How Property Gift Deeds Work?
While gifting a property, a gift deed is essential and a mandatory requirement. So, basically, a “Gift Deed” is a completely legally drawn document validating the transfer of property voluntarily to another person without the exchange of money. Similar to the sale deed, gift deed also has the complete information of the beneficiary and the transferors. The property can be legally transferred to another person or an institution. On the other hand, it is mandatory that the recipient accepts the transfer when the donor is alive and the same should be registered with a sub-registrar under Sec.122, Property Transfer Act of 1882 & Sec.17, Registration Act of 1908.
Details included in a Property Gift Deeds:
- The complete details of the donor, including name, birth date, address and father’s name.
- The complete details of the beneficiary, including name, birth date, address and father’s name.
- Correct date and place where the legal deed is registered.
- The relationship between the donor and the beneficiary.
- Complete details of the property meant for gifting.
- Signatures of the parties involved in the transfer.
- Signatures of two witnesses.
- Details of the two witnesses.
Who is eligible for accepting a Property Gift Deeds?
For documenting a gift deed legally, the beneficiary is supposed to be competent. By law, the donor must not be a minor, whereas, the beneficiary is allowed to be a minor with a nominee natural guardian. This nominee takes the liability of managing the property till the beneficiary reaches legal adulthood. Also, the beneficiary needs to be alive; otherwise the property gift deed is invalid.
The process involved in gift deed transfers:
1, Draft of the gift deed: It is a legal document that has the complete details related to the transfer of the property and it is drawn with the aid of the attorney. The gift deed must contain all the vital details of the beneficiary and the transfer should be a voluntary act. For instance, if you want to transfer one of your flats in Tambaram, Chennai to a related beneficiary, all the details of the property must be in the legal deed and registered in the sub-registrar office in Tambaram.
2, Gift deed acceptance: The process of transfer is complete only when the beneficiary accepts the property. The donor of the property should also be alive at that time. During the possession of the property, the process is completed and the acceptance is legally validated.
3, Status of the property: The property that is ought to be transferred must be registered for the transfer to be valid. At least 2 witnesses should be present to attest the transfer. This number of witnesses required to attest is different in different states of the country.
4, Fees levied during the transfer: Like a normal sales deed, the registration of this deed comes with registration fee and the stamp duty charges. Stamp duty charges for transfer of property by gift are same as the charges for a sales deed, whereas it varies in different states of the country. Some states also provide discounted registration fee for gift deeds. For instance, if someone wants to transfer the ownership of one of the apartments in Pallavaram, Chennai, the fees levied involves registration fee and stamp duty charges that are usually charged in Tamil Nadu.
Cancellation of a gift deed:
In accordance with the Sec.126, Transfer of the Property Act, gift deeds can be called off in various circumstances. With a mutual agreement between the donor and the beneficiary, a gift deed can be revoked. If the supposed beneficiary is not willing to accept the gift of property, the transfer can be cancelled. If illegal, immoral or repulsive conditions arise under the transfer of property, the gift deed can be revoked. After the preparation of the deed, it cannot be cancelled unless and until a revocation clause is mentioned in the agreement. To prevent any problems in the future, it is highly advisable to add a revocation clause in the agreement.