Gift deed in India: An Overview
Agreement & Contract

Gift deed in India: An Overview

A Gift Deed is a legal document that transfers the ownership of a property or asset from one person to another without any exchange of money. It is an instrument of transfer of property that is commonly used in India to gift property to family members or close relatives. In this blog, we will discuss the validity and structure of a gift deed in India.

Validity of a gift deed

To be legally valid, a gift deed must fulfill certain legal requirements. These requirements are outlined in the Transfer of Property Act, 1882 and the Indian Registration Act, 1908. The key requirements for a gift deed to be valid are:

Competency of parties

The donor and the donee must be competent to enter into a gift deed. This means that they must be of sound mind, not minors, and should have the legal capacity to transfer and receive property.

Free consent

The gift must be made by the donor out of his or her free consent. This means that the donor should not be under any undue influence or coercion and should fully understand the implications of the gift.

Acceptance

The gift must be accepted by the donee. Acceptance can be express or implied, but it must be made during the lifetime of the donor.

Delivery

The gift must be delivered by the donor to the donee. Delivery can be physical, constructive, or symbolic, but it must be unconditional and irrevocable.

Registration

The gift deed must be registered with the Sub-Registrar of Assurances in the jurisdiction where the property is located. This is a mandatory requirement under Section 17 of the Indian Registration Act, 1908, and failure to register the gift deed can render it invalid.

 

Structure of a gift deed

The gift deed must be drafted in a specific format and must contain certain essential elements. These include:

a) Title

    The gift deed should have a clear and concise title that reflects the purpose of the document. This can be "Gift Deed" or "Deed of Gift".

b) Introduction

The introduction of the gift deed should include the names and addresses of the donor and the donee, as well as a brief description of the property being gifted.

c) Recitals

The recitals of the gift deed should provide the context and background of the gift. This can include the reason for the gift, the relationship between the donor and the donee, and any other relevant details.

d) Operative clause

The operative clause of the gift deed is the section that actually transfers the property from the donor to the donee. This should be clearly worded and should specify the nature and extent of the property being gifted.

e) Consideration

The gift deed should explicitly state that no consideration has been exchanged between the donor and the donee. This is a key requirement for a gift deed to be valid, as any exchange of money or other consideration would render the gift deed void.

f) Covenants

The covenants of the gift deed are the promises made by the donor and the donee. These can include promises to maintain the property, pay taxes, or otherwise fulfill the obligations associated with ownership of the property.

g) Registration details

The gift deed should include the details of the registration, including the date and time of registration, the Sub-Registrar of Assurances, and the registration number.

h) Signatures

Finally, the gift deed should be signed by the donor and the donee, as well as two witnesses. The signatures should be witnessed by an authorized person, and the gift deed should also include the date of signing. In India, a gift deed is a legal way to give someone else your property. It can also help you save money on taxes. If you gift your property to close family members, you don't have to pay tax on it. The law, specifically the Indian Income Tax Act, 1961, has a list of family members you can gift to without paying tax. This list includes your parents, spouse, siblings, kids, and direct ancestors and descendants. If you give your property to any of these family members, it counts as tax-free income. So, using a gift deed can help you save money, especially if your property's value has increased a lot over time. Without a gift deed, if you sell such a property, you might have to pay a lot of money as capital gains tax. 

 

How to transfer property after death of spouse?
Property

How to transfer property after death of spouse?

One of the spouses, particularly the woman, is very uninformed about handling the finances and estate-related issues. As a result, if neither spouse is aware of the transfer of the deeds, they risk losing their rights to the property to their heirs following the death of either spouse. People frequently lack knowledge of the legal intricacies since India's real estate and property concerns are somewhat complicated. A person's property may be either inherited or obtained via the use of one particular resource. The property gained through a sale deed is the property bought by the person investing his own earned resources, as opposed to the property acquired by inheritance, which is the property that is inherited by the legal heirs of the person. A person has the unrestricted legal right to leave acquired property to anyone or to his legitimate heirs.

