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What Is A Gift Deed?

A gift is when someone gives something to another person for free, without expecting anything in return. This can be something you can move, like a toy, or something you can’t move, like a house. If both people are alive when the gift is given, it’s called an “inter vivos” gift. If the gift is given after one person has died, it’s called a “testamentary” gift.

Only gifts given while both people are alive are considered gifts under the law. If the gift isn’t done the right way, it can be canceled or considered invalid. There are rules about what can be given as a gift and how to give it, and those rules are explained in this article.

Introduction.

According to Section 122 of the Transfer of Property Act, 1882, a “gift” is when one person gives their property to another person for free, without expecting anything in return. The person giving the gift is called the donor, and the person receiving it is called the donee.

For a gift to be valid, several things must happen:

The property must already exist.
The ownership must be transferred from the donor to the donee.
It must be given freely, without any payment.
The donor must be able to make the gift (competent).
The donee must accept the gift.

Gifts can be given between two living people, which is called an "inter vivos" gift, or they can be given after the donor has died, known as a "testamentary" gift (For example- through will). Gifts given when someone thinks they might die soon are called "mortis causa" gifts. If both people are Muslims, the gift follows different rules from the Quran instead of the Transfer of Property Act.

Essentials of Gift:

Important Points About a Valid Gift:

Ownership Must Change: When someone gives a gift, they must fully give up their rights to that item. It’s okay to give a gift with certain conditions, as long as those conditions follow the law.
Gift Must Be of Existing Property: A gift can only be made of something that already exists, like a car or a house. You cannot gift something that you don’t own yet or that will only exist in the future.
No Payment Needed: A gift is free, meaning the person receiving it doesn’t pay for it. If money is exchanged, even a small amount, it’s considered a sale, not a gift. Gifts given with the hope of getting something in return are not true gifts.
Gift Must Be Given Freely: The person giving the gift must do so willingly, without pressure or trickery. Just being related to someone doesn’t mean they were forced to give the gift. It must be clear that the person giving the gift truly wanted to do so.
The Giver Must Be Able to Give: The person giving the gift (called the donor) must be legally able to do so. This means they must be an adult, mentally sound, and not banned from making gifts. For example, a child cannot give away their belongings.
The Receiver Must Accept the Gift: The person getting the gift (called the donee) must accept it. A child can accept a gift through their parent or guardian. If a gift is made to multiple people, the one who can accept it will receive the whole gift. Acceptance must happen while the donor is still alive and able to give the gift. If the receiver dies before accepting it, the gift is not valid.

Who’s Who in the Gift Transfer Process?

Key Points About the Giver (Donor) and Receiver (Donee) of a Gift:

Donor:

The giver of the gift (donor) must be able to give it. This means they must be an adult and mentally sound.
Groups like businesses or organizations can also give gifts.
A gift from a child or someone who is not mentally well is not valid.
The donor must own the property they are giving away.

Donee:

The receiver of the gift (donee) does not have to be an adult or mentally sound.
Gifts can be given to anyone, including children or people who are not yet born, as long as someone who is capable accepts it for them.
Groups like companies or organizations can also receive gifts.
The donee must be a specific person or group. Gifts to the general public cannot be made.

Exploring Various Gift-Giving Methods:

To make a gift valid and enforceable by law, certain formalities must be followed as outlined in Section 123 of the Transfer of Property Act. For gifts of immovable property, such as land or buildings, registration is required to make the gift legal. In contrast, gifts of movable property, like cars or jewelry, can be transferred simply by handing over the item to the person receiving it. Following these steps ensures that the gift is recognized by law.

Immovable Property:

When giving immovable property, such as land or buildings, it is necessary to register the transfer, regardless of the property's value. This registration involves having a written document (gift deed) that is signed by the donor, attested by two witnesses, and properly stamped.

