TRANSFER OF IMMOVABLE PROPERTY Flashcards
[s 42] Transfer by person having authority to revoke former transfer.
The principle underlying this section is that where there is a transfer of property under which the transferor reserves to himself a power to revoke the same under certain specified conditions, if after the first transfer, he transfers the same property to another person; the first transfer is automatically revoked.
It also specifies that the transfer and the power of revocating the same are inseparable in such cases. If the power of revocation is subject to a condition, the transfer is also subject to the same condition.
[s 48] Priority of rights created by transfer.
This Section is based on the maxim, qui prior est tempore potior est jure, which means that one who is first in time is better in law. The transferor cannot prejudice the right of the transferee by any subsequent dealing with the property.
This doctrine is drawn from the Principles of Natural Justice which states that if the rights are made in favour of two different people at different times, then the one who has the advantage in time will get the advantage in law as well.
This Section lays down a crucial principle that no man can convey a better title apart from what he has.
When a transferor transfers the same property in favour of more than one transferee, then each transferee will enjoy the property together with its right as the former transferee.
Under this doctrine, if an individual has already created a transfer of the property in motion, then he cannot ignore his grant and treat the property free from the rights that were created in an earlier transaction.
The doctrine is provided under Section 48 of TPA and its ingredients are:
1) It is only applicable to immovable property.
2) There should be one transferor and more than one transferee.
3) The transfer should have been made at different times and should have created the rights in the transferee.
Exceptions of the Doctrine of Priority
Exceptions—Many exceptions also have been recognized to this rule and they are given
below:—
(1) Section 50 of the Registration Act gives priority to a subsequent registered deed over a prior unregistered deed of which the registration is optional. However, this exception is subject to the doctrine of notice.
(2) Where transfer deed is executed through fraud, misrepresentation, or gross negligence of prior transferee (mortgagee), the priority of the prior mortgagee will be postponed. (Section 78, Transfer of Property Act, 1882).
(3) In a suit for partition, if the receiver under the direction of the Government mortgages the whole or part of the estate, the mortgagee would be entitled to priority over an execution creditor by whom the property was attached after the commencement of the suit for partition.
[s 49] Transferee’s right under policy.
The rule is applicable to all kinds of transfers of property. For instance, if the property is subject to a usufructuary mortgage, where the possession of property is with the mortgagee, and the property is destroyed or damaged by fire, the insurance amount, if the property is insured, would be received by the owner, i.e., the mortgagor, but the
mortgagee would have a right to require him to either apply the total amount, or whatever is necessary in the given situation, for restoration of the property to its original condition.
If the transferor fails to do so, the mortgagee would have an option to revoke the mortgage and demand his money back. Similarly, in case of lease, where the property is in possession of the lessee and is destroyed or damaged by fire, a similar right is available to the lessee. If the lessor fails to apply the insurance money for the restoration of the property, and the property is unfit for occupation, the lessee would also have an option to cancel the lease.
Restrictive Covenants (Section 40)
Section 40 deals with negative covenants and their enforceability against subsequent transferees. This section says that if a transferor imposes a negative covenant in a transfer of property then such covenant is binding and enforceable against the
assignee of the transferee provided the following conditions are fulfilled:—
(i) The covenant is for the more beneficial enjoyment of the transferor’s own immovable property,
(ii) The subsequent transfer is for value and the assignee has notice of the covenant, or
(iii) The subsequent transfer is without consideration.
Restrictive covenants are annexed to the land as if they are part of the land and along with the transfer of land they pass on to every subsequent transferee. This section enacts the equitable rule that the burden of a covenant runs with the land.
Therefore, such covenants are enforceable against any person who has interest in that land.
Affirmative covenants are not annexed to the land and do not run with the land.
Right to Maintenance etc. (Section 39)
Under this section protection is given to the maintenance rights of a widow, wife, son,
unmarried daughter, etc. who are entitled to receive maintenance from the profits of
immovable property.
This section protects the right to receive maintenance not only in the first instance but also the right to receive enhanced amount of maintenance in future if there has been material change in the circumstance
Third-Party Right to Maintenance
A third person means a person other than the transferor and transferee.
