There are various Property Gift Deed Rules which are necessary to follow to make the Gift Deed valid. The property can be movable or immovable. But in the case of immovable property where no consideration is taken from the recipient, the Gift Deed must be registered to make the transfer legally valid.
A property can be gifted in many ways, but nowadays, the most common method is a Deed of Gift for transferring the ownership to a family or non-family member. It has similarities with a sale deed.
The main difference is that a Gift Deed has no exchange of money, whereas sale deed property transfers include an exchange of money. One must make such a transaction while keeping the Property Gift Deed Rules in mind and following them.
What do you mean by a Gift Deed?
A Gift Deed is a type of agreement that states voluntary transfers of property ownership from the donor to the donee without any consideration in return. The Deed of Gift must be registered with the sub-registrar under Section 17 of the Indian Registration Act, 1908. The transfer is valid when both parties are available.
Some other Property Gift Deed Rules define that if the Gift Deed is not registered or the individual fails to do the same, it may become invalid as deciphered under Section 123 of the Transfer of Property Act.
The two parties involved:
- The one who gifts is called the donor.
- The one who receives it is called the donee.
Some Essential Property Gift Deed Rules
There are a few Property Gift Deed Rules which must be followed while gifting the property of any individual. They are as follows:
- The gift which is made to a family or non-family member is given with love and affection for dear ones, and no consideration is involved in such transfers. If the consideration is involved in any way, then it is not valid as a Gift Deed.
- The Property Gift Deed Rules state that the property gifted can be any movable or immovable property as chosen by the donor.
- The main aspect of Property Gift Deed Rules is that the transfer must be made voluntarily, and there must not be any traces of forgery, fraud, or pressurization on the donor for making the transfer. If coercion is proven, the Gift Deed is terminated.
- The Property Gift Deed Rules state that only existing properties can be gifted. No future inheritance or shared property can be gifted by the donor.
- The donee must accept the gift as per the Property Gift Deed Rules. If under any circumstances the donee cannot be present, then the authorized individual to act on their behalf must be present.
- The registration of the Gift Deed is mandatory in the case of any immovable property. In the case of movable gifts, the donor may or may not get the Gift Deed registered as per the Property Gift Deed Rules.
- The competence of both parties is necessary for them to enter into a Gift Deed contract. They should be above 18 years of age and of sound mind.
- According to the Property Gift Deed Rules, any minor (under 18 years) cannot enter any contract regarding the transfer of property or a Gift Deed. If the donee is under 18 years of age, their guardian must act on their behalf.
- The donor can gift any property only if they are the sole owner of the property involved. The property of future inheritance or joint ownership properties cannot be gifted according to Property Gift Deed Rules.
- The Property Gift Deed Rules state that the donee can sell the property according to their will as they become the owner after the transfer. This may not be the case for every Gift Deed as some can have the conditional clause where it is mentioned by the donor that the donee cannot sell or rent the property received for a limited period or as agreed with them.
- If the donor or donee dies before transferring or accepting the gift, then the Gift Deed can become void and of no value. According to the Property Gift Deed Rules, it becomes ineffective and invalid.
- The Property Gift Deed Rules and format in India must be followed under the applicable laws and registered according to the legal provisions as mentioned by the registrar.
Can a Gift Deed be revoked?
According to the Property Gift Deed Rules in India, a gift can be revoked and suspended if the conditions regarding it are mentioned in the registered deed.
According to Section 126 of the Transfer of Property Act, 1882, revoking is not possible unless it is mentioned in the registered Gift Deed that “the donor may take back the gift if necessary at any point of duration.” The donor is suggested to take legal consultancy services to solve such matters legally.
The two ways under the Property Gift Deed Rules which can help in revoking a gift are:
- The mutual consent and agreement of both parties can revoke a Gift Deed.
- If it can be proved that the gift was made involuntarily, then the contract may be revoked under the Property Gift Deed Rules.
Stamp Duty on Gift Deed
There is a certain amount of stamp duty that is charged on the property gifted. As under the Property Gift Deed Rules, the stamp duty must be cleared for gifting a property. The charges vary from state to state and have a concession for men-women, family and non-family members, etc. Registration fees are paid by the donor to register the Gift Deed.
The donee becomes the original owner after the transfer of property. The transfer of property must be voluntary and registered as per the Property Gift Deed Rules. There may be complications in the clause, which can be solved with legal consultancy services.