According to the Supreme Court case Gomtibai v. Mattulal, without these formalities, the gift is not considered complete. Unlike other transactions, the doctrine of part performance does not apply to gifts, meaning all requirements must be met for the gift to be valid.

A donee who takes possession of land without a registered gift deed cannot defend their claim if they are evicted. It’s important to note that registration can still occur after the donor’s death, as long as the essential elements of the gift are present. However, if these essential elements are missing, registration will not make the gift valid.

Additionally, there is no need for the donor to give possession of the property for it to be considered a gift, as confirmed in the case of Renikuntla Rajamma v. K. Sarwanamma, where it was ruled that retaining the right to use the property during the donor’s lifetime does not affect the transfer of ownership to the donee, provided the gift is registered and accepted.

Movable Property:

For movable properties, a gift can be completed simply by handing over the item to the person receiving it (the donee), and registration is not required. This means that the gift is valid regardless of the property's value. How the property is delivered can vary depending on the item itself.

The key points are that the ownership and possession must be transferred to the donee. Any agreed-upon method of delivering the property that effectively gives possession to the donee is considered valid.

Actionable claims:

Actionable claims are defined in Section 3 of the Transfer of Property Act and refer to rights to claim money debts or movable items that the claimant does not currently possess. These claims represent intangible movable properties and can be transferred under Section 130 of the Act. To gift an actionable claim, the transferor (the person giving the gift) must provide a written document signed by themselves or their authorized agent. There is no need for registration or delivery of possession for the transfer to be valid.

The Legal Aspects of Gifting Future Property.

A gift of future property is not legally enforceable and is considered void under Section 124 of the Transfer of Property Act. This means that if someone promises to give property that does not exist yet, that promise has no legal standing.

However, if a gift includes both present property (which exists) and future property (which does not), only the part related to the future property is void; the gift of the present property remains valid. Similarly, a gift of future income from a property before it has actually been earned is also void under this section.

Gifting to Multiple Recipients: What You Need to Know.

According to Section 125 of the Act, if a property is gifted to multiple recipients (donees) and one of them does not accept the gift, that portion of the gift becomes void. This means that the interest that the non-accepting donee would have received goes back to the person who made the gift (the transferor) and does not pass to the other donees. However, if the gift is made to two donees together with the right of survivorship, it remains valid, and if one donee passes away, the surviving donee receives the entire property.

Understanding Onerous Gifts: Key Provisions.

Onerous Gifts:

Onerous gifts are those that come with liabilities, meaning the burdens of the property outweigh its benefits. The term "onerous" refers to something that is a burden. When a property that has more debts or responsibilities than advantages is gifted, it is called an onerous gift. The person receiving the gift (the donee) has the right to reject it.

Section 127:

According to Section 127, if a single gift includes multiple properties and one of them is onerous, the recipient cannot choose to reject just the onerous part while accepting the other properties. This rule is based on the principle that whoever accepts the benefits of a gift must also accept its burdens.

Therefore, if a donee receives both an onerous property and a beneficial property in one transaction, they must decide whether to accept both or reject the entire gift.

If they choose to accept the beneficial property, they are also required to accept the onerous one.

Gifts to Minors: If an onerous gift is given to a minor and they accept it, they have the right to refuse the gift once they reach adulthood. Upon becoming an adult, they can choose to accept or reject the gift. The donor cannot reclaim the gift unless the donee officially rejects it after reaching the age of majority.

Universal donee.

Universal Donee in Law:

A universal donee is a person who receives all of someone’s property as a gift. This includes both movable things, like furniture, and immovable things, like a house. In English law, this idea is not recognized.

When someone gives all their property away, the person receiving it must also pay any debts the giver had at the time of the gift. This means if the giver owes money, the receiver has to pay it, but only up to the value of the property they received. The idea is that if you gain something good, you should also take on some responsibility.