Also read:  Cruelty: As A Ground For Divorce

Whenever a property is owned jointly: The couple often owns the property collectively with the right of survivorship. This is most frequent in a married couple's home. If one of the spouses passes away in this situation, the property immediately transfers into the surviving spouse's name. This is not subject to probate and doesn't call for a deed. One must determine whether the property is owned concurrently with the right of survivorship in order to secure the ownership interest in the estate. After one of the spouses passes away, the right of survivorship effectively transfers ownership. There are three types of such ownership:

  • Tenancy in common: No right of survivorship exists. His share is divided among his legal heirs when a co-owner passes away. The part of the property will pass according to the terms of the Hindu Succession Act, personal laws, or India Succession Act as appropriate, and the legal heirs of the deceased spouse will become co-owners.

  • Joint Tenancy: Property passes to the wife after the husband's death. The remaining co-owners inherit the deceased co-portion owners of the property.

  • Tenancy by the entirety: A unique type of joint tenancy known as tenancy by totality only occurs between husband and wife. In this type of ownership, neither spouse may transfer their portion of the property to a third party without the approval of the other owners. This lease may be cancelled by mutual consent, a divorce, or the passing of either spouse. Property passes to the wife after the husband's death.

Also Read:  Legal Child Custody Rights in India

The law assumes tenancy in common between the co-owners unless otherwise specified in the deed. The assumption is for tenancy by the entirety in the event of a married couple unless the deed provides otherwise. To prevent legal issues later, disclosing the kind of ownership in the title deed is always advisable.

If the deceased person signed a final will and testament: If the property is not owned jointly and one of the spouses has left a last will and testament before passing away, the property will be handled and divided in accordance with the terms of the will. A "testator" is the individual who has signed the will. However, only properties a person has purchased are included in the will's execution (sale deed). The Hindu Succession Act of 1956 stipulates that heirs up to four generations have contingent rights over ancestral property; hence it is impossible to form a will in the case of property belonging to the Hindu Undivided Family.

Property owned by a descendant but lacking a will or testament: The Hindu Succession Act, 1956 requirements will be followed if one of the spouses passes away without leaving a will or testament and the property belonged to the decedent. The legal heir or coparcener must get a no-obligation certificate from the other heirs or successors and submit it with the affidavit in the absence of a will. Any financial benefits that are given to the successor or other heirs must be disclosed in the transfer instrument. The property is divided equally between the parties on a deed of partition or Panchnama in the event that there are equal coheirs or heirs. The deed of partition is delivered to the Sub-office registrar together with a lineage list certificate (listing lawful heirs) acquired from the municipal corporation and the property document. 

After all of the documents have been verified, the registration of the land documents is passed in the name of the legal heirs. The property will now be modified as the next step. It alludes to the change in the land's title as recorded in the state's land and revenue records.

Get the WILL done: Will

NON-HINDU WIVES' PROPERTY RIGHTS FOLLOWING THEIR HUSBAND'S DEATH 

Christian Rights: Wife's Share in Husband's Property Following His Death:

Christians view the property as having been acquired on their own, regardless of how it was done, and the widow has a claim to the deceased husband's assets with any other legitimate heirs.

 

Muslim Rights: Wife's Share of Husband's Assets After His Death: 

In Islam, Muslim law also acknowledges the wife's entitlement to the deceased husband's property, which is typically one-fourth of the property in cases where there are no children and one-eighth in cases where there are. 

Also read:  Inheritance under Muslim Law

Everything You Need to Know About Property Transfer Process
Property

Everything You Need to Know About Property Transfer Process

Transferring property is the act of giving it to another individual, either now or in the future. Section 8 of the Transfer of Property Act of 1882 states that when a property is transferred, all rights associated with it are also transferred. There are several ways to transfer ownership of property in a permanent manner: 1) relinquishment, 2) sale, (3) a gift; and (4) a short-term mortgage lease, leave of absence, and licence agreement

According to Section 54, a "sale" is a deed-based transfer of ownership for a sum that has either been paid in full or pledged in part. The sale deed must be for consideration and is legally needed to be stamped and registered. Capital gains tax may be due on either long-term or short-term gains depending on how long the property was held before it was sold. The seller of the land is responsible for paying this tax; however, there are provisions in the Income Tax Act of 1961 that allow for its avoidance. When a property is still being built, there are distinct tax consequences than when you actually take possession of it. A property buyer must keep back 1% in tax and deposit it with a recognised bank. The other forms of permanent transfer are not discussed in detail here.

