Liabilities & Rights of the Buyer

Introduction

Section 55 of the Transfer of Property Act, 1882 also lays down the duties and rights of the buyer. These rules ensure fairness in property transactions. The buyer has obligations before and after the sale, along with certain legal protections.

Meaning / Definition

Liabilities and rights of the buyer refer to the legal duties (obligations) and legal benefits (rights) that arise in a sale of immovable property. These apply both before and after completion of the sale.

Modes or Types

Liabilities of buyer before completion of sale

Disclosure of material facts

• Buyer must disclose facts that:

  • Increase the value of the property
  • Affect the seller’s interest

• Duty arises only when:

  • Buyer knows the seller is unaware
  • The fact increases property value significantly

Payment of price

• Buyer must pay the agreed price

• Payment and execution of sale deed are usually simultaneous

• Exception:

  • If property has an encumbrance (legal burden like mortgage), buyer may:
    • Retain part of price to clear it
    • Recover excess amount from seller if needed

Liabilities of buyer after completion of sale

To bear loss

• After sale, risk passes to buyer
• Any damage or loss to property is borne by buyer

To pay outgoings

• Buyer must pay:
  • Taxes
  • Rent
  • Public charges
• Seller’s liability ends on date of sale

Rights of buyer before completion of sale

Buyer’s lien

• Buyer has a charge (right over property or money) for:

  • Advance payment
  • Interest

• If seller defaults:

  • Buyer can recover advance

• If buyer defaults:

  • Advance may be forfeited

Rights of buyer after completion of sale

Right to improvements and profits

• Buyer can:
  • Improve property
  • Enjoy increase in value
  • Receive rents and profits

Important Case Law

• Summers v. Griffith – Buyer is not bound to disclose hidden advantages of property
• Mehtab Singh v. Collector of Saharanpur – Buyer can retain price to clear encumbrances
• K.S. Vidyanandan v. Vairavan – Contract must be performed within reasonable time
• Chand Rani v. Kamal Rani – Time is not usually essential in sale of immovable property unless circumstances show otherwise

Distinction / Comparison

Before vs After sale

• Before sale → buyer has limited rights (like lien)
• After sale → buyer becomes owner and bears risk

Default by buyer vs seller

• Seller’s default → buyer can recover advance
• Buyer’s default → advance may be forfeited

Practical Example

A agrees to buy property from B and pays an advance. If B refuses to complete the sale, A can recover the advance amount with interest using buyer’s lien.

Summary

• Buyer must disclose important facts affecting value
• Buyer must pay price, subject to adjustment for encumbrances
• After sale, buyer bears risk and pays charges
• Buyer has lien for advance paid before sale
• Buyer can recover advance if seller defaults
• After sale, buyer can improve property and enjoy profits