Liabilities of the Universal Donee:

Under Section 128 of the Transfer of Property Act, a universal donee is responsible for all debts and liabilities of the donor that exist at the time of the gift. This means that when someone accepts all the properties of the donor, they must also take on the associated burdens. However, the donee's responsibility for these debts is limited to the value of the property they received as a gift. If the debts exceed the total value of the properties, the donee is not liable for the amount that goes beyond the value of the gift.

Protection for Creditors:

This provision(Section 128 of the Act) ensures that creditors can pursue the donor's property for any outstanding debts, while also protecting the universal donee from being responsible for more than the value of what they received.

Exploring the Conditions for Gift Suspension or Revocation.

According to Section 126 of the Transfer of Property Act, 1882 talks about when a gift can be put on hold or taken back. A gift is when someone gives something to another person without expecting anything in return.

If the person giving the gift (donor) and the person receiving it (donee) agree, the gift can be paused or taken back if something specific happens that neither can control.
However, if they agree that the gift can be taken back whenever the donor wants, then that gift is not valid at all.
A gift can also be taken back in some situations, just like a contract can be canceled. But if the gift is not allowed to be taken back, this rule does not change that.
The donor can put conditions on the gift, saying it can be paused or taken back. If this is done, the rules about conditional gifts apply.
According to Section 126, there are two ways to take back a gift:
1. By both the donor and donee agreeing to it.
2. By canceling it like a contract.

Revocation by Mutual Agreement:

The person giving the gift (donor) and the person receiving it (donee) can agree that the gift can be put on hold or taken back if something happens that neither of them controls. But the reason for taking back the gift must be clearly stated; it can't just be a wish or a hope.

For example, if a gift was given for past and future help from the donee, but the agreement didn’t say that the donee had to keep helping the donor, then the donor can't take back the gift. A court found that because there was no clear condition in the gift agreement, it was considered an unconditional gift.
If there is a separate agreement that includes a condition for taking back the gift, that condition can still be valid, even if it’s not in the main gift document.
The condition for revoking the gift cannot just depend on what the donor wants. If a gift can be taken back whenever the donor wants, then it’s not really a gift.
Any conditions for taking back the gift must be agreed upon when the gift is given. If the agreement to take back the gift is made after the gift is given, it can’t be revoked anymore.
It’s not necessary for the revocation condition to be in the gift document itself, but both the condition and the gift should be made at the same time. They can be in separate papers, but they must relate to the same gift.

The rule for taking back a gift is that it must follow certain legal conditions. If a condition completely prevents the transfer of property, it is not valid under the law. So, if a gift includes such a condition, the gift cannot be taken back because the condition is not valid.

The condition for taking back the gift must depend on something that happens in the future and is not controlled by the donor. For example, if A gives his field to B but says he can take it back if B and his children die before A does, this is a valid condition. If B dies without children while A is still alive, A can take back the field.
If the agreement states that the donor can take back the gift whenever he wants, that condition is not valid. In this case, the gift cannot be taken back. For example, if A gives B one lakh rupees but says he can take back 10,000 rupees whenever he wants, the gift of 90,000 rupees is valid, but the 10,000 rupees is not really given as a gift. It still belongs to A, and legally, it’s as if no transfer of that 10,000 rupees happened at all.

Revocation by Rescission as Contracts:

A gift is when someone gives ownership of something freely and willingly. If it can be shown that the donor did not give the gift voluntarily—meaning their agreement was not truly their own—the gift can be taken back.

A gift usually comes after an agreement between the donor and the person receiving it (donee), where the donor offers the gift and the donee accepts it. If this agreement is canceled, the gift cannot happen.
According to Section 126, a gift can be taken back for the same reasons a contract can be canceled. For example, if the donor’s agreement was influenced by threats, pressure, lies, or misleading information, that agreement can be considered void, and the donor can take back the gift.
This rule about revoking a gift does not apply when the gift is completely invalid, like if the donor didn’t have the legal right to give it. So, if the donor was forced or tricked into giving the gift, they can choose to take it back. If they don’t take action to revoke it, the gift remains valid.
Only the donor can take back the gift for these reasons; they cannot pass this right to someone else. However, after the donor dies, their legal heirs can request to take back the gift if any of those issues apply.
There is a three-year limit for the donor to revoke a gift based on fraud, coercion, misrepresentation, or undue influence, starting from when they become aware of these issues.
Once the donor accepts the gift again, either openly or through their actions, they can no longer take it back for those reasons.

