Buying a Rented Flat in Bengaluru: The Lease, the Deposit and Section 109
Under Section 109 of the Transfer of Property Act, a buyer of a tenanted flat gets the landlord's rights and, if the tenant elects, the landlord's liabilities. The seller stays liable unless the tenant elects otherwise, arrears stay with the seller, and the lease ends only under its terms or the Act.
Some resale listings in Bengaluru come with a line that buyers skim past: "currently rented." The flat has a tenant, a monthly rent and a security deposit held by the seller. When the sale deed is registered, the tenant does not vanish. Section 109 of the Transfer of Property Act, 1882 decides what the buyer inherits: the landlord's rights, possibly the landlord's obligations, and a lease that keeps running until it is properly ended.
This guide explains how a lease travels with a sale, who owes the tenant the deposit, how a lease ends under the Act, and what to settle in the sale agreement. It is general information on a central law. State rent laws can add their own conditions, so check those with a lawyer too.
The short answer. Under Section 109, when a landlord sells a leased flat, the buyer gets all the landlord's rights and, if the tenant so elects, becomes subject to all the landlord's liabilities, unless the contract says otherwise. The seller is not released from the lease's liabilities merely by selling, unless the tenant elects to treat the buyer as liable. The buyer is not entitled to rent arrears due before the sale, and a tenant who pays the old landlord without reason to know of the sale need not pay again. The trade-off: a tenanted flat can bring rental income from day one, but you cannot simply move in; the lease must end under its terms or the law before you get vacant possession.
Does the tenant's lease survive the sale?
Yes. Section 109 assumes it does. It says: "If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it."
In plain terms, the buyer steps into the landlord's position for the flat. The rights to collect future rent and to enforce the lease's terms pass to the buyer. Whether the buyer also takes on the landlord's obligations depends on the tenant's election, which is why the next question matters.
Who refunds the tenant's security deposit after the sale?
Possibly both seller and buyer, depending on the tenant's choice. Section 109 says "the lessor shall not, by reason only of such transfer, cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him." The seller therefore stays liable to the tenant unless the tenant chooses to look to the buyer instead.
For a buyer, that creates a practical risk. If the seller keeps the deposit and the tenant later elects to treat the buyer as liable, the buyer may face the refund claim. The cleanest fix is in the sale agreement: either the seller refunds the deposit to the tenant before the sale, or the deposit amount is adjusted against the price and the buyer assumes the obligation in writing, with the tenant informed.
Can the buyer collect rent the tenant owed the seller?
No. The proviso to Section 109 says "the transferee is not entitled to arrears of rent due before the transfer." Arrears up to the sale remain a matter between the seller and the tenant.
The proviso also protects tenants who did not know about the sale: "if the lessee, not having reason to believe that such transfer has been made, pays rent to the lessor, the lessee shall not be liable to pay such rent over again to the transferee." A buyer should therefore notify the tenant of the sale promptly, in writing, with the new bank details.
If only part of the leased property is sold, the Act says the lessor, transferee and lessee may decide what proportion of the rent relates to the part transferred, and if they disagree, a court with jurisdiction over a possession suit may decide it.
| Question | Transfer of Property Act rule | What to settle in the sale |
|---|---|---|
| Does the lease continue? | Buyer gets all the landlord's rights under Section 109, absent a contract to the contrary | Get a copy of the lease and confirm its term and rent |
| Who owes the deposit? | Seller stays liable unless the tenant elects to treat the buyer as liable | Refund before sale, or adjust against price with a written assumption |
| Rent arrears before sale | Buyer is not entitled to them | Seller collects or writes off arrears; record it |
| Rent paid to seller after sale | Tenant unaware of the sale need not pay again | Notify the tenant in writing on the sale date |
| Monthly lease without written terms | Section 106 deems it month to month, ended by 15 days' written notice | Check whether a written lease or local law says otherwise |
How does a lease end so the buyer can move in?
Under its terms or under Section 111. That section lists the ways a lease of immovable property determines, including "by efflux of the time limited thereby," by express or implied surrender, by forfeiture in specified cases after written notice, and "on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other."
Where there is no written contract or local law or usage to the contrary, Section 106(1) says a lease for purposes other than agriculture or manufacturing "shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice." Section 106(4) requires the notice to be in writing, signed, and sent by post or delivered or tendered personally, or, if that is not practicable, affixed to a conspicuous part of the property.
Section 107 adds that a lease "from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument." Ask the seller whether the lease was registered and what term it carries. State rent legislation may also govern eviction and notice, so take advice before counting on a move-in date.
Two smaller rules can trip up a new owner. Section 112 says a forfeiture under Section 111(g) "is waived by acceptance of rent which has become due since the forfeiture," or by any other act showing an intention to treat the lease as subsisting, provided the lessor knows of the forfeiture; rent accepted after a suit to eject on that ground is filed is not a waiver. And Section 111(d) says a lease ends when the interests of lessee and lessor in the whole property vest in one person in the same right, which is what happens when a sitting tenant buys the flat.
What should a Bengaluru buyer check before buying a tenanted flat?
The lease, the deposit and the tenant's plans. Our report on a tenant buying the flat they rent covers the reverse situation, and our explainer on where RERA's protections stop, including for tenants covers what that law does not reach. Then work through this list:
- Get a copy of the lease and note its term, rent, notice clause and whether it is registered.
- Confirm the security deposit amount with both seller and tenant, and agree in writing who will refund it.
- Ask whether any rent is in arrears, and record that arrears up to the sale stay with the seller.
- Agree in the sale agreement whether the sale is with the tenant in place or with vacant possession.
- If you need vacant possession, make it a condition and tie the final payment to it.
- Notify the tenant in writing on the sale date, with your bank details for future rent.
- Check with a lawyer whether any state rent law adds conditions on notice or eviction.
Can the sale agreement change these rules?
Partly, between seller and buyer. Section 109 applies "in the absence of a contract to the contrary," so the seller and buyer can agree how they split rights and obligations between themselves. But the tenant is not a party to that contract, and some of Section 109's protections are written in the tenant's favour, such as the right to elect whom to hold liable and the protection for rent paid without notice of the sale. Take advice before relying on a clause that tries to shift them.
The safest approach is a three-way understanding: the seller, the buyer and the tenant all know the date of sale, the deposit position and who collects rent from when.
Frequently asked questions
Does a tenant have to leave when a flat is sold?
Not because of the sale alone. Section 109 of the Transfer of Property Act gives the buyer all of the landlord's rights under the lease, absent a contract to the contrary. The lease continues until it ends under its own terms or under Section 111, for example by expiry or a valid notice to quit.
Who refunds the tenant's deposit after the sale?
Section 109 says the seller does not stop being subject to the lease's liabilities merely by selling, unless the tenant elects to treat the buyer as liable. The buyer may become liable if the tenant so elects, so settle the deposit refund or adjustment in the sale agreement.
Can the buyer claim rent arrears owed to the seller?
No. The proviso to Section 109 says the transferee is not entitled to arrears of rent due before the transfer. It also says a tenant who pays rent to the old landlord without reason to believe the sale has happened need not pay that rent again to the buyer.
How much notice ends a monthly residential lease?
Under Section 106, absent a written contract or local law or usage to the contrary, a non-agricultural, non-manufacturing lease is deemed month to month and terminable by fifteen days' written notice. State rent laws may set other conditions, so check them before relying on this.
This article explains provisions of the Transfer of Property Act, 1882 for information only and is not legal advice. State rent laws may also apply to tenancies in Bengaluru.
Last updated 2026-11-10. PropNewz Team.
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