Transferring property - How to go about it
My grandfather had two wives. One son (W) for first wife and three sons(X, Y, Z) for second wife. In 1970's my grandfather orally distributed all his properties among his four sons and kept some property himself. After oral partition all sons has obtained pattadhar pass books and title deed for their share of land. All of his sons except X (my father), sold away individually a part of their share. Now Y has filed suit demanding for partition, stating that no partition took place between us and we were are all jointly enjoying the property. Will this suit stand? My grandfather died in 1985. Grandmother died in 2011. My father X being the first son of second wife died in 2009. After my father’s death all the property in my father’s name (which he purchased and which he got inherited from his father) has been transferred to my mother’s name (A). My father(X) and my mother (A) had one son (B), two daughters (C & D) Now A, B, C, D (we are all married) is planning to give some property to my wife (E) and some property to myself (B).
1. Which way shall we give some property to my wife (E) (gift, settlement or any other way) to avoid further complications from my sisters and my father’s brothers?
2. Which Can my mother (A) and my two sisters(C&D) give some property to me (B) (gift, settlement, partition, release)?
3. If A, B, C, D registers a partition deed in which the whole property given to B’S share, except one house to A’S share and some nominal amount to C&D shares. Will there be any provision to C & D to approach court in future, that they got little share or low share in the family property? (As a Hindu woman or girl will have equal property rights along with other male relatives for any partition made in intestate succession after September 2005). At present my sisters are not interested in family property and are ready to give their share to me. So in which way shall I take their share to avoid further complications?
Section 7 of the Transfer of Property Act, 1882 provides that every person competent to contract i.e. a major and of sound mind or is not disqualified by law for contracting. Therefore even the interest of a co-owner or co-sharer can be sold, mortgaged, leased to another co-sharer or to a stranger. The fact that the partition has not taken place by metes and bounds does not stand in the way of the interest of a co-owner.
Thus, if it is proved by all other parties minus Y, who received a part in the share, that such an “oral division” had indeed taken place and that for so many years, none of you had any problems, then the basis for such a suit will stand dismissed in the court of law.
When it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems.
You can ask your family members to transfer you property in the following ways-
This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.
However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed.
Advantages: The biggest benefit is that there is no tax implication if you are gifting property to certain relatives However, you still have to pay stamp duty, which can vary from 1-8% for immovable property, depending on the state in which the transfer takes place. If you are gifting property to a non-relative, the stamp duty would be higher at 5-11%. You have to pay this duty even in the case of movable property. Expect to shell out 2-8% in case of relatives, and 3-8% for non-relatives. For physical shares, the stamp duty is 0.25%, but if these are in the demat form, you don't have to pay.
Limitations: Though a gift deed cannot be revoked, it can be challenged in court, coercion and fraud being the most common grounds. So, if you have been tricked into gifting property, you can take the matter to court and have the transfer reversed. It can also be challenged on the grounds that the donor was not of sound mind or a minor. You can never have a challenge-free gift deed, but consult a lawyer while drafting it so that the chances of it being challenged are minimum Also, you cannot gift a property that's held jointly.
This document is quite different from a gift deed, though the legal implications are the same. You can use this instrument if you want to transfer your rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and be registered. The stamp duty is similar to that for a gift deed. However there is no discount for relatives, nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the portion of the property that you relinquish, not on its total value. You can also use this deed to transfer movable property without registration, but it is typically used for immovable property.
Advantages: It allows seamless transfer of your share in a jointly-held property. This document is most commonly used when a person dies without leaving behind a will and all siblings end up inheriting the property. Unlike a gift deed, you can draw the relinquishment deed for monetary consideration.
Limitations: There are no tax benefits, for as per the tax laws, the term 'transfer' includes relinquishment, not gift. Hence, when you are relinquishing property for monetary consideration, it will result in capital gains for the transferor. If the consideration is less than the stamp duty value of the property, the difference between the stamp duty and the consideration will be taxed in the hands of the buyer. If you relinquish it without any consideration, the stamp duty value of the property will be its sales price.
After the 2005 amendment, daughters HAVE a compulsory right over inherited property according to section 15 of the Hindu Succession Act . In case they are not rewarded share in the property they can approach the courts and claim relief accordingly. Thus, it is advised that you ask them to sign up the relinquishment deed or the gift deed to allow any such property transfer to take place without chances of any future litigation.
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