Uses of gift deed

In this blog post, Yash Koshal from RDVV-Jabalpur talks about the various uses of a Gift Deed.

Various Uses of Gift Deed

There are a number of ways through which the property can be transferred from the owner of that property to the donee. It can be done by sale, will or gift but the method commonly used to transfer the property to the family members is by executing the gift deed in favor of that person.

Though no monetary transaction is involved in the gift deed then also it is mandatory to get the gift deed registered.

Section 122 of the Transfer of Property Act, 1882 defines gift.

What All Can be Gifted?

Things which can be gifted should have such properties to be called as a gift –

  1. It should be movable or immovable property.
  2. It should be tangible property.
  3. It must be transferable.
  4. It should be in present time and not to be a future property.

Gifting Process

  • Drafting Gift Deed

With the help of the lawyer, gift deed is drafted which describes what is being transferred and to whom it is transferred. It is basically a contract between the donor and the donee which defines the simultaneous act of giving and taking. To make gift valid, it must be made by the person voluntarily and not by force.

  • Acceptance of Gift 

After the legal work is done it is necessary by the donee to accept the gift from the donor in order to make the gift deed valid. Acceptance of the gift must be done during the lifetime of the donor. In case donee fails to accept the gift, whatever may be the reasons, it is rendered invalid.

  • Registration

A gift of immovable property cannot pass any title unless it is registered under Section 123 of the transfer of property act. Attestation by two witnesses is mandatory during registration as well as post registration then only title transfer is possible.

How to Get Gift Deed Registered?

Gift deed gets registered as per the provision of the Registration Act, 1908 –

  1. Valuation of the property to be gifted by the valuation expert.
  2. Payment of stamp duty and transfer duties are slightly different for men and women (slightly lower for women). Stamp duty also varies from state to state.

Gift Deed in Case of Minor

Any person who owns the property can make the gift deed in favor of anyone but there is an exception to this rule.

In the cases in which either a donee or donor is a minor, minors are not eligible to contract so, they cannot transfer property as a gift.

  • If the donor is a minor then the gift deed becomes invalid.
  • In case, if the donee is a minor, a natural guardian can accept the gift on behalf of the minor.

Guardian acts as a manager of the property gifted to the minor and if the gift is burdensome, the responsibility of the gift cannot be enforced on the minor until he/she is minor. Once the donee becomes major he may either accept the gift or return the gift back to the donor.

Is Oral Gift of Immovable Property Valid?

According to section 123 of transfer of property act, a gift of immovable property which is not registered and orally said is not a valid gift in law. Mere delivery of the gift without doing legal paperwork cannot confer any title.

Gift Under Hindu Law

It is not necessary under Hindu law to transfer gift by doing the legal paperwork. However, a gift under the law is not valid without the delivery of the possession of the subject of the gift from the donor to donee.

Where the physical possession of gift is not given but all the efforts made by the donor to make the gift valid will consider the gift to be valid.

Property Which Can be Gifted

  1. Any Hindu can dispose his property by gift which is his separate property or self-acquired property.
  2. A father can also dispose of his property by gift, whether self-acquired or ancestral.
  3. A female can also dispose of her stridhan by gift, subject to, in certain cases, the consent of husband is necessary.
  4. A widow can also dispose of her property by gift which she has inherited from her husband.
  5. The owner of the impartible state can also dispose of his/her property by gift unless there is a custom prohibiting him/her to dispose of property by gift.

Gift to Unborn Child

Under pure Hindu law, gift in favor of a person who does not exist at the time of making the gift will be considered as an invalid gift. But this rule has been amended by these acts namely:

  1. The Hindu Transfers and Bequest Act, 1914
  2. Hindu Disposition of Property Act, 1916
  3. The Hindu Transfer and Bequest Act (City of Madras), 1921

Gift Under Muslim Law

Under Muslim law, gift is considered as a part of a contract in which there should be an offer made by the person that should be accepted by the other person and then it should be transferred to that person.

As in the case of Smt. Hussenabi vs Husen Sahab Hasan, where a grandfather made an offer of gift to his children. He (grandfather) also accepted the offer on behalf of his grandchildren. However, there was no implied or express acceptance made by the major grandson.

Karnataka High Court held that, since the three elements of gifts were not present in the case of major child hence, gift in the favor of major child is invalid. As far as minor grandchildren are concerned, their gift is valid.

Essentials of Valid Gift

  • Declaration

There must be clear intention of the donor to make the gift in favor of another person. Declaration by the donor is the statement which clearly signifies that the donor is willingly making a gift in favor of another person.

A declaration can be in written form or can be oral depending upon the situation. The donor can declare to gift property of any kind either orally or by written means. Under Muslim law, it is not mandatory to give in writing for transferring of the gift.

  • Acceptance
  • There must be proper acceptance by the donee. If donee does not accept the gift then, it will become invalid.
  • It is not necessary that donee should be a Muslim to accept the gift. For accepting the gift the person may be of any religion. Gift in favor of child and female is also valid.
  • A child who is in the mother’s womb is also a valid donee if he/she born within six months after declaring gift in his/her favor.
  • The gift can also be made in favor of the company, a close corporation, a body corporate or a trust.
  • Any guardian on behalf of the minor or insane person can receive the gift.

The Guardians who can receive the gift on behalf of the minor or insane are:

  1. Father
  2. Father’s executor
  3. Paternal grandfather
  4. Paternal grandfather’s executor.
  • Possession Delivery and Acceptance of the Gift

The term possession in Muslim means only such as the nature of the subject is capable of. Thus, the real test of delivery of possession takes place to see who takes the advantage of gift, whether it is donee or donor.

If the advantage of the gift is been taken by the donor then the gift will become invalid.

The delivery of possession of the gifts depends upon the nature of the property. There are basically two modes of delivery of possession:

  1. Constructive
  2. Actual
  • Constructive Delivery

Constructive delivery of possession is a possession in which there is a symbolic transfer of property. Constructive delivery of possession is basically the possession in which the property is not actually delivered to the donee but the donor has done something which can be constituted that the possession has been given but as the property is of such nature that the physical delivery of possession is not possible then, constructive possession of property is enough to complete the act of gift.

  • Actual Delivery

Actual delivery of possession means where the property is physically delivered to the donee. Actual delivery of possession only takes place when the property is tangible (which can be seen or touch) is delivered to the donee.

Examples of tangible movable property are – bags, chairs, mobile phones, laptop etc whereas the examples of the tangible immovable property are house, land, etc.

Now, coming on to the tangible movable property, actually transferring of movable property is necessary to validate the actual delivery of possession. Mere entry in the accounts book does not constitute actual delivery of possession.

On the other hand, where the property is immovable its actual transfer to the donee is also mandatory to make it valid.

In the case of immovable property, the property cannot be handpicked and transferred to the donee.

For example, if a person gifted his house in which he is living to the donee, the actual delivery of possession is only valid when the person who gifted his house should vacate his house and ask donee to stay in it. Then only the actual delivery of possession is valid.

Certain Things which Should be Remembered while Making Gift Deed

While executing the gift deed one thing should be remembered that, after executing the gift deed in favor of the donee, the donor does not have the right to revoke the gift deed until there is a special clause mentioning to revoke the gift, which has been made in the favor of donee.

Conclusion

A gift in favor of someone is free, any person who is a legal owner of a property can transfer his property by way of gift. It is actually a transfer of property to some other person without any consideration. So it can be said that the chief characteristic of the gift is that it can be transferred to some other person without any consideration.

What do you think about the Gift Deed? Is it possible to take advantage of this? Comment your view below and share the article.

 

LEAVE A REPLY