According to Section 105 of the Act, a lease is the stated or implied transfer of the right to use a property for a specific amount of time in exchange for payment of a price up front or a promise to provide future payments of money or other valuable items. If the lease term is more than 11 months, Section 17 of the Registration Act of 1908 requires registration of the rental agreement. In all other instances, conveyance of possession and an oral agreement are sufficient. Stamp duty and registration costs must be paid in order to complete the registration process. Whether it is a residential or commercial tenancy, the objective of the tenancy should be expressly stated in the lease deed.

Mortgage is defined in Section 58 of the Act as the transfer of ownership of a specified piece of real estate by the execution of a mortgage deed or the deposit of title deeds as collateral for a loan. The mortgagor is the owner of the property who grants the lender a lien on an immovable asset. 

A registered gift deed may be used to transfer immovable property in accordance with Section 122 of the Act. The transfer of the real estate is done willingly and without payment. According to sections 17 of the Registration Act of 1908 and 123 of the Transfer of Property Act, a gift deed must be registered with the sub-registrar in order for the transfer to be considered lawful.

 

For all these, the first step is DOCUMENTATION: it includes the filing of reports and documents and a NOC that there is no objection to the sale, lease, or transfer of property in any other form. 

REGISTRATION: Once a property has been passed in the "name" of the recipient through a relinquishment, sale, or gift deed. Additionally, it's crucial to have the transfer mutated in the municipal records. 

ADJUNCTION: The procedure for calculating a property's and piece of land's market worth begins after registration. You can determine the stamp duty that must be paid for the property with the help of this value.

WITNESS: Witnesses are required to be present during the entire process and to have a valid ID on them. The best witnesses are those whom you know well.

PERFORMING FORMALITIES: After all the processes and details are completed, the paperwork is returned to you for registration with all the Delhi property registration details. You have two options: collect it personally or authorise someone to do so on your behalf. If you have a home loan, your bank will likely manage the documents; alternatively, you can gather and deliver them to your bank.

 

DUTY PAYABLE: According to the relevant state laws, stamp duty is due on transfers. The general stamp duty you pay when selling or giving up the property may or may not be comparable to the stamp duty you pay on gift deeds. For various Indian states, it varies. 

The circle rate is the lowest price at which stamp duty is due in the context of the real estate transfer. These rates serve as a predictor of property prices in various locations. Different towns and cities in the same state have different circle rates. For instance, In Delhi, the rate is 4% when there are one or more women among the buyers, 6% when there are only men or a corporate entity, and 5% when there are both men and women. Additional 1% must be paid as registration fees. In Delhi: The Delhi Property and Land Registration Department must be paid stamp duty and registration fees when purchasing real estate in Delhi, the nation's capital. A portion of the Delhi property registration process has been made online to save time and guarantee system openness. The urban development department will soon launch a single platform that will streamline the property registration procedure in Delhi. Currently, a user must navigate through various portals to calculate stamp duty, registration fees, etc., for the registration of property in Delhi. Users will be able to access and download land records, including certified, digitally signed maps held by Delhi's land record agencies, as well as all other property-related historical and current information necessary for its registration, through the new web portal. Property owners can register their properties online in a few easy steps using the DORIS Delhi Online Registration Information System website.

In Maharashtra: Under the Maharashtra Stamp Act, stamp duty and registration fees are assessed in Maharashtra. It details the assets and instruments and the amount of Mumbai/Maharashtra stamp duty that must be deposited with the government. 

On March 23, 2022, the Maharashtra government approved a law that would waive stamp duty Maharashtra for properties that are sold after one to three years. The coronavirus pandemic has made it harder to make money on real estate sales; therefore, Maharashtra's decision to extend the waiver for a further three years was made in an effort to help. 

Planning to transfer a property? Know the process and costs involved.
Property

Planning to transfer a property? Know the process and costs involved.

 

Transferring a property. Whether you are buying a property from someone or selling it to someone, the common thing that happens in the transaction is the transfer of property ownership from one party to another. Hence, it is also imperative for us to know the process and costs involved.

 

What is transfer of property?

 

In simple words, the transfer of property rights happens:

  • either via buy or sell transaction between two parties or
  • wilful assignment of rights on a property by the owner to the person(s) of his or choice

 

Let us now understand how can the existing owner transfer rights of his or her property to someone else.

