Buying or selling land, a house, or a shop is not just about exchanging money for property. Understanding the rights and liabilities of buyer and seller of property is crucial, as it is a legal transaction that comes with responsibilities and protections for both the buyer and the seller.
The Transfer of Property Act of 1882 outlines the provisions in India. Section 55 of the Act clearly explains what each side must do, and what rights they get in return.
These rules apply automatically, unless the buyer and seller agree to something different in their sale agreement.
Rights and Liabilities of Buyer and Seller of Property
Duties of the Seller
The seller is the individual who possesses the property and consents to sell it.
His primary responsibility is to ensure that the buyer receives a property that is secure, lawful, and free from hidden problems.
1. Tell the Buyer About Defects
If the property has any defect—either in the land itself or in the seller’s ownership rights- the seller must disclose it.
- Example: If there is a court case on the land, or the house has serious structural damage, the seller must inform the buyer.
The seller cannot hide such facts, especially when the buyer cannot discover them easily with normal care.
2. Show Title Documents
The seller must allow the buyer to check all the ownership documents (sale deeds, tax receipts, mutation papers, etc.) that prove he has the right to sell the property.
3. Answer Buyer’s Questions
The seller must provide an honest response to the best of his knowledge if the buyer asks questions concerning the property or the seller’s title.
4. Execute the Sale Deed
Once the buyer pays the price, the seller must sign and hand over a proper sale deed (conveyance deed) at the agreed time and place.
5. Take Care of the Property
From the day of agreement until the final handover, the seller must look after the property and keep the documents safe, just like a responsible owner.
6. Give Possession
Once the sale is completed, the seller must provide possession of the property to the buyer or someone designated by the buyer.
7. Pay Dues and Clear Charges
The seller must pay all taxes, public charges, and rent that are due up to the date of sale.
If there are loans or mortgages on the property, he must clear them unless the property is sold with those liabilities.
Seller’s Rights
The law also protects the seller. He has two important rights:
- Right to Profits Till Sale: The seller can keep all rents, income, and profits from the property until ownership actually passes to the buyer.
- Right to Unpaid Money: If the buyer gets ownership but does not pay the full price, the seller has a legal charge (a right similar to a mortgage) on the property. This means he can demand the balance money and interest before the buyer can enjoy the property freely.
Duties of the Buyer
The buyer is the person who purchases the property. His main duty is to pay the price and take over the property honestly.
1. Disclose Important Facts to Seller
If the buyer knows something that increases the value of the property and suspects the seller does not know it, he must tell the seller.
- Example: If the buyer knows that a new metro line will pass near the land and increase its value, he should inform the seller.
2. Pay the Price
The purchaser is required to pay or propose the specified amount at the appropriate time and location.
- If the property is sold without any loans or mortgages, the buyer is required to pay the entire price to the seller.
- If it is sold with existing loans, the buyer has the option to subtract that amount from the total price and pay the lender directly.
3. Bear the Risk After Sale
Once ownership transfers, the buyer assumes responsibility for any harm, destruction, or depreciation in the property’s value that occurs due to factors not attributable to the seller.
4. Pay Future Taxes and Charges
After the transfer, the buyer assumes responsibility for all future taxes, public charges, rents, and loan payments if the seller sold the property with those encumbrances.
Buyer’s Rights
The buyer also enjoys several rights after the transaction.
- Right to Improvements and Profits: After the sale, the buyer enjoys any rise in property value, improvements, or rental income.
- Right to Security for Advance Payment: If the buyer has paid money in advance and the seller fails to deliver the property, the buyer gets a charge on the property. This allows him to recover the advance amount with interest.
- Right to Earnest Money and Costs: If the buyer rightly refuses to accept delivery due to the seller’s fault, he can claim back his earnest money (deposit) and also recover legal costs, if any.
Why These Rules Matter
Section 55 is very practical. It balances the interests of both sides.
- The buyer is protected from fraud, hidden defects, and unclear ownership. He also gets security for advance payments.
- The seller is protected from loss if the buyer delays payment. He gets a legal right over the property until full payment is made.
These rules reduce disputes and make property transactions safer.
A Simple Example
Let’s say:
- Mr. A sells his land to Mr. B for ₹50 lakh.
- A must disclose that there is a small loan of ₹5 lakh on the land.
- B can deduct ₹5 lakh and pay it directly to the bank, while giving A the balance ₹45 lakh.
- Until the sale deed is registered, A can still enjoy the rent from the land.
- Once the deed is registered, B becomes the owner and will enjoy future profits.
- If B delays payment of the last ₹10 lakh, A has a legal charge on the land until he gets paid.
- If after the transfer the land is damaged due to flooding, B must bear the loss, not A.
This shows how Section 55 gives clear rights and duties to both parties.
Conclusion
Property transactions involve large amounts of money, so trust and fairness are essential. Section 55 of the Transfer of Property Act, 1882 acts as a safety net.
- The seller must be honest, hand over possession, and give a clear title.
- The buyer must pay the price, take over responsibility, and bear future risks.
- Both sides enjoy rights that protect them if the other defaults.
In short, these rules ensure that a property deal is not just a handshake but a fair, balanced, and legally secure process.
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