What is a Gