Blog Article

Everyone likes to give gifts to their loved ones. But there are some legal implications in gifting which is not known by all of us. A gift is a transfer of property for the token of love and affection to our loved ones. Only a person who is the legal owner of a property can gift the property. There are many ways to transfer the property such as – by sale, will or gift. But the ideal way of transferring the property is by executing a gift deed.

What Is A Gift Deed?

A gift deed is a transfer of property as per the provisions of Section 122 of the Transfer of Property Act,1882. A gift deed is a document which specifies the legal transfer of gift from one person (Donor) to the other person (Donee). Gift deed specifies the details of property transferred and the details of donor and donee. It involves the transfer of ownership of property without any monetary exchange.

A movable property can be gifted or transferred either by a registered instrument or by delivery of possession, but an immovable property cannot be transferred by mere delivery of possession.

The donor should be solvent at the time of transfer of gift and transfer of property should not take place for the purpose of tax evasion or any illegal activity. It must be transferred voluntarily and not under any compulsion. The donor and donee both should sign the gift deed. The property can be transferred or gifted to blood relatives or to any third parties.

What Can Be Gifted?

1. Property which is transferable.
2. The gift should be tangible.
3. An existing property and not a future property.
4. Any movable or immovable property.
5. The gift must be free of cost.

How To Make A Gift?

Precisely, there are three steps in making a gift, which includes-

1. Gift Deed Execution

The initial step in a gifting process is to draft a Gift Deed. Conventionally, it was done with the help of a lawyer mentioning the details of property which is being transferred and the persons between whom it is transferred. But now, at LegalDesk.com, one can create a Gift Deed online within minutes and get it printed on Stamp paper and get the deed delivered to his/her doorstep.

2. Acceptance By Donee Either Implied Or Expressed

The person who receives the property must accept the gift. Accepting the gift is legal requirement and non­ acceptance of the gift tends to be invalid. The acceptance completes after taking possession of gift by the donee during the lifetime of the donor.

3. Registration Of Immovable Property And Stamp Duty Payment

The transfer of immovable property should be registered as per Section 123 of the Transfer of Property Act, and it requires two witnesses at the time of registration and post registration. The transfer of immovable property has to be registered compulsorily but for movable property it is not compulsory, it may be effected even by physical delivery of the commodities. A gift of immovable property does not transfer any title to the donee unless it is registered.

Documents Required To Gift A Property

1. Name and details of donor and donee
2. Details of the property and its value in the prescribed format of gift deed
3. Parent document
4. Statement containing the particulars of property and its market value
5. Encumbrance certificate of thr property
6. Title deed of the property which is transferred by the donor
7. No objection certificate if the property transferred is an agricultural land
8. Affidavit stating that Registration of this deed does not violate the notification issued under 22A of the Registration Act, 1908

Registration of Gift Deed

Gift deed registration is mandatory for immovable property and the transfer of property is considered as invalid if it is not registered properly. Registration is done as per the provisions provided under section 17 of the Registration Act, 1908. After registration, only the recipient can apply for transmutation or further transfer of property.

1. The property being gifted needs to be valued by the approved valuation expert.
2. Transfer duty and Stamp duty has to be paid. Stamp duty varies between men and women and from state to state.
3. Gift deed needs to be presented for registration in the office of sub registrar within 4 months of its execution.

How To Make A Gift To A Minor?

Gift Deed contract between minors is invalid. A minor donor cannot transfer a gift and it is void. However, a legal guardian can accept the gift on behalf of the minor donee and he can act as a manager of the gifted property. If the gift is arduous, the obligation cannot be enforced on donee until as he/she is minor. Once the donee attains adulthood he can accept the burden or return the gift.

Charges Involved

For gift deed registration, Stamp duty and registration fee has to be paid. Stamp duty varies between states and for men and women, and some state governments give concessions for transfer of property to blood relations. Stamp Duty 7% plus 1% registration fees.

Conditions To Be Met

There are specific conditions to be met for gifting property as per the Transfer of Property Act,

• The transfer of property should be done voluntarily.
• The donor must aware of the property he is transferring, to whom it is transferred and the full details included in gift deed.
• The donor must be solvent, is of sound mind and competent to contract at the time of transfer of property.
• The contract document must be stamped and registered duly, and attested by two witnesses.
• A gift of property is valid only if it is duly registered.
• The donee or recipient must accept the gift during the lifetime of the donor if the donee expires before accepting the gift, the contract becomes void.
• The donor cannot be a minor but the donee can be a minor and a legal guardian who
• acts as a manager can accept the gift on behalf of the donee.
• The person who offers and accepts the gift must sign in the gift deed.

Points To Be Considered

1. It should be a volunteer transfer of property.
2. Transfer should take place from donor to donee without any compulsion, fraud or coercion.
3. It cannot be any future property, has to be existing movable or immovable property owned by the donor.
4. There must be no monetary exchange.
5. Onerous property cannot be transferred to a minor.
6. The donor and donee must be willing to transfer and accept the gift property, not to be persuaded.

Revocation Of Contract

Once the contract is entered into and gift deed is registered in the name of donee then the donor cannot revoke the deed unless it is included as a clause in gift deed.There must be an agreement between the donor and donee that gift can be revoked on the happening of a certain event. Under section 126 of the transfer of property act, the situation in which the gift deed can be canceled or revoked by the donor is specified.

Invalid Contract

The transfer of property is invalid and the contract becomes void if,

1. The gift deed is not registered and executed.
2. The deed is executed between minors or by minor.
3. The condition specified in gift deed is not fulfilled.
4. The donee dies before acceptance.
5. Property is gifted for consideration.
6. Monetary exchange took place.
7. The donee does not accept the gift during the lifetime of the donor.
8. The gift deed is not signed by both donor or donee.
9. Not attested by two witnesses.

Drawbacks Of Gift Deed

• Though a gift deed cannot be revoked, it can be challenged in court as the donor was not of sound mind or minor at the time of transfer of property.
• Property held jointly cannot be transferred.

Create Gift Deed With LegalDesk

With LegalDesk’s ready to use online template of Gift Deed, you can create a Gift Deed online within minutes. All the templates available with us are legally valid and very user-freindly. Besides Gift Deed format, we also have various other templates of legal documents and deeds, online rental agreement, Will format and more. Click the button below and get started.