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Priyanka Parashar/Mint
Priyanka Parashar/Mint

Property transfer may be invalid if gift deed not registered

It may be noted that a will is revocable and a gift deed is irrevocable

My father sold a flat in Mumbai and gave my brother and me the proceeds, which we used to buy a bigger house taking a loan for the differential amount. The loan and hence, ownership, is in my brother’s and my sister-in-law’s names, and the third owner is my father. Now my father wants to give his share to me as a gift deed. What is the process to do so? Would a will be better than a house transfer?

—Tania

We are assuming that the new residence too is located in Mumbai; that your father’s share in the flat is a distinct share and is accordingly reflected in the title documents. You may do any one of the following to have the portion of the flat transferred in your name that is at present in the joint names of your father, brother and sister-in-law;

1. If your father wishes to transfer the house to you during his lifetime, he can inter alia do so by executing a gift deed in your favour. The gift of immovable property must be in accordance with section 122 of Transfer of Property Act, 1882 (TOPA). A gift is considered to be valid only when (i) it is made voluntarily; (ii) it is without consideration, (iii) there has been an offer by the donor; and (iv) the offer has been accepted by the donee. Thus, for the gift to be valid, your father must transfer his share of the said property voluntarily, without consideration and it must be accepted by you during his lifetime while he is still capable of giving. The transfer must be effected by a registered and stamped instrument signed by or on behalf of your father and must be attested by at least two witnesses in accordance with section 123 of TOPA. Stamp duty, payable on the gift deed, is governed by the provisions of the Maharashtra Stamp Act, 1958, since the property is situated in Mumbai. The stamp duty where the gift is being made to a daughter, will be 2% of the market value (ready reckoner value) of the property.

Please note that it is mandatory to register a gift deed with the sub-registrar of assurances as per section 17 of the Registration Act, 1908. Otherwise the transfer will be held invalid. Thus, on execution of the aforementioned document, it will have to be registered with the office of the sub-registrar of assurances within whose sub-district the whole or some portion of the property is situated, within four months of the date of execution of any of the aforementioned documents.

2. If your father wishes to transfer the house to you after his lifetime, he can do so by drawing up a will and bequeathing his portion to you.

This is assuming that personal laws applicable to your father permit him to bequeath his properties through a will. While no stamp duty is payable on the will, upon your father’s demise, a probate of the will has to be obtained and applicable court fees will have to be paid.

A will is a legal declaration of the intention of a person (testator) with respect to his property or estate, which he desires to take effect after his death. In India, the registration of wills is not compulsory even if it relates to immoveable property. Non-registration of a will does not lead to any inference against the genuineness of a will. A will is to be registered with the applicable registrar/sub-registrar of assurances, with a nominal registration fee. Once the scrutiny of the will is done by the registrar/sub-registrar and he is satisfied with all the documents, then the registrar/sub-registrar will make an entry in the register book by writing year, month, day and hour of such presentation of the will and issue a certified copy to the testator. The testator of the will as well as the attesting witnesses have to put their signatures and thumb impressions in the register maintained by the sub-registrar. Once a will is registered, it is placed in the safe custody of the registrar and cannot be tampered with, destroyed, mutilated or stolen.

With respect to your query, it may be noted that a will is revocable and a gift deed is irrevocable. This means that in case of a will, if your father changes his mind in the future, he can execute a new will rendering the old will invalid. Thus, a will can be altered any number of times by the testator, including cancellation. Further, a will could be challenged thus delaying the transfer of ownership in the property concerned. However, once a gift deed is executed, it cannot be revoked under any circumstances.

A gift deed needs to be stamped and registered only then it is effective. In case of a will, no stamp duty is required and registration is optional. However, after the death of the testator, the beneficiary will have to procure a probate of the will.

Also, as aforementioned, if your father bequeaths his portion of the flat in a will, you will obtain the ownership of the flat upon his death. However, if he executes a gift deed, you will receive your share in the flat immediately and during the lifetime of your father.

For advice on tax implications, it is recommended that you consult a tax adviser or chartered accountant.

Queries and views at mintmoney@livemint.com

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