Gifting Property: Finding What are the Legal Ways to Transfer your Property to Your Loved Ones?

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Property has always been a very attractive asset for everyone in India. It is the preferred asset when people think of investment and consider it as an asset with appreciating financial value. In case you are willing to transfer property to your loved ones, there are many ways to do that legally. Under the Indian law there are various options available whether you want to pass down the ancestral gifting property to your loved one for financial security of their future, various property transfer options are available. Understanding the legal avenues available for property transfer is important as choosing the wrong methods can result in undesirable outcomes, incurring additional tax or potential delays in transfer of the property. In this comprehensive article we examine the popular ways to transfer property to loved ones while ensuring compliance with applicable laws and regulations.

Understanding the Legal Landscape of Property Transfer

Before we start exploring the popular methods of property transfer, let us take a look at legal aspects involved in property transfer. The transfer of the ownership from one property holder to another goes through complex legal procedure. In India the Transfer of Property Act 1882 governs the property transactions. This law outlines the detailed guidelines on what counts as a transfer and the conditions that must be met.

Property Ownership Rights:

India is a vast country and property ownership rights differ as per jurisdiction. There are different ways in which property can be owned, however, some the most common type ownership are listed below

Fee Simple Ownership: It is a type of ownership that gives complete control to the owner over the property they can, they have complete right to sell, lease, and rent or transfer the property.

Co-Ownership: In this type of ownership, the property is jointly owned by multiple parties, hence, it is popularly known as shared ownership. The distribution of the property can be equal or can be a distinct portion of property.

Leasehold Ownership: This type of ownership is executed through a lease agreement where the owner of the property agrees to grant access to the property to another party for certain years.

Clarity in Gifting Property Documentation:

Documentation is the most important part of the property transfer, it is important to have clarity in documentation, meet legal requirements and complete necessary registration. One should get deeds, titles, leases, and other legal instruments that define ownership, usage rights, properly any lapses in documentation will lead to confusion and dispute resulting in financial losses or loss of property rights.

Tax Implications: 

While transferring property one should consider tax implications, as different methods of property transfer have varying tax liabilities based on the method used. The tax consequences like capital gains tax, stamp duty, and gift tax will depend on the method used in transferring properties.

Legal Options Available For Property Transfer in India

There are various legal options available for property transfer in India from straight forward sales deed to gift deed for loved ones. Some of the most popular property transfer options are  

• Sale Deed
• Gift Deed 
• Relinquishment Deed 
• Partition Deed or Settlement Deed.
• An inheritance or Will Deed.

Sale Deed: The most popular legal option of property transfer in India is thorough sales deed. Sales deed is a legal document that allows the owner to sell the property to another party. This document serves as proof of sale from one party to another party. This is the most important document in a sale transaction of property, a sale is not considered to complete until the sales deed is not registered. The sales deed included important details such as

• Details of the Parties Involved (Buyer & Seller)
• Conditions of Sale (Price/Advance Payment etc.)
• Details of the Property
• Indemnity & Encumbrance Clause
• Delivery & Possession of the Property

Key Advantages Offered: 

• A sales deed is a legal binding on involved parties, hence, it safeguard the rights of both buyer and seller
• It ensures smooth transfer of property.
• The property transaction gets stamped and recorded through sales deed
• Sales Deed document clearly outlines all the rights and responsibilities of the transferee (buyer) and transferor (seller).

To confirm the ownership transfer the buyer and seller has to sign a transfer deed. After the transfer deed is executed it will be confirmed that the property has been transferred to its legitimate owner.

Gift Deed: The gift deed is another way to transfer property to your loved ones. Under the gift deed the donor willingly transfers the property ownership to the donee, without expecting money in exchange. Gift deed is irrevocable and a voluntary act from the donor and donee is not expected to pay anything in return. 

1. The gift deed holds certain advantages in property transfer, as some jurisdictions may allow tax exemption on gift deeds. 
2. The ownership transfer can be done within the lifetime. 
3. The ownership transfer is instant with gift deed
4. Since gift deeds are documented, it is a good way to avoid future disputes and conflicts.

Relinquishment Deed: A Relinquishment Deed is a legal instrument which is used in property related matters. This legal instrument can be used in cases where a co-owner is involved in the act of giving up his or her share in an immovable property. Relinquishment deed is one of the legal ways to transfer and give up share in an immovable property by the co-owner. This deed is volunteer in nature like the gift deed. For a relinquishment deed to be legally recognized it must be in compliance with Section 17 of the Registration Act, 1908.

Key Advantages Offered

Simplifying Ownership: This deed is a legal solution to the complexities created by joint ownership.

Preventing Future Disputes: This legal document helps in providing clarity related to ownership, hence, it acts as a safeguard against property disputes.

Property Succession: This deed helps families to plan successors of the property in an organized way avoiding any family dispute.

Legal Clarity: Having a legal clarity in property matters is of utmost importance, a registered relinquishment deed clearly outlines the ownership details and serves as proof of relinquishment

Partition Deed or Settlement Deed: Partition or Settlement deed comes into picture when property transfer needs to occur in jointly held property. Registration of partition deed is a legal procedure to authenticate the ownership of each co-owner and legitimize the transfer of shares/portion of the jointly held property. Registering the property with the sub-registrar is mandatory as per the provision of the Registration Act 1908.

Key Advantages Offered:

Simply Ownership: Just like relinquishment deed partition deed also simplify ownership and resolve complexities of joint ownership.

Mutual Consent: The partition deed is executed with mutual consent of co-owners, hence, helps in preventing any future disputes.

Equitable Division: The partition deed aims to make equitable division of the property among the co-owners. The co-owners will become the rightful owners of their share once the deed is executed successfully.

An inheritance or Will Deed: A Will Deed is popularly known as Will, it is a legal document that helps in succession planning. Through this deed the transfer of property takes place as per the will of the testator among the legal heirs. A Will deed is a crucial document in testamentary succession, it helps in avoiding any potential family dispute.

Key Advantages Offered

A will deed offer several benefits and some major benefits are listed below

• A will deed helps in planned succession
• It provides legal clarity and avoid any confusion
• It can help in protecting the right in case the heir is a minor
• A will deed helps in avoiding any potential dispute among family members
• It saves the surviving members from legal complications.
• It gives testator the freedom to distribute the assets as per the wish
• A will deed reduces stress and brings peace of mind
• Takes effect after the death of testator or as per the conditions

Once registered with competent authorities it becomes legal binding on surviving members of the deceased. Allowing the rightful heir to inherit the property of the ascendant as per the clause mentioned in the will deed,

Conclusion: There are various ways to transfer property to the loved ones, however, it is equally important to understand the legal aspects associated with the property transfer. You also need to consider the tax implications, it is always advisable to take help from a legal expert and tax planner to avoid serious consequences due to lack of knowledge and awareness. Insaaf99 is online digital platform where you can easily consult with the best property lawyer to guide in property transfer related matters.

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