 

Before the title of the property is transferred from the existing owner to a new owner, a legal document called as the Memorandum of Understanding (MoU) needs to be signed between existing owner of property and the new owner. MoU generally includes the following details:

  • details of the existing owner of property
  • details of new owner of property
  • time period in which the property will be transferred from existing to new owner
  • amount to be paid by new owner to existing owner, if any

Also Read:  Sale Deed Drafting: Take utmost care before registry

 

What are the various types of Property Transfers?

 

Essentially a property can be transferred by its existing owner(s) to the new owner(s) in the following manner:

  • By Relinquishment Deed

This is a legal document that is signed by the existing owner of the property when he or she wilfully transfers his or her share in the property to a new owner. This happens mostly in joint ownership property cases and is a legally binding document. It is mandatory to register a relinquishment deed and pay stamp duty, taxes and registration fee of the relinquishment deed to the state government. However, the amount may vary from one state to another.

 

This is a type of document signed by the existing owner of a property where he or she wilfully transfers all the rights of the property and its associated benefits to the new owner(s). As per law, it is not mandatory to register a transfer deed or will. However, this document must be executed in the presence of two witnesses. This makes the process of property transfer by will or transfer deed the cheapest mode. But it is advisable to get the will or transfer deed registered to avoid issues of succession that may arise in the future.

 

This is a type of legal document where the existing owner of property transfers the rights of his or her own property by way of gift. Generally, the new owners are his legal heirs. There is no exchange of money involved in the process. However, it is mandatory to get a gift deed registered with the local/district sub-registrar’s office. The state government(s) charges a stamp duty for the registry of gift deeds that ranges between 1 percent to 7 percent of the property value and also depends on the state in which the property is located. Additionally, a registration fee also needs to be paid to the state government which usually ranges between 0.5 percent to 1 percent of the property value.

 

This is one type of legal document where the existing owner transfers the title of his or her property by way of a sale to the new owner. The transaction involves exchange of money between the existing owner and the new owner. It is also mandatory to register a sale deed in district sub-registrar’s office. Stamp duty, registration fee and taxes as applicable by law are paid by the new owner. However, these charges may vary from one state to the another. We have described in details about this in our other posts.

Also ReadHow to get your property valuation done to ascertain a correct market price

Note: Transfer of property is governed by provisions of the Transfer of Property Act 1882. For transferring the property, a person must be of 18 years or above in age. Additionally, the person should be a legal owner of the property that he or she wants to transfer and must possess registered documents to prove his or her ownership.

 

Any person who is 18 years of age is competent to transfer the property, provided he is the legal owner of the property with registered documents stating the same.

 

Also ReadStamp duty and registration charges are mandatory: Buyers should take utmost care on this front 

 

Why there is a need of a property lawyer?

 

Transfer of a property tends to be a complicated legal process and it is always advisable to take the help of a competent property lawyer or consultant.

 

The property lawyer is a professional:

  • who is aware of all the modalities involved in the transfer process – documentation, taxes, fees and charges, registration process, and so on
  • drafts the sale deed, transfer deed, gift deed, will or relinquishment deed, as the case may be
  • helps you in getting the appointment from the sub-registrar’s office for registry
  • assists you in executing the transfer process smoothly and within the permissible legal boundaries of the state where property is located

 

Involving a property lawyer in the property transfer process is a practical thing to do as the owner will get clarifications to queries, if any, in an unbiased manner and thus making the entire process smooth and stress free.

 

If you are planning to transfer property, you must do the right thing, right now – consult a property lawyer. Getting a right advice will ultimately make a huge difference!

When seller is not signing your property transfer papers: Deemed Conveyance is your option
Property

When seller is not signing your property transfer papers: Deemed Conveyance is your option

Conveyancing refers to the transferring of title in a property from one person to the other. You can convey your property through an instrument of deed. This instrument of deed, which is used for conveyancing or transferring property, is called a conveyance deed. A conveyance deed can be used to transfer any right, title, or interest in a property from one person to another. It includes transfers made during one’s lifetime. A conveyance deed is essential to complete transfer of purchased property.

Conveyance Deed

A Conveyance deed is a document that includes legally valid contractual terms and can be enforced in a court of law. A Conveyance Deed is a broader term and includes a sale deed within its scope. All sale deeds are conveyance deeds, but conveyance deeds include various other transfer instruments such as gifts, lease, mortgage, etc. It is important here to highlight the difference between an agreement to sell and a conveyance deed. An agreement to sell is a mere promise to sell the property and not an actual sale itself. An agreement to sell does not create any interest or charge on the property. Hence, a conveyance deed is required to complete the transfer of a property.

