, or which the buyer cannot discover with ordinary care.

The seller should give the buyer all documents of title relating to the property which are in the seller’s possession or power. After the buyer has paid the amount due, the seller should execute a proper conveyance of the property in favour of the buyer for execution at a proper time and place. Further, between the date of the contract of sale and the handing over of the property, the seller should take as much care of the property and all documents of title relating to it which are in his possession as an owner of ordinary prudence would take.

The seller is bound to give the buyer or any person as he directs possession of the property. Till the date of sale of the property, the seller is bound to pay all public charges and rent due in respect of the property as well as the interest on all encumbrances on the property.

The buyer has a right to assume the seller has interest in the property and that he has the power to transfer it. In case the sale is made by a person in a fiduciary capacity, the buyer has a right to assume the seller has done no act whereby the property is either encumbered or he is hindered from transferring it.

After the money has been paid by the buyer to the seller, the seller is bound to deliver all documents of title relating to the property which are in his possession or power. However, there are two exceptions to this rule. Where the seller retains any part of the property comprised in the documents, he is entitled to retain the documents. And where the property is sold to different buyers, the buyer of the part of greatest value is entitled to the documents.

In such cases, the persons retaining the documents are bound, upon request by the buyer, and at the cost of the person making the request, to produce the documents and furnish true copies or extracts as the buyers may require.

On the other hand, a seller is entitled to any rent and profit from the property till the ownership of the property passes to the buyer. In case the ownership of the property has passed to the buyer before payment of the entire money, the seller is entitled to a charge on the property for the unpaid amount.

He is also entitled to interest on the amount from the date on which possession has been delivered to the buyer.