S.55 is the most detailed section in the TPA on sale. It enumerates the rights and duties of both seller and buyer in two stages: (a) BEFORE completion of sale, and (b) AFTER completion. These duties are implied by law they apply even if the sale deed is silent on them.
Legal Framework
| Provision | Subject |
|---|---|
| S.55(1)(a)-(g) | Seller's duties/liabilities |
| S.55(2)-(6) | Buyer's duties/liabilities |
| S.55(1)(a) | Seller's duty to disclose material defects |
| S.55(1)(b) | Produce documents of title |
| S.55(1)(c) | Answer questions about title |
| S.55(1)(d) | Execute proper conveyance |
| S.55(1)(f) | Give possession |
| S.55(4)(a) | Buyer's duty to disclose facts materially increasing value |
| S.55(6) | Buyer's liability to pay charges after ownership vests |
Seller's Rights and Liabilities (S.55(1))
Before Completion
| Duty/Right | S.55 Clause | Content |
|---|---|---|
| Disclose material defects | S.55(1)(a) | Must disclose defects in property or title NOT within buyer's knowledge and which buyer could not discover with ordinary care |
| Disclose latent defects | S.55(1)(a) | Defects not apparent on inspection (e.g., underground drainage defect, disputed boundary, pending litigation) |
| Produce title documents | S.55(1)(b) | Must produce all documents of title in his possession or power for buyer's examination |
| Answer questions on title | S.55(1)(c) | Must answer relevant questions truthfully |
| Execute proper conveyance | S.55(1)(d) | At buyer's cost, execute a proper conveyance deed as buyer reasonably requires |
| Take care between contract and conveyance | S.55(1)(e) | Must take reasonable care of property (and documents) between contract date and delivery |
| Give possession | S.55(1)(f) | Must give possession on delivery of conveyance deed |
| Covenant on title (implied) | S.55(2) | Implied covenant that seller has right to sell and shall put buyer in possession |
After Completion
| Right/Liability | Content |
|---|---|
| Right to rents/profits until ownership passes | Seller entitled to income until date of conveyance |
| Charge on property for unpaid price | If price remains unpaid, seller has a charge (lien) on the property (S.55(4)(b)) |
| Liability for pre-existing encumbrances not disclosed | If seller concealed a mortgage/charge, liable to buyer for damages |
Duty to Disclose What Must vs. Must Not Be Disclosed
| Must Disclose (Seller's duty) | Need NOT Disclose |
|---|---|
| Hidden/latent defects in property (structural cracks behind plaster) | Patent defects visible on inspection (cracked wall, broken window) |
| Defects in title (pending litigation, undisclosed mortgage) | Matters of public record (registered encumbrances buyer should check) |
| Material facts affecting value (property under acquisition notice) | General market conditions |
| Rights of third parties (tenants in possession, easements) | Obvious occupants (buyer can see tenant living there) |
Why: The duty to disclose is based on good faith (uberrima fides in property transactions). The seller knows the property's history; the buyer does not. But the law does not protect a lazy buyer patent defects and matters of public record are the buyer's own responsibility to discover.
Illustrations
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Latent defect (must disclose): Arun sells his house to Bala. The house has termite infestation in the foundation beams invisible without breaking the floor. Arun knows about it (he treated it 2 years ago, treatment failed). Arun does not tell Bala. Under S.55(1)(a), this is a material defect NOT within buyer's knowledge and not discoverable with ordinary care. Arun has breached his duty. Bala can claim damages or rescission.
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Patent defect (no duty to disclose): Same house has a visible crack running across the living room wall. Bala inspects the house before purchase and sees the crack but buys anyway. Arun had no duty to point this out it is a patent defect. Bala cannot later claim non-disclosure.
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Seller's charge for unpaid price: Arun sells the house to Bala for Rs. 40 lakhs. Bala pays Rs. 30 lakhs at registration and promises to pay the remaining Rs. 10 lakhs within 3 months. Bala takes possession. Three months pass; Bala does not pay. Under S.55(4)(b), Arun has an implied CHARGE on the house for the unpaid Rs. 10 lakhs even without any express clause in the deed. Arun can enforce this charge like a mortgage.
Buyer's Rights and Liabilities (S.55(2)-(6))
Before Completion
| Duty/Right | S.55 Clause | Content |
|---|---|---|
| Disclose facts increasing value | S.55(4)(a) | Must disclose facts within buyer's knowledge that materially increase property value (if unknown to seller) |
| Right to inspect title deeds | S.55(1)(b) | Can demand production of all title documents |
| Right to examine and investigate title | Common law | Can make searches, enquiries at registration office |
After Completion
| Duty/Right | Content |
|---|---|
| Bear charges (S.55(6)) | All outgoings (tax, cess, maintenance) from date ownership vests |
| Entitled to benefit of improvements | Any improvement between agreement and conveyance benefits buyer |
| Entitled to rents/profits from date of ownership | Income from the date title passes belongs to buyer |
| Loss falls on buyer | After conveyance, destruction/damage is buyer's risk |
Illustration
- Buyer's duty to disclose (rare, but exists): Govind agrees to buy a plot from Hari for Rs. 10 lakhs. Govind knows (from his job in the Collector's office) that the government is about to announce a highway through this area, which will multiply land prices 5x. Hari does not know this. Under S.55(4)(a), Govind must disclose this fact. If Govind conceals it and buys at Rs. 10 lakhs, Hari can seek rescission (the concealment materially affected Hari's decision to sell at that price).