Not having a conveyance deed would make it difficult for you to prove that you are the legal owner of the property. In the event of any potential dispute, you would not be able to prove ownership in the absence of a written agreement. Hence, conveyance deed is important, not only to transfer the property to also to establish good title to the property.

Conveyance Deed: Meaning

The term `conveyance’ includes the transfer of property, and the term `deed’ is a written legal instrument enforceable in a court of law. Hence, a conveyance deed means a deed which is used to effect various forms of transfers. A conveyance deed is valid only when the consideration for which the property is sold is valid. Typically, a valid conveyance deed can be used as proof to show that the property is free from all encumbrances and disputes.

A valid and acceptable conveyance deed contains certain essential elements, such as:

  • The deed must confer exact boundaries of the property in order to avoid any future land disputes regarding ownership.
  • It must state that all the rights vested relating to the property have been transferred along with the transfer of the property
  • The conveyance deed must provide details in regard to the delivery and acceptance of the property.
  • It must state all terms and conditions regarding the transfer of the property.
  • It must be made on a non-judicial stamp paper and is to be signed by parties involved in the transfer.
  • It must contain the full names, addresses, and other requisites of the seller and buyer.
  •  It must state that the property is free from any disputes or encumbrances, and if this is not the case, it must mention the details of the same, if any.
  • It must be signed by at least two witnesses present and have witnessed the completion of the deal.
  • It is a mandate that it should be in writing and is to be attested.
  • It must be registered through the local registrar’s office by paying the requisite registration fee.

Deemed Conveyance: Meaning

If conveyance does not occur under a regular procedure or if the builder or developer refuses to sign the conveyance deed, then deemed conveyance may occur. Deemed Conveyance generally occurs in the transfer of an interest in residential and commercial properties.  It occurs when the builder or promoter, or developer of the project refuses to sign the conveyance deed. In such cases, the court can sign the same on behalf of the seller and record it in the government records. In the circumstance where the promoter or the owner of the building does not convey the ownership of the property, an application can be made to the Registrar of Housing Societies to transfer the ownership of the respective premises. This process of transfer so performed is through deemed conveyance and, the promoter or the owner is not required in this transfer.

Documents required for Conveyance Deed

Certain documents are required for a conveyance deed to be validly signed. Conveyance deed documents are as follows:

    • Registered agreement for sale
    • Property card
    • Siri survey plan/survey plan from the revenue department
    • Application form 7 to the district deputy registrar affixing a court fee stamp of Rs.2000
    • Details of telephone number and address of the owners
    • The plot plan approved by the local authority
    • Architect certificate
    • Certificate obtained under Urban Land Ceiling Act, 1976
    • Building plan approved by an authority
    • Completion certificate and commencement certificate
    • Occupancy certificate
    • List of owners
    • Proof of payment ( stamp duty)
    • Proof of registration
    • Agreement of sale, if executed
    • Power of attorney
    • The draft of conveyance deed
    • Mutation entries from the revenue office, form 6
    • Copy of the non-agricultural order
    • Certificate of exclusion if any
    • Proof of property tax paid
    • Search report if any
    • Certificate of property issued by an advocate, if any

Registered Conveyance deed 

A conveyance deed is typically required after the purchaser and seller have agreed to the terms and conditions of the transfer of the property. After the conveyance deed is signed, the seller is required to pay the applicable stamp duty.

It is important to register the conveyance deed. A registered conveyance deed is compulsory for getting the mutation of the property done. A registered conveyance deed would act as evidence and assurance of title in the public domain. It will prevent people from committing fraud or illegally taking over the property.

You can register your conveyance deed in three simple steps:

  • Execute the conveyance deed on a non-judicial stamp paper.
  • Present the executed deed at the registrar’s office along with the required conveyance deed documents.
  • Pay the registration fee.
  • Typically, two witnesses are required to complete the process of registration.

All original documents need to be submitted to the sub-registrar’s office within four months of the execution of the conveyance deed. The buyer is also required to intimate other authorities regarding the change in ownership.

You need to draft a conveyance deed which contains all the relevant information before you can execute and register the same. You may choose to engage a local lawyer who can guide you through the legal aspects of drafting and registering a conveyance deed.