(B) Transfer of immoveable propertyCentral

Section 42 of The Transfer of Property Act, 1882

Where a person transfers any immoveable property, reserving power to revoke the transfer, and subsequently transfers the property for consideration to another transferee, such transfer operates in favour of such transferee (subject to any condition attached to the exercise of the power) as a revocation of the former transfer to the extent of the power. Illustration A lets a house to B, and reserves power to revoke the lease if, in the opinion of a specified surveyor, B should make a use of it detrimental to its value. Afterwards a, thinking that such a use has been made, lets the house to C. This operates as a revocation of B's lease subject to the opinion of the surveyor as to B's use of the house having been detrimental to its value.

Summary

This rule applies when a person transfers land or buildings but keeps the legal power to cancel that transfer.
If that seller later transfers the same property to a new buyer for payment, the new transfer acts as a legal cancellation of the first transfer.
The cancellation of the first transfer is valid up to the extent of the power the seller kept, and is subject to any conditions attached to that power.

Practical examples

1Dev transfers his house to his brother Rahul, but Dev includes a clause in the contract stating he can cancel the transfer if a certified architect decides Rahul is damaging the structure. A year later, Dev believes Rahul is damaging the house and sells the house to Amit for twenty lakh rupees. This sale automatically cancels Rahul's rights, subject to the architect's formal opinion on the damage.

2Sita leases her shop to Geeta for five years, keeping the right to cancel the lease if Geeta uses it for storage. Sita later sells the shop to Rohan for ten lakh rupees. This sale operates as a cancellation of Geeta's lease, provided Geeta was indeed using the shop for storage as agreed.

FAQ

1. What is the main effect of Section 42 of The Transfer of Property Act, 1882?

Under Section 42 of the Transfer of Property Act, 1882, if a person transfers land or buildings while keeping the power to cancel that transfer, and then transfers it to someone else for payment, the new transfer automatically cancels the first one to the extent of that power.

2. Does Section 42 of the property transfer law apply to gifts made without payment?

No, Section 42 of the property transfer law requires the second transfer to be made for consideration, which means for payment or value, so it does not apply if the second transfer is a gift.

3. Are there any conditions on the automatic cancellation under Section 42 of the 1882 Act?

Yes, under Section 42 of the 1882 Act, the automatic cancellation is subject to any conditions that were originally attached to the exercise of the power to cancel the transfer.

Test yourself

Q1.Under Section 42 of the Transfer of Property Act, 1882, if a person transfers land but keeps the power to cancel it, what must occur for a subsequent transfer to act as an automatic cancellation?

Q2.If a person has the power to cancel only half of a previous land transfer, how does a subsequent sale of the entire property affect the first transfer under Section 42 of the Transfer of Property Act, 1882?

Q3.Under Section 42 of the Transfer of Property Act, 1882, if the power to cancel a transfer is subject to a condition, how is the subsequent transfer affected?

Q4.To what type of property does Section 42 of the Transfer of Property Act, 1882 apply?

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