Recall Check
- Under S.55(1)(a), what types of defects must a seller disclose?
- What implied lien does an unpaid seller have under S.55(4)(b)?
- Does the buyer have any disclosure obligations under S.55?
Key Cases
Bishan Chand v. Radha Kishan (1982) Bishan-Chand-v-Radha-Kishan-1982 Issue: Whether a seller's failure to disclose a pending litigation concerning the property constitutes breach of duty under S.55(1)(a). Rule: Pending litigation affecting title is a material fact that the seller must disclose. The buyer cannot be expected to search court records of every court to discover pending suits. Held: The seller's non-disclosure of a suit for specific performance filed by a third party was a breach of S.55(1)(a). The buyer was entitled to rescission and refund.
Distinctions
| Basis | Seller's Duty to Disclose (S.55(1)(a)) | Buyer's Duty to Disclose (S.55(4)(a)) |
|---|---|---|
| What must be disclosed | Defects in property/title reducing value | Facts materially INCREASING value |
| Direction of information | Seller knows more about property | Buyer knows more about external circumstances |
| Frequency | Very common (seller always has information advantage) | Rare (buyer rarely knows more than seller) |
| Example | Hidden structural defect; pending litigation | Government highway announcement increasing value |
| Breach consequence | Buyer can rescind or claim damages | Seller can rescind or claim damages |
| Basis | Implied Covenants (S.55) | Express Covenants (in sale deed) |
|---|---|---|
| Source | Statute (implied by law) | Agreement of parties |
| Apply when | Always (unless excluded by express terms) | Only as agreed |
| Can be excluded | Yes, by express contrary intention in deed | N/A |
| Examples | Disclose defects; execute conveyance; give possession | "Seller warrants no encumbrances for 12 years" |
| Standard | Minimum duties imposed by law | Parties may set higher or different duties |
Flashcards
Q: What is the seller's duty under S.55(1)(a)? A: Disclose material defects in the property or title that are (a) known to seller, (b) not known to buyer, and (c) not discoverable by buyer with ordinary care.
Q: What is the implied lien of an unpaid seller? A: Under S.55(4)(b), where purchase money remains unpaid, the seller has a charge (lien) on the property for the unpaid amount, even without express agreement.
Q: Must a seller disclose patent defects? A: No. Patent defects (visible on inspection) need not be disclosed. The buyer is expected to discover them through ordinary inspection.
Q: When does the buyer become liable for outgoings (taxes, maintenance)? A: From the date ownership vests (S.55(6)) typically the date of registration of the sale deed.
Q: Does the buyer have any disclosure duty? A: Yes (rare). Under S.55(4)(a), buyer must disclose facts within their knowledge that materially INCREASE the property's value, if unknown to seller.
Q: What is the difference between latent and patent defects? A: Latent: hidden, not discoverable by ordinary inspection (must disclose). Patent: visible, apparent on inspection (no duty to disclose).
Exam Scenario
A agrees to sell his flat to B for Rs. 60 lakhs. Before completion, A discovers that the municipal corporation has issued a notice of demolition for unauthorised construction on the top floor. A does not inform B. The sale is completed. B later receives the demolition notice. Advise B.
Approach: (1) A demolition notice from the municipal corporation for unauthorised construction is a material defect in title/property. (2) Under S.55(1)(a), A was bound to disclose this to B it is not discoverable by ordinary inspection (notices may be served only on the owner), and it materially affects the property's value and usability. (3) A's concealment is a breach of the implied duty under S.55(1)(a). (4) B's remedies: (a) Rescission of sale (restore status quo: B returns flat, A returns Rs. 60 lakhs); OR (b) Damages (difference in value between flat "as represented" and flat "with demolition liability"); OR (c) if B retains the flat, claim the cost of rectification/regularisation from A. (5) B may also claim that the sale was obtained by fraud (active concealment under S.17, ICA) and seek avoidance on that ground independently.
Problem: Anil agrees to sell his flat (valued Rs.60 lakhs) to Bipin. They execute a notarized agreement to sell and Bipin pays Rs.10 lakhs as advance. Anil hands over possession. Before the sale deed is registered, Anil sells the same flat to Chetan through a registered sale deed. Bipin files a suit for specific performance. Advise Bipin on his rights under S.54 and S.53A.