Sections 36-37 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
When a property is sold in the middle of a rent period, who gets the rent? And when one property is split among several owners, who can demand what the tenant owes? Sections 36 and 37 of the Transfer of Property Act, 1882 answer both questions. This article reads them as per the text of the Act consulted.
Section 36: unless a contract or local usage says otherwise, rents, annuities, pensions, dividends and other periodical payments in the nature of income are, on a transfer, treated as accruing from day to day and are apportionable between transferor and transferee, but are payable on the days appointed for payment. Section 37: when property is divided among several owners, the benefit of an obligation relating to the whole is performed for each owner in proportion to the value of his share if it can be severed without substantially increasing the burden; if not, it is performed for one owner whom they jointly designate. The obligor is not answerable until he has had reasonable notice of the severance.
Section 36: periodical payments accrue day by day
Section 36 reads: "In the absence of a contract or local usage to the contrary, all rents, annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof."
Four points follow.
- Default rule. It applies "in the absence of a contract or local usage to the contrary". A written term in the sale deed can change it.
- Covered payments. Rents, annuities, pensions, dividends and other periodical payments in the nature of income.
- Day-to-day accrual. Between the seller and the buyer, the payment is treated as earned a little each day.
- Payment day unchanged. The tenant or payer still pays on the usual day. Only the split between seller and buyer follows the days.
Example. Sanjay Verma owns a shop let to a tenant at Rs. 30,000 a month, taking a 30-day June as the period. On 11 June, Sanjay sells the shop to Preeti Nair. The sale deed is silent on rent. Under section 36, as between Sanjay and Preeti, the June rent is treated as accruing day by day: the first 10 days (Rs. 10,000) belong to Sanjay and the next 20 days (Rs. 20,000) to Preeti. The tenant pays on the usual day, and whoever receives the full amount accounts to the other. A clause in the deed on rent adjustment avoids any argument, and a legal consultation is useful when the property has several tenants.
Our earlier article on sections 8 and 9 explains that rent accruing after the transfer passes with the property. Section 36 supplies the method for splitting a period that straddles the date of transfer.
Another example fits dividends or pensions: if the right to a periodic payment is transferred mid-period, the same day-by-day split applies unless a contract or local usage differs. What counts as "local usage" is not defined in the text, so it should be checked for your area.
Section 37: obligations when property is divided
The rule
Section 37 applies when, "in consequence of transfer, property is divided and held in several shares, and thereupon the benefit of any obligation relating to the property as a whole passes from one to several owners of the property". In the absence of a contract to the contrary among the owners, the corresponding duty is performed in one of two ways.
| Situation | How the duty is performed |
|---|---|
| The duty can be severed and severance does not substantially increase the burden | In favour of each owner in proportion to the value of his share |
| The duty cannot be severed, or severance would substantially increase the burden | For the benefit of one owner jointly designated by the several owners |
The proviso
"no person on whom the burden of the obligation lies shall be answerable for failure to discharge it in manner provided by this section, unless and until he has had reasonable notice of the severance." So the person who owes the duty, such as a tenant, must be told of the split before he can be blamed for not following it.
Agricultural leases
"Nothing in this section applies to leases for agricultural purposes unless and until the State Government by notification in the Official Gazette so directs." State practice should be checked for agricultural leases.
The Act's illustrations, retold
- (a) A sells to B, C and D a house situated in a village and leased to E at an annual rent of Rs. 30 and delivery of one fat sheep. B provided half the purchase-money, and C and D one-quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7.50 to C and Rs. 7.50 to D, and must deliver the sheep according to the joint direction of B, C and D. The money can be severed by value of shares; the sheep cannot, so it goes by joint direction.
- (b) In the same case, each house in the village is bound to provide ten days' labour each year on a dyke to prevent inundation. E had agreed, as a term of his lease, to perform this work for A. B, C and D severally require E to perform the ten days' work due on account of the house of each. E is not bound to do more than ten days' work in all, according to such directions as B, C and D may join in giving.
Printing slip to note. In illustration (b) the copy consulted reads "E had agreed as a term of his lease to perform this work for A, B, C and D severally require E to perform ...". Two sentences have run together, with the full stop after "A" missing. The sense is clear from the rest of the illustration, and the official text should be checked.
The setting of these illustrations (a village, a sheep, labour on a dyke) belongs to the old text. The principle is what matters: money duties split by share value, indivisible duties go to a jointly named person, and the obligor need only do what he would have done for the whole.
Present-day example
Harpreet Singh sells a commercial plot to three buyers, Anil, Bina and Chetan, who contribute 50 per cent, 25 per cent and 25 per cent of the price. The plot is let to a tenant, Dolly Traders, at a yearly rent and with a duty to hand over one annual set of premises records to the owner. After notice of the severance, the rent is payable to Anil, Bina and Chetan in proportion to the value of their shares (half, a quarter, a quarter), and since the single set of records cannot be split, Dolly Traders delivers it as the three jointly direct. Until Dolly Traders has had reasonable notice of the split, it cannot be blamed for paying the old way.
Practical checklist
- When selling mid-period, put an adjustment clause in the deed for rent, dividends or other periodical receipts.
- If you rely on the default rule, count the days from the date of transfer.
- When buying a share of a let property with other co-buyers, agree who will receive what, and tell the tenant in writing. The rights of a buyer of a co-owner's share are in our article on section 44.
- For duties that cannot be split, agree on one person to give directions.
- Check for local usage and, for agricultural leases, any State notification.
- Keep a dated copy of the notice of severance.
Need help with rent, tenants or shared ownership?
Selling or buying a let property, or sharing it between several owners, raises practical questions about who collects and who is bound. We can walk through your deed and tenant arrangements in a legal consultation.
Key takeaways
- Under section 36, periodical payments in the nature of income accrue from day to day and are apportionable between transferor and transferee, but payable on the appointed days, unless a contract or local usage differs.
- Under section 37, a severable duty is performed for each owner in proportion to the value of his share; an unseverable one, or one whose severance increases the burden, goes to one owner jointly designated.
- The person who owes the duty is not answerable until he has had reasonable notice of the severance.
- Section 37 does not apply to agricultural leases unless the State Government so directs by notification.
- Put adjustment clauses in sale deeds and give written notice to tenants.
- Later amendments and State changes should be checked.
Read next
- Section 35: doctrine of election
- Sections 38 and 39: transfer by limited owner and right to maintenance
- Sections 8 and 9: operation of transfer, legal incidents and oral transfer
- Tax on Rental Income -- Complete Guide for Landlords
Disclaimer: Based on a publisher's print of the Transfer of Property Act, 1882 showing amendments up to the Transfer of Property (Amendment) Act, 2002 (3 of 2003), as consulted on 2 October 2026. State amendments, later amendments, stamp duty and registration charges are not covered and should be checked. This article is general information, not legal advice; check the official text before acting.