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Gift Deed Defined
You have probably come across this term and if you are wondering what it means, you don’t need to go any further to find out the answer. A gift deed is a legal document or record that shows that the donor of a property is passing on the legally held title of that property to some other person, referred to as the donee.
Is Gift Deed Mandatory?
A gift deed needs to be mandatorily made and registered in case of immovable property being transferred whereas it is not necessary in the case of movable property. The provisions that need to be fulfilled for a gift deed to be valid are covered in Transfer of Property Act, 1882 and the Registration Act, 1908.
What Makes A Gift Deed Valid?
The following conditions need to be met for a gift deed to be legally valid:
- When a donor is creating a gift deed in favor of a third party, he/she should know what implications the agreement will have and should have the competency to enter into such agreements.
- A gift deed can be made only if the donor has a legal title over the property at present. He/she can transfer only that property over which he has a legal claim.
- A gift should be made of either movable or immovable property, however, the creation of a gift deed is mandatory only in cases of immovable property.
- As per the Indian Contracts Act, 1872, a minor cannot enter into a contract. Since a gift deed is also a type of a contract, a minor cannot create a gift deed in anyone’s favor. However, a gift deed can be made in favor of a minor in the name of his/her guardian.
- Another aspect of the Indian Contracts Act which affects the creation of a gift deed is the idea of ‘free consent’ and the fact that no contract will be valid if it is made under duress, coercion or undue influence.
- When a gift deed is created in favor of a donee, he/she should accept the gift during the lifetime of the donor for it to be valid otherwise it will not be recognised by the law.
- Given that any contract has two parties, at least, both the parties should consent to the transfer in the same sense for it to be legally valid and accepted. Hence, acceptance by the donee is an important aspect for the creation of a gift deed.
Registration Of A Gift Deed
For a gift deed to be recognised by the law, apart from the above conditions, it needs to be registered in the sub-registrar’s office.
As per Section 17 of the Registration Act, a gift of an immovable property needs to be compulsorily registered under the jurisdiction of the sub-registrar’s office where the property is situated.
In Kerala, the government in the 2011 amendment of the Registration Act of Kerala fixed a maximum cap of Rs 1,000 on stamp duty for land dealings between family members, which includes wife, husband, father, mother, brother, sister, grandparents and grandchildren, and pegged the maximum registration fee at Rs 25,000.
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