Legal Guide

What is a Gift Settlement Deed?

by Bhavya Choudhary · 4 min read

Gift settlement deed

Introduction

Many family disputes can be solved and disposed of by using a gift settlement deed which can be done with or without consideration. A gift settlement deed can be used to avoid court proceedings as the settlor and the settlee internally solve matters by executing a settlement deed with their terms and conditions for the division between the family members or relatives.

What is a Gift Settlement Deed?

The Gift settlement deed or gift deed is the kind of deed that is formed by the settler of the immovable property. The settler executes the Gift settlement deed in favor of the settlee. There are certain stamp duty charges and registration fees which must be cleared for successfully executing and registering a Gift settlement deed. The charges are different for each state and can vary accordingly.

A few essential points to be noted:

  • The gift settlement deed can be executed and registered only after the proper stamp duty and registration fees are cleared as per the prescribed rate for each state or district.
  • The settler must compulsorily affix their signature on the gift settlement deed. A few states have also made it mandatory for the Settlee to sign the documents for the records and approval evidence.
  • It is necessary to keep track of whether the original copy of the title deed, which belongs to the settler, has been transferred to the settlee as per the terms and conditions.
  • The settlee needs the approval of the settler for mutation of their name in the context of the gift settlement deed.
  • There must be an absolute transfer of the property involved by the settler to the settlee, as the new owner of the property must enjoy the property rights.
  • The settlor of the gift settlement deed must ensure that there are no life interests involved in the property provided to the settlee.
  • The schedule of the property, i.e., the property description, should be mentioned clearly and concisely in the gift settlement deed.
  • The settlee has to accept the gift deed of settlement in their name for the transfer to be authorized and completed.

Registration of the Gift settlement deed

The parties opting for a gift settlement deed can use this method to settle their conflicts and disputes regarding the property/land/building. This method is enforceable in a court of law by registering it with a sub-registrar.

The requirements for it to be valid are:

  • The gift settlement deed should be present in written form for it to bring effect and transfer.
  • It should be registered as it is a legal document and can be enforced in the case of litigation.
  • Any kind of settlement can be done with this gift deed as a form of payment settlement or dispute settlement.
  • The division of ancestral or inherited property between family members can be done by using a family settlement deed or gift settlement deed so that they can distribute the immovable asset among themselves.
  • The gift settlement deed can be made with or without considerations among the family members or their dependents.
  • It can also be used in consideration of marriage as property disposition among families.
  • The gift settlement deed is absolute and legally binding and cannot be revoked once made by the settlor.
  • Mutual decision and consent are needed to resolve the disputes using a gift settlement deed or any legal consultancy services that can help with solving the queries regarding it.

Different types of Settlement Deeds

The settlement can be divided into two categories as per the nature of the transaction. These are:

  • Conditional settlement: This type of settlement means the settlor is attaching some kind of conditions along with the transfer, which the settlee is obliged to follow and comply with. 

There can be any kind of terms or payments that are to be completed within the given time. If the settlee fails to follow the given instructions or breaches the deed, the settlement deed may get revoked by the settlor. It is to be fulfilled to complete the transfer.

  • Absolute settlement: This type of gift settlement deed is also called the unconditional settlement, where the settlor gives no conditions for property division or transfer. The settlee is not bound by any explicit conditions in the settlement; they are free to obtain rights. 

It is registered and transferred. The settlor has no right to revoke such settlement, and the settlee gets the property ownership in their name as per the law. It cannot be made void as there are no valid conditions attached or made.

What are the Requirements to make it valid?

A gift settlement deed can be termed as valid only after the following criteria are met and cleared accordingly:

  • Both parties should give their mutual consent to execute a settlement deed.
  • They must be above 18 years of age to enter such an agreement.
  • The gift settlement deed can be presented in oral and written form.
  • The gift settlement deed should be free from coercion, fraud, forgery, or undue influence.
  • The written documents are to be signed by both parties, and two witnesses must attest to it in their presence.
  • It is legally binding once it is signed and registered among the parties with the mutual decision.
  • If any sibling or party is not present to sign the deed, then it becomes void and can be terminated to form a new one.

Conclusion

The gift settlement deed acts as an alternative to solve family disputes related to assets and properties. It is done to avoid court settlements because that can be expensive and lengthy to follow through. The parties may take the necessary legal consultancy services to understand each term and condition thoroughly.

It is advisable to take legal consultation from a property expert lawyer in cases of division or property transfer as they can handle the documents professionally and execute the deed precisely.

Bhavya Choudhary

Written by

Bhavya Choudhary

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