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A transfers ownership of land to B by a registered sale deed. The price is payable in one year. B fails…

Section 54 of the Transfer of Property Act, 1882 permits a sale for a price paid, promised or partly paid and partly promised. Once ownership has passed, subsequent…

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A transfers ownership of land to B by a registered sale deed. The price is payable in one year. B fails to pay when it falls due. What is the effect of that nonpayment on the sale?

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Answer and explanation

Correct answer B

Section 54 of the Transfer of Property Act, 1882 permits a sale for a price paid, promised or partly paid and partly promised. Once ownership has passed, subsequent nonpayment alone does not invalidate the sale. In the absence of a contract to the contrary, section 55(4)(b) gives the unpaid seller a charge for unpaid purchase money and interest from delivery of possession against the buyer, a transferee without consideration, or a transferee with notice of the nonpayment.

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Option A

Once ownership passes under a sale for a promised price, subsequent nonpayment alone does not make the sale voidable.

Option B

Section 54 permits a sale for a promised price. Nonpayment alone does not invalidate a completed sale.

Option C

A promised price is sufficient consideration for a completed sale under section 54.

Option D

Nonpayment does not create a usufructuary mortgage. Section 55(4)(b) instead provides for a seller’s charge in the circumstances it specifies.

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