Buyers

Rights and
Liabilities
Bharat Vijay P
6th Semester
847

Who is a Buyer?
Buyer

is the person who gives

consideration for the transfer of
property to his name in a sale of
property. He is the transferee. He is
the vendee.
The Buyer has some Rights in sale
as well as liabilities.

Liability 1: Section 55 (5)(a)

The buyer is bound-to disclose to
the seller any fact as to the nature
or extent of the seller's interest in
the property of which the buyer is
aware, but of which he has reason
to believe that the seller is not
aware,
and
which
materially
increases the value of such
interest;

For

example, the buyer may have

to disclose to a woman selling her
property that she is the absolute
owner and not a limited owner. But
he need not disclose to her that
there is a mine in the property
because the buyers duty only
relates to facts concerning title.

Liability 2:Section 55 (5)(b)

Its

the buyers duty to pay or

tender, at the time and place of
completing the sale, the purchasemoney to the seller or such person
as he directs:

 PROVIDED

that, where the property

is sold free from encumbrances,
the buyer may retain out of the
purchase-money the amount of
any encumbrances on the property
existing at the date of the sale, and
shall pay the amount so retained to
the persons entitled thereto;

 Where

money is retained by the

purchaser to pay off an encumbrance
the section provides that he shall pay
the amount so retained to the persons
entitled thereto.
But there may be circumstances where
there is no such obligation to pay the
amount retained to the vendor.
This can be seen in the case of Mohd.
Siddiq v Muhammad Nasirullah (1898)
21 All 223 (PC)

Mohd. Siddiq v Muhammad

Nasirullah (1898) 21 All 223
(PC)
Part

of purchase price retained by

vendee (buyer) in order to pay off
an encumbrance.
Encumbrance was not paid off and
was larger than the amount
retained.
Suit by vendor to recover the
amount retained with interest.

Held The

security is meant to make the

property free from encumbrances so as
to get a good title.
Vendee to retain the security, until
vendor provides the rest of the money
necessary.
Interest not to be given unless vendee
refused to or omitted to pay the money
when they were informed by the vendor
that he was prepared to pay the balance
necessary to satisfy what was due to
the mortgagee.

 When

the purchaser retains the

encumbrance money, the mortgagee
can sue him to recover the amount, as
the purchaser is under statutory duty
(shall pay) to pay the amount to the
mortgagee . The mortgagee can also
sue the vendor in which case the vendor
can sue the purchaser.

Liability 3: Section 55 (5)

(c)
where

the ownership of the property

has passed to the buyer, to bear any
loss arising from the destruction, injury
or decrease in value of the property not
caused by the seller;
This clause deals with the buyers
liability to bear any loss caused to the
property after completion of sale.

 After

the completion of the sale, the

buyer becomes the absolute owner of
the property and has to bear anything
that happens to the property that is not
caused due to the seller.
For example, A buys a property for a
certain amount of money, but the land
becomes flood prone due to construction
of high roads nearby and hence the
property suffers reduction in its value.
The liability is on the buyer and has
nothing to do with the seller.

Liability 4: Section 55 (5)(d)

o
o
o

where the ownership of the property has passed

to the buyer, as between himself and the seller,
to pay all public charges and rent which may
become payable in respect of the property,
the principal moneys due on any encumbrances
subject to which the property is sold,
and the interest thereon afterwards accruing due.

 This

section also highlights the buyers duties on

becoming the absolute owner after completion of
the sale.
He will have to fulfill his social duties and
responsibilities that comes with being the owner
of the property.
He will have to pay tax, rent, mortgage (if any)
and interest. The seller has relinquished all his
rights and duties on the property.
He will also become responsible for any tortious
liability that may arise out of how he takes care
of the property.

Right 1: Section 55 (6)(a)

The

buyer is entitled, when the

ownership of the property has
passed to him, to the benefit of
any improvement in, or increase in
value of, the property, and to the
rents and profits thereof;

Izzat-un-Nizza Begum v. Kunwar

Pratap Singh (1909) LR 36 IA 203
Property

sold subject to two mortgages.

Purchaser retained money to pay off
mortgages.
After sale, mortgages declared invalid.
Vendor sued for the unpaid purchase
money.

Held On

the sale of property subject to

encumbrances the vendor gets the price of his
interest, whatever it may be.
A covenant to pay the encumbrances is
nothing more than a contract of indemnity.
When the encumbrances becomes invalid, the
vendor has nothing to complain about. His
indemnity is complete.
The notion that the purchaser is a trustee for
the amount left over after paying off an
encumbrances and is liable to the vendee pay
back the balance money is without foundation.

 After

the purchase is complete, the vendor

has no claim to participate in any benefit
which the purchaser may derive from the
purchase.
If, however, the property is sold free from
encumbrances, the vendee retains the
vendors money to pay off the encumbrance,
and hence, the vendee is an agent of the
vendor and accountable to him for any
surplus.

Right 2: Section 55 (6)(b)

The buyer is entitled, unless he has improperly
declined to accept delivery of the property, to a
charge on the property, as against the seller
and all persons claiming under him, to the
extent of the seller's interest in the property,
for the amount of any purchase-money properly
paid by the buyer in anticipation of the delivery
and for interest on such amount; and, when he
properly declines to accept the delivery, also
for the earnest (if any) and for the costs (if any)
awarded to him of a suit to compel specific
performance of the contract or to obtain a
decree for its rescission.

 The

buyer is entitled to a charge on the

property, i.e. when he has paid the
purchase price and the seller hasnt given
him the document giving the purchaser
ownership.
Sometimes when the buyer has already
given an advance on the property but
when the seller comes for delivery, the
buyer might not have the full sum to pay
off the seller. This is improperly declining
to accept deliver. This sections says that,
such a buyer is not entitled to a charge on
the property.

 When

the seller and the buyer are not

ready (for ex.: when they are not ready
with the documents) for the delivery, this
situation is known as properly declining of
delivery. In this case and all other cases
except for the one in the previous point,
the buyer is entitled to the charge.
But when properly declined, he is also
entitled to the recovery of earnest
money( earnest money signifies that
parties are in earnest or have made up
their minds; represents a guarantee that
the contract will be fulfilled) and all other
costs awarded in the suit of specific
performance.

Thank You