I want to gift my daughter and son-in-law a flat on their wedding, which is currently owned by me and my wife. What will be the legal formalities for the transfer of ownership?
You and your wife may gift your interest in the flat to your daughter and son-in-law by jointly executing a gift deed in favour of your daughter and your son-in law and conveying your entire interest in the flat in their favour. At the time of conveying your right and interest in your flat to your son and daughter-in law, you would need to decide whether you would like your daughter and son-in–law to be ‘joint tenants’ or ‘tenants in common’ of the flat.
A joint tenancy exists where a single estate in property is owned by two or more persons under one instrument or by an act of the parties. Joint tenants hold a single unified interest in the entire property, i.e., they each have undivided interest in the property. In the case of tenants in common, each of the tenants in common has a distinct share and interest in the property. One of the differences between joint tenancy and tenants in common is that in case of the latter, upon the death of one of the tenants, his or her interest in the property will devolve according to the laws of succession and not by survivorship. Thus, the legal heir of the deceased tenant in common will assume all the benefits and liabilities attached to such interest.
Normally, unless the title document of a property expressly states that the owners of a particular property shall hold the same as ‘joint tenants’, it is presumed under law that the owners of the said property are ‘tenants in common’. Accordingly, if you intend to transfer the property in the joint names of your daughter and son-in law, it is advisable that you specify in the document whether they will hold it as joint tenants or as tenants in common.
The gift must be effected in the manner set out in sections 122 and 123 of the Transfer of Property Act, 1882. According to the the Act, a gift of immovable property must be effected by a registered instrument signed by or on behalf of you and your wife, and attested by at least two witnesses. The gift would have to be accepted by your daughter and son-in-law (as recipients of the gift) during your lifetime.
Stamp duty would have to be paid on the gift deed prior to its execution, as per the relevant laws of the state where the property is situated and where the gift deed is executed. In some states, the stamp duty is lower in the case of gift to a close relative.
Further, the gift deed would need to be registered within a period of 4 months from the date of execution as per the applicable provisions of the Registration Act, 1908, with the applicable sub-registrar of assurances and applicable registration charges would also be require to be paid at the time of registering the gift deed, depending upon the state in which the immovable property is situated and the deed of gift is executed.
Queries and views at firstname.lastname@example.org