This article is written by Meera Patel from Maharaja Sayajirao University, School of Law. This article highlights the ways an NRI can transfer their inherited property titles in India.
Table of Contents
Introduction
Non-Resident Indians who are also known as NRIs do not tend to have any representatives that can execute the practice of transferring property in India. This usually happens due to various reasons such as:
- Time constraint
- Unable to travel back and forth
- Lack of awareness and knowledge about real estate in India
- Scarce general knowledge related to the ups and downs in the market
- Lure various barriers
- Illegal possession of the property
- Illegal sale of property by the third party in the absence of the owner
- Illegal transfer of property
- Various other fraudulent activities
To avoid such barriers, the property owners usually tend to carefully transfer their property personally under their name legally so that they can escape such fraudulent encounters. There are various problems one can face while transferring the property on their own which can cause a lot of disputes due to the unmanageable property paperwork and various other barriers.
Who is an NRI
A Non-Resident Indian is a citizen of India who has not resided in the legal territory of India for more than 182 days during the past fiscal year.
Technically, any person who has voluntarily left India with the sole intent to immigrate to another country to obtain employment opportunities or to carry out one’s business or employment in that country. Any person who identifies themselves as someone who has been staging their intentions to leave India and reside in some other country for an undecided period is known as an NRI.
Different modes used for transferring property in India
The legal practice of transferring property in India functions under the Transfer of Property Act, 1882. Various special and distinct provisions under this act state the conditions and rules that are attached to the practice of transferring property in India. The basic idea of transferring revolves around the fact that an NRI can pass on his/her property to any individual, company, or organization/ association, and the property can range from movable to immovable property. Although, any property transactions such as buying, selling, carving interest, and property, etc are ruled by the state as well as the central government.
However, listed below are a few ways through which any property title can be transferred in India by an NRI:
Transfer of property titles/ property ownership can be passed on by 2 distinct methods:
Involuntary transfer
In the case of an involuntary transfer of property, it usually happens that the court lays hold of the property of the individual and transfers it to someone without the discretion of the former owner of the property. When this type of transfer happens, there are chances that the joint family or ancestral property assets.
Voluntary transfer
In the case of a voluntary transfer of property or property titles, the owner of the property would pass on their property on their discretion to anyone they want to give it to. The transfer of such property can be done by:
- Gifting the property to someone
- By the method of creating a legal will or inheritance
- The property can be transferred by various types of considerations such as by sale, by lease, by exchange, or by the mortgage.
Different kinds of property transfers in India
Listed below are the different types of property transfers in India by an NRI according to the Transfer of Property Act, 1882:
Sale
As stated in Section 54 of the Transfer of Property Act, 1882, a sale of transfer of property always means that the owner is selling the property title for a pain price. All the property rights will be transferred to the person paying the demanded or negotiated price for the same.
The basic elements that constitute a sale transfer are:
- At least 2 or more parties
- The subject matter
- Price
- Legal consideration
The basic modes that can be considered as the modes of sale transfer are:
- The possession can be delivered if it is a movable property
- The registration instruments
Mortgage
As per Section 58 of the Transfer of Property Act, 1882, the definition of a mortgage is transferring an interest in a particular immovable property for the sole purpose of affixing monetary payments in the form of loans, future debts, or performance of the engagement. In easier words, a mortgage is a transfer of an interest of an immovable property that can be considered as security until you pay all your debts. Due to various specifications of the Registrations Act, 1908, it is necessary to identify the particular immovable property.
Exchange
As per Section 118 of the Transfer of Property Act, 1882, when 2 people collaboratively agree to exchange one property for the ownership of another thing or property even if both the properties that are being exchanged are money. These kinds of transactions are known as ‘exchange under the act’. Although, it seems that only immovable properties can be exchanged but here under this act not only immovable properties can be exchanged but also movable goods can be exchanged here under this Act.
Gift
As per Section 122 of the Transfer of Property Act, 1882, when a property owner hands over a title to someone voluntarily without anything in return such as a paid price or anything and this happens under the owner’s discretion, then it is considered as the transfer of property as a gift. The former owner of the property is called the donor and the person who receives the property in the form of a gift is known as the donee.
There are certain conditions when it comes to transferring property as a gift. For example: When a donee is offered a gift and the donee dies before accepting the gift, then the gift can be considered as void or if an immovable property is gifted to a minor, the minor’s legal guardian is supposed to assume the property title until the minor reaches the legal age.
Lease
As per Section 105 of the Transfer of Property Act, 1882, a lease is technically an immovable property whose rights can be transferred for a certain period for a paid or a promised price that needs to be renewed from time to time. A lease is a contract that inculcates the decided terms under which the involved party agrees to rent out a property for a period that is legally owned by the transferor.
License
As per Section 53 of the Indian Easements Act, 1882, the definition of license states that any person with possession of a license gives the right to do or to continue to do whatever they want to with the immovable property. Without a license, the activity or usage of that property can be termed as unlawful therefore, the license is an essential part of the transfer of property. In simple terms, the license is permission or authorization to stay or use the immovable property without which it could be also counted as trespassing or illegal.
