While you may look at the purchase of your home as the fulfilment of your goals and aspirations, it is undeniable that real estate is a major asset. Like all other asset classes, there are laws that govern the transfer of land, house, apartment, and all real estate properties. To know more about the right instrument for transferring your real estate property, here is an overview of the different deeds that can be made and an introduction to the Transfer of Property Act.
- Sale deed - A sale deed is one of the most common instruments used to transfer a property. As the name suggests, it is a deed made during the sale of the property and details the dimensions, location, cost, and other details, along with information about the buyer and seller. A sale deed must be registered at the sub-registrar office to be legally valid, and the stamp duty paid. A registered sale deed is legal proof of transfer of ownership.
- Transfer deed - The ownership of immovable property can be transferred from one person or entity to another through a transfer deed. This need not involve a sale. In cases like a mortgage, a deed of transfer is executed. Property ownership can be given through a transfer deed only when both parties are alive. This includes individuals, associations, organisations, or companies.
- Gift deed – Immovable property or real estate can also be gifted by the owner to an individual or organisation. Gifting of a property means transferring ownership without any monetary consideration or without any money exchange. A gift deed can be drawn out on stamp paper and requires witnesses. Like a sale deed, a gift deed also needs to be registered for it to have the legal sanction, and stamp duty must be paid. While gifting a property means transferring it without monetary exchange, if the value of the property is more than INR 50,000, the property may be taxable.
- Relinquishment deed – Relinquishment means renouncing a claim. A relinquishment deed is made in case an owner voluntarily gives up his/her ownership, legal claim, and interest in a property. This is done only in the case of joint ownership when one of the owners renounces the claim on the property in favour of the other(s). Like a sale deed, a relinquishment deed must also be registered for legal ownership to pass to the other party.
- Partition deed – According to the Hindu Succession Act, 1956, you can stake a claim on an ancestral property that was owned by your great-grandfather, grandfather, and father and has remained undivided throughout. Ancestral land can be claimed by three generations, and such right is by virtue of birth. Coparceners can, however, demand that the property be partitioned, and, in such cases, each receives an equal share. This is done by way of a partition deed. A legally executed partition deed also needs to be registered.
- Will - A property owner can bequeath any self-acquired property to any other individual or organisation through a will. This means that a property owner can draw up a will stating that ownership of his/her property can be passed on to the beneficiary upon his/her death. Such a will can be changed or replaced any number of times, and when the owner dies, the last will takes effect. It is a good idea to have witnesses for a will and to have it registered as well. It is important to remember that ancestral property cannot be passed on to beneficiaries through a will.
Transfer of Property Act, 1882
The Transfer of Property Act of 1882, the Sale of Goods Act of 1930, the Hindu Succession Act of 1956, and the Indian Succession Act of 1925 are the four main acts that deal with the transfer of movable and immovable properties in India. Of these, the Transfer of Property Act of 1882 is perhaps the most pertinent as it proscribes the legal terms for the purchase, gift, or transfer of properties. Therefore, as a prospective homeowner, it is a good idea to do your research and learn more about the implications of this law.
Conclusion
When you set out to buy a property in India, you must research the paperwork and documentation involved in the process. Understanding the process of property transfer will help you verify the documents and the title of the property you are interested in buying. It will also help with executing your sale deed and registration process.
As a prospective homeowner, it is also important to have a clear understanding of the registration and stamp duty that is required to be paid at the office of the Inspector General of Registration and Stamps. Registering your property makes your ownership legally valid and secure, and protects you from any future litigation.
