Introduction If a person is planning to rent out a property or if someone is planning to let ou...
The transfer of a property to someone can take place either for a consideration or without any consideration. Where no monetary transaction is involved in a transfer of property such a transfer is called a deed of gift. One may transfer a property to their dear ones out of pure love and affection towards them. Such a process doesn’t require any monetary consideration; however; it still goes through the whole legal process. In this article, we shall study various aspects related to making a Gift.
A gift deed is a legal document which involves the voluntary transfer of gift from the donor to someone without any monetary consideration. Such transfer of gift must be registered under the transfer of property act. The donor should be solvent and must not use this as a means to avoid paying tax. The transfer can be made to a person or an institution, and the acceptance of the gift must be made by the recipient within the lifetime of the donor.
The following properties are included with respect to a Gift:
The following details are included in a deed of gift:
The process of transferring a property goes through the following stages for a gift:
A gift deed can be drafted by a lawyer, and the deed describes what is transferred and to whom it is transferred. A gift is a contract between the one who is gifting, i.e., Donor and the recipient of the gift. It is a simultaneous and reciprocal act of giving and take. In order to constitute a valid gift, the gift should be made voluntarily by a person and without any compulsion and exchange of money.
Acceptance is also an essential legal requirement for a valid gift. After a gift is executed, the recipient of the gift must accept the gift during the lifetime of the donor failing which the gift shall be invalid. The validity of the acceptance can be determined by acts such as taking possession of the property.
The recipient of the gift of an immoveable property can’t receive a title to such gift unless it is registered. The title can only be transferred after it is attested by two witnesses during registration and post-registration as per section 123 of Transfer of Property Act.
A deed of gift can be registered under the provisions of the Registration Act, 1908. The steps followed in its registration are as follows:
Valuation of the property is done by a valuation expert of the property that is being gifted.
Thereafter stamp duty and transfer duty is paid. It varies from person to person wherein the stamp duty is slightly on the lower side for women. Stamp duty is also different from state to state and to find out the rates you can visit the official website of the state government.
A person who owns a property can gift that to some other person as per legal rule, but there is an exception to this rule where a donor or the recipient is a minor. A minor is not eligible to contract; therefore, they cannot transfer property as a gift. Where the donor of a gift is a minor, the deed shall be legally invalid.
If the recipient of a gift is a minor, a natural guardian may accept that gift on his or her behalf. A guardian may act as a manager of the property that has been gifted to the minor. In case the gift is onerous, the minor cannot be forced to oblige till he or she is a minor. As and when the minor becomes an adult, he or she may either accept the gift or may return the gift.
It is vital to know that an immoveable property that is gifted orally and is not registered is not legally valid as per section 123 of the Transfer of Property Act. Even if the gift has been delivered, but no legal paperwork has taken place, then it won’t confer any title.
In order to constitute a valid gift, there are few essentials that must be fulfilled. These include a declaration by the donor of his intention of gifting someone. There must be a clear intention on the part of the donor to make a gift.
Once a declaration of a gift is made by a donor, the recipient must properly accept the gift. In case the recipient of the gift fails to accept the gift, the gift will become invalid. Religion is not a bar for acceptance of a gift. Even a child in mother womb is also a valid recipient of a gift if he or she is born in six months after declaring the gift in that child’s favour.
The delivery of the possession of the gift is an important essential of a valid gift. The real test of such delivery takes place in order to find out who takes advantage of the gift if it is the donor or the recipient of the gift. In case the advantage is taken by the donor, such a gift shall be invalid.
There are two modes of delivery of possession, namely actual and constructive delivery. Actual delivery of a gift means where the property is physically delivered to the recipient of a gift. Only tangible property is covered under this type of delivery. Whereas constructive delivery means where there is a symbolic transfer of a property. It means that the recipient hasn’t received the delivery of the property, but the donor has facilitated in a way that amounts to the fact that the possession has been given.
A gift can be made to your dear and loved ones but with the due legal process. The main feature of the gift is that it is free and doesn’t involve any monetary consideration, however; it must be kept in mind that in a gift extra cost of stamp duty needs to be paid which may vary from state to state.
Also, Read: Gift Deed Registration: Everything you Need to Know.