This section lays down that where a third party has a right to receive maintenance or a provision for advancement or marriage out of the profits of immovable property, which is subsequently transferred, the right of such third party can be enforced against the transferee—
(i) if the transferee had notice, i.e., notice of maintenance, etc. although the transfer was for value or consideration, or
(ii) if the transfer was gratuitous one i.e., without consideration, irrespective of the fact whether the transferee had the notice of the right of maintenance, etc.
Provision for Advancement.
—
“Provision for advancement” means where a property is purchased in the name of near
relations such as in the name of wife or children, there is presumption of gift of that property in favour of that relation so as to enable them to anticipate the inheritance.
This is a rule of English law and is unknown in India. Such transactions in India come
under Benami Transactions under section 41.
Provision for Marriage.
—
Provision for legitimate expenses for the marriage of the members of a Joint Hindu Family may be made from the income of a property. Such persons are entitled to enforce their rights against the transferees for consideration of such property with notice of rights or a gratuitous transferee of such property under this section.
[s 40.2] Covenants Running with the Land
This expression is borrowed from the English law of real property. A covenant running with the land is a covenant annexed to the land. A covenant may run with the land at law or in equity.
A covenant runs with the land at law when the benefit of it passes to the assignee of the covenantee or when the burden of it passes to the assignee of the covenantor, and in either case, independently of notice.
Contractual Obligations Annexed to Ownership
The first paragraph of this section deals with the restrictive covenants whereas the second paragraph provides for contractual obligations annexed to ownership.
Restrictive covenants are enforceable only when the covenantor’s ownership rights in the property are already established. Second paragraph deals with personal rights arising out of contract, annexed to ownership in the property.
According to the second paragraph, where a third person is entitled to the benefit of an obligation arising out of contract and annexed to ownership of the property then the obligation may be enforced against a transferee for value with notice. For example, A
contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A. A contract for sale of an immovable property, imposes an obligation on the seller to sell the property to purchaser but it does not create any interest in his favour in the property. Such contract creates an equitable estate in his favour.
Feeding The Grant By Estoppel (43)
This section is based on the principle of estoppel which is here also known as feeding
the grant by estoppel. A person who has interest in an immovable property can transfer
that property but a person not having any interest or title in the property cannot transfer
the property and would convey no title to the transferee. Where a person having no
authority professes to transfer any immovable property, he is estopped from denying
the transfer when he subsequently acquires such authority. The principle of this section
is based upon the following two principles:—
(1) The common law doctrine of estoppel by deed
(2) The equitable principle that if a person promises more than he can perform, then he must fulfil the promise when he gets the ability to do so.
The doctrine comes into play when a person transfers property to which he has no title, on a representation that he has a present and transferable interest in, and acting on that representation, the transferee takes the transfer for consideration.
When these conditions are satisfied the section says that if the transferor subsequently acquires the property the transferee becomes entitled to it if the transfer has not been cancelled in the meantime and is still persisting.
“The doctrine envisages that where a grantor has purported to grant an interest in land which he did not at the time possess, but subsequently acquires, the benefit of his subsequent acquisition, goes automatically to the earlier grantee, or as it is usually expressed, feeds the estoppel”.
This principle is based on an equitable doctrine that a person who promised to perform more than he can perform must make good his
contract when he acquires the power of performance where properties in question
were sold by an auction.
“
Essential Requirements of the Section 43
(1) a fraudulent or erroneous representation that the transferor had authority to transfer the property.
(2) the transfer is for consideration.
(3) the transferor subsequently acquires the interest which he professed to transfer.
Conditions to fulfil the grant by estoppel
In order to get the benefit of the provision, the conditions which must be satisfied are:
(1) the contract of transfer was made by a person who was competent to contract;
and
(2) the contract was subsisting at the time when a claim for recovery of the property was made.
Insured Property (Section 49)
Section 49 says that where any immovable property is transferred for consideration and on the date of its transfer the whole of such property or any part of it may have been insured against loss or damage by fire, the transferee, if any such loss occurs to the property and the transferor receives money under the insurance policy may require such money to be applied in reinstating the property. However, this right is subject to a contrary contract.