Different kinds of properties that an NRI can inherit in India
Just like any other Indian citizen, even a non-resident Indian can inherit any type of property in India. The property that they can inherit can range from residential to commercial properties. As per the Indian property transfer laws, an NRI cannot purchase farmlands or farmhouses in India but they can inherit farms and farmhouses in India.
As per the Indian Succession Act, 1925, an NRI possesses the right to ask for their share in their ancestral properties from their families or relatives. Additionally, an NRI has the right to possess the inherited property from another NRI but of course, there are certain rules and regulations for that too.
Lastly, it is necessary for the person from whom the NRI inherits the property is the rightful owner of that property. Therefore, if a property is inherited and transferred to someone without the approval from the Reserve Bank of India could be confiscated for questioning by the RBI.
Documents that are needed to transfer property in India
Various necessary documents are needed to finish the property transfer in India by an NRI. Listed below are all the necessary documentation required to prove that the legal heirs are indeed the rightful heirs or successors of the property that is in question:
A legally registered will
As per the Indian property transfer laws, an NRI doesn’t need to acquire a registered will. A mere plain piece of paper with the signature of the will authorizer and the specifications are required. Even though it is not necessary to acquire a registered will, it is advised to procure a registered will as it could be used as evidence in the court if someone faces authenticity problems in the future.
A certificate of succession
This can be used in situations when there is no will. Therefore, to acquire their ancestral properties, the heir would need to obtain a certificate of succession from the court.
An encumbrance certificate
This certificate is necessary because it is needed as proof during the transactions of properties. This certificate applies when immovable properties are in the transaction even if it is a gift, exchange, lease, mortgage, etc.
A khata or a revenue document
A khata is a typical official record of the revenue documents which includes the evaluation of a property such as the size of the property, location, areas under the construction, information of the owner, etc.
An original property purchase registration deed
Other necessary documents
- The death certificate of the deceased owner/ person.
- Residence details of the deceased owner/ person.
- Detailed information about the property that is supposed to be transferred.
- Birth certificate of the legal heir.
- Ration card of the legal heir.
- Bank statements of the legal heir.
Different ways to transfer immovable assets in India
One of the most blooming and desired sectors of investment in India is the real estate sector which can also be categorized under the immovable assets. However, after investing, people usually tend to transfer the property titles to other people who could either be their families, friends, etc.
Listed below are the distinct ways by which immovable properties can be transferred or acquired in India
By a legally valid will
Any person will be able to acquire their desired rightful property through inheritance or a mere legal will. If the person dies without creating a will, then that particular land or property would be transferred to the rightful legal heirs which are mentioned in the Indian succession laws.
Inheritance laws of India
According to the inheritance laws of India, the beneficiaries of the inheritance can acquire their desired properties only after the death of the person from whom they will be inheriting the property and not before that. Although, the testator can change the details of the will after it has been registered anytime they want.
By relinquishment or discharge deed
In cases where there are more than one owner of the said property or assets, one co-parent can easily transfer their share of the property in the name of the other co-parent via the relinquishment or discharge deed. This can be practised with or without consideration. The involvement of money for exchange is totally up to the discretion of the person transferring the property to the other co-parent.
Party settlements through partition deeds
A partition deed helps out the co-parents of the property when a court orders the local revenue authoritative body to meddle between them if problems arise between the involved parties.
Through gifts
A gift can range from a movable property such as cash, cheque, shares, jewellery, utility goods, etc to immovable property such as house, land, building, etc which can be obtained without having to pay for it as it will be a capital asset for the person who receives property in the form of a gift.
Selling the ownership titles of the said property
The Idea of selling the ownership of the property titles is the most desired mode of acquiring or transferring property in India. Execution of sale deeds is the most desired option to transfer the property at the moment.
Conclusion
Alienation means that when one transfers the ownership of a property title in the form of sale, gifts, mortgage, lease, license, etc to other people, organizations, etc. It is equally as easy for an NRI to transfer their inherited property titles in India as it is for an Indian citizen. Sure there are a few rules and regulations and documents that one needs to to be updated with but to if one wants to avoid hassles such as fraud, time constraint, financial problems, etc while going through the painful process of transferring properties through a third party, one can easily refer to India’s Transfer of Property Act, 1882.
References
- http://www.helplinelaw.com/real-estate-wills-probate-and-trust/NTIP/how-can-nris-transfer-inherited-property-title-in-india.html
- https://economictimes.indiatimes.com/nri/nri-real-estate/how-nris-can-transfer-title-of-inherited-property/articleshow/16531117.cms
- https://housing.com/news/laws-governing-inheritance-immovable-property-india-nris/
- https://medium.com/@shellykaundal/5-ways-to-transfer-property-in-india-aceef6b31a08
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