Know About Transfer of Property Act India: Meaning, Definition & Key Elements

You may experience financial emergencies sometimes, such as an unexpected medical expense, a new business venture, a wedding, or education. It is not always feasible to have enough cash in your pocket to handle such situations. The best way to meet your financial needs in these circumstances is with an Instant Loan Against Property (LAP).
 

It requires a good understanding of the legal acts and other key sections of those acts. This blog informs about the Transfer of Property Act, TPA Bare Act, LAP, its benefits, and eligibility criteria.
 

What is the Transfer of Property Act (TPA)?

The Transfer of Property Act (TPA) is an important legislation that governs the transfer of Property in India. This Act was first introduced in 1882 and has undergone several amendments since then. The TPA defines the legal framework for transferring various kinds of properties, such as land, buildings, and apartments. It outlines the various modes of required transfer and the legal requirements to ensure the transfer is valid.
 

The Transfer of Property Act 1882 provides the legal basis for property transfer in India. It contains various provisions that govern the transfer of property and has undergone several amendments over the years. The Act applies to all citizens of India who are involved in the transfer.

Read More: Key Questions About Loans Against Property Answered
 

What is the Transfer of Property?

According to the law, the transfer of property is defined as the act of a living person transferring property to one or more living persons, either presently or in the future. This definition also encompasses companies, associations, or groups of individuals.
 

What Does ‘Transfer’ Mean Under the Transfer of Property Act?

The Transfer of Property Act considers the term "transfer" to include various modes such as sale, mortgage, lease, actionable claim, gift, or exchange. However, it does not apply to transfers that occur through the operation of law, such as inheritance, forfeiture, insolvency, or sale through a decree's execution. Additionally, the Act does not govern property disposal through wills or cases related to the succession of the property.

What Is the Scope of the Transfer of Property Act?

The Transfer of Property Act allows for the transfer of various types of properties, including:

1. Immovable Property Sales: The transfer of ownership of immovable property from the seller to the buyer in exchange for payment, which may include physical goods.

2. Mortgage of Real Estate: The transfer of ownership of the property in the form of a mortgage, where the property serves as collateral for a loan. The mortgagor must repay the principal and interest to release the property from the mortgage.

3. Immovable Property Leases: The transfer of possession of immovable property from one party to another for a fixed charge, without any transfer of ownership.

4. Exchange of Real Estate: When two parties agree to exchange real estate properties, it is known as a property exchange.

5. Gift of Real Estate: According to the Transfer of Property Act of 1882, a gift refers to the unrequited transfer of real estate from one person to another.

What Are the Types of Property That Can be Transferred Under this Act?

The Transfer of Property Act has a specific scope that includes the following:

Parties: The Act enables two or more parties to transfer property ownership through a legal process.

Property Type: The primary focus of the Transfer of Property Act is on the inter-vivos (between live beings) transfer of immovable property. The Act is applicable to transfers made by both companies and private individuals. However, it should be noted that the Act applies only to transfers allowed by law and not to those that are merely party acts.
 

Section 58 of the TPA

Section 58 of the Transfer of Property Act is an important provision that deals with mortgages. It outlines the various kinds of mortgages that can be created, such as a simple mortgage, mortgage by deposit of title deeds, and usufructuary mortgage. This section also defines the rights and duties of the mortgagor and the mortgagee.
 

The TPA Bare Act is the basic version of the Transfer of Property Act available to the public. It contains the draft of the Act without any amendments or explanations. The Act is a useful resource for lawyers and legal professionals who require the exact text of the Act.
 

LAP is a popular financing option in India where borrowers can obtain a loan by mortgaging their property. The eligibility criteria for LAP vary depending on the lender and the value of the property being mortgaged. The loan amount is typically a percentage of the property value.
 

The TPA and its various provisions play an important role in LAP. The lender must ensure that the transfer of the property is legal and valid under the TPA. Section 58 of the TPA outlines the legal requirements for creating a mortgage and defines the rights and duties of the mortgagor and the mortgagee. Borrowers need to understand the TPA and its provisions when considering LAP financing.
 

What Are the Seller's Responsibilities During Transfer of Property?

Section 54 of the Transfer of Property Act defines a sale as the transfer of property ownership in exchange for a promised or paid sum. The Act also outlines the seller's obligations during the property transfer process, which include:

1. Providing all title documents to the buyer upon request for inspection.

2. Disclosing any significant defects in the property to the buyer.

3. Maintaining the property and all relevant documents with the same care as an owner between the contract's date of sale and the handover of the property.

4. Clearing all encumbrances on the property at the time of the sale.

5. Granting the buyer full possession of the property.

6. Answering all relevant inquiries about the property's title to the best of their knowledge.

7. Paying all rent and public charges for the property up to the sale date.

8. Completing the property transfer process at the location and time agreed upon by the buyer, upon payment of the agreed sum.

What Are the Buyer's Responsibilities During Transfer of Property?

As per the Transfer of Property Act, the buyer also has obligations during the property transfer process, which are as follows:

1. The buyer must disclose any information related to the property that the seller may not be aware of.

2. Once the buyer takes possession of the property, any damages or losses that occur are their responsibility.

3. The buyer must provide the purchase money to the seller at the time of sale completion.

4. The buyer must pay off any outstanding debts related to the property, including rent and other public charges, after gaining possession of the property.
    

The purpose of the Transfer of Property Act is to simplify the process of property transfer and make it easily understandable for all parties involved. Over time, the Act has been amended to improve its effectiveness.
 

What is Loan Against Property (LAP)?

LAP is a type of secured loan secured by self-employed and business owners who put a mortgage on their property as collateral. Customers can borrow a larger sum as compared to other loan types because the property serving as collateral is either commercial or residential property.

Advantages of LAP

LAP offers several advantages to the borrower. Some of these are:

• LAP offers lower interest rates since the property is being used as collateral. It also indicates that you can take advantage of lower EMIs.

• It is quite easy to obtain with a trusted lending institution such as Hero FinCorp. We ensure a fast approval process so that the complete procedure is hassle-free.

• It also offers long tenure. For example- Hero FinCorp offers a maximum period of 10 years.

• With LAP, you can secure a large amount of loans that can be used for several purposes.

Eligibility criteria of LAP

If you are considering applying for a LAP, choose Hero FinCorp for the most trustable services and added advantages. Let’s look at the key eligibility criteria. The Loan Against Property eligibility include:

• You must be an Indian national

• You must be at least 25 years of age at the time of application and not older than 75 years at the end of the loan term

• You must have a profitable business. (Salaried individuals are not eligible for the Hero FinCorp LAP program)

• Your business must be active for at least three consecutive years.

Conclusion

TPA and LAP are two essential legal and financial concepts. TPA governs the transfer of property rights and ownership, ensuring that transactions are legally valid and transparent. On the other hand, LAP is a popular loan product that enables property owners to leverage the value of their property to secure loans for various purposes.
 

For property owners in India, having a good understanding of both TPA and LAP is essential to make informed decisions regarding property ownership, transfer, and financing. By complying with TPA regulations and using LAP wisely, property owners can maximise the value of their assets and achieve their financial goals while minimising legal and financial risks.
 

If you are a business owner or self-employed individual looking for capital, consider LAP from Hero FinCorp for the best interest rates, loan amounts, and a hassle-free quick approval process.