Mohammedan Law: Conditions for Gift Suspension and Revocation.

When both people involved in a gift are Muslims, the rules for that gift come from Islamic law, not the regular property laws. A Muslim can take back a gift after giving it, but there are some exceptions. A gift cannot be taken back in these situations:

If a husband gives a gift to his wife or a wife gives one to her husband.
If the person receiving the gift is closely related to the person giving it.
If the gift is given to a charity or for a religious purpose.
If the person who received the gift has died.
If the item given has been sold or given to someone else.
If the item given is lost or destroyed.
If the item has become more valuable, no matter why.
If the item has changed so much that it can not be recognized (like turning wheat into flour).
If the person giving the gift received something in return for it.

What do you mean by a Gift Deed?

A Gift Deed is a legal document that shows a person is giving their property to someone else for free, without expecting anything in return. This document must be officially registered with the local authorities according to the Indian Registration Act of 1908, and the transfer is only valid if both people are present.

If the Gift Deed is not registered, it could be considered invalid according to the rules of property transfer.

The two parties involved:

The one who gifts is called the donor.
The one who receives it is called the donee.

Why a Deed of Gift Matters: Key Purposes

A Gift Deed serves the following important purposes:

Transfer of Ownership: The main purpose of a Gift Deed is to transfer ownership of property or valuable items. This can include things like land, houses, stocks, bonds, or any other items of value.
Estate Planning: People often use a Gift Deed to help with planning what happens to their property after they pass away. By giving away their assets while they are still alive, they can manage taxes and make sure their belongings are shared fairly and according to their wishes.
Charitable Donations: Non-profit organizations and charities often get donations through a Gift Deed. This legal document allows donors to support causes that are important to them.

Understanding The Importance Of Registering a Gift Deed.

A registered Gift Deed is an official document that makes the transfer of ownership of assets, like property, legally binding without any payment. Registering the Gift Deed with the government adds trust and legal strength to the document, helping to prevent future disagreements about the gift. To register a Gift Deed, you need the original document and other papers like an ID, PAN card, Aadhaar card, and details about the property, such as the sale deed. You might also need other documents related to the property. The transfer of property as a gift must be done through a registered Gift Deed at a local office, and you will need to pay stamp duty and registration fees.

What You Need: Documents for a Gift Deed.

To create and register a Gift Deed, you generally need the following documents:

Proof of Ownership: The person giving the gift must show they own the property or assets. This can include property papers, title deeds, or ownership certificates.
Identity and Address Proof: Both the person giving the gift (donor) and the person receiving it (donee) need to provide ID and address proof, like an Aadhaar card, passport, or voter ID.
Sale Deed: If the property was bought through a Sale Deed, you need to include a copy of that document.
Encumbrance Certificate: This certificate shows that the property has no legal issues or debts attached to it.
Witnesses: Two witnesses must be present during the signing and registration of the Gift Deed, and they need to provide their ID and address proof as well.

Step-by-Step Guide to Gift Deed Registration.

Registering a Gift Deed is important to make the gift legally valid and enforceable. Here are the key steps involved:

Prepare the Deed: First, write the Gift Deed, including all necessary details about the donor, the recipient (donee), the property, and any terms and conditions.
Visit the Sub-Registrar Office: Next, go to the local Sub-Registrar Office to start the registration process.
Payment of Stamp Duty: Pay the required stamp duty based on the value of the property or assets being given as a gift.
Execution and Attestation: The donor and donee must both be present at the Sub-Registrar Office to sign the Gift Deed. Two witnesses are also needed to sign and confirm the document.
Registration: Submit the Gift Deed for registration at the Sub-Registrar Office. This step includes checking the identities of everyone involved and making sure the deed meets legal standards.
Receipt of Registered Deed: After registration, the Sub-Registrar will give you a copy of the registered Gift Deed, which serves as official proof of the gift.

Gift Deed Charges: Understanding the Costs Involved.

The costs of creating a Gift Deed include stamp duty and registration fees, which can differ based on where you are and the value of the property or assets being gifted.

Stamp Duty Charges: This fee is based on the market value or the value set by the government for the property. Different states have different rates for stamp duty, so it's important to check the rates in your area.
Registration Charges: These fees also depend on the value of the property or assets. The registration charge is usually a fixed percentage of the property’s value and can vary from one state to another.

Conclusion.

The concept of a gift and what it includes has been a long-standing topic in property law. The Transfer of Property Act of 1882 outlines all the rules and steps related to gifts and how ownership is transferred.

For a gift to be valid, several important points must be met: there must be a clear transfer of ownership, the ownership must relate to property that currently exists, the transfer must be made without expecting anything in return, and it must be given willingly by the donor.

Additionally, the donor must be legally capable of giving the gift, and the recipient must accept it. The most crucial part is that the gift must be accepted while the donor is still alive and able to give the gift.

Registration is essential for all gifts of immovable properties; without a registered deed of gift, the title cannot be transferred. A gift becomes valid and complete only upon registration.

When examining the laws related to gifts, we encounter key aspects such as gifts of existing and future property, the conditions under which a gift can be revoked, and donations made in contemplation of death (donatio mortis causa).

Once a deed of gift is executed and registered, it cannot be revoked unless the requirements of Section 126 of the Transfer of Property Act, 1882, are met.

Therefore, it can be concluded that the Transfer of Property Act, 1882, serves as a comprehensive code governing the regulations of gifts in India. Section 126 clearly outlines how gifts can be suspended or revoked in two ways:

by mutual agreement,
through rescission as contracts.

Frequently Asked Questions (FAQs):

1. What are the legal steps involved in transferring property from a grandfather to a grandson in India?

Transferring property from a grandfather to a grandson in India can be done in several ways. If the grandfather wants to transfer ownership while he is still alive, he can use a gift deed to transfer the property without any payment or a sale deed if money is exchanged for the property. Another option is for the grandfather to create a will that clearly states how he wants his assets to be distributed after his death. If there is no will, the property will be transferred according to intestate succession laws, which govern inheritance based on legal guidelines.

2. How long does the property transfer process typically take from a grandfather to a grandson in India?

The time it takes to transfer property from a grandfather to a grandson in India depends on the method chosen. A gift deed transfer usually takes a few weeks to complete, as it involves drafting the deed, getting signatures, and registering it with the appropriate authority. A sale deed transfer may take a similar amount of time. However, transferring property through a testamentary will can take longer, potentially several months, due to the need for probate proceedings and legal validation of the will.

3. Is registration mandatory for a gift deed of immovable property?

Yes, registration is mandatory for a gift deed involving immovable property under the Transfer of Property Act, 1882. The title to the property cannot pass without a registered gift deed. Registration provides legal validity and helps avoid future disputes regarding the ownership of the property.

4. Can a gift deed be revoked under the Transfer of Property Act, 1882?

A gift deed can be revoked under certain conditions as specified in Section 126 of the Transfer of Property Act, 1882. Revocation can occur by mutual agreement between the donor and the donee or through rescission as contracts. However, once a gift deed is executed and registered, it cannot be revoked unless these requirements are met.

References.

Written by Ruthvik Nayaka

Ruthvik Nayaka is a final year law student, his interests lies in areas including, but not limited to Corporate Law and taxation law. He is also the EN-ROADS Climate Ambassador. He facilities climate-workshop, climate action simulation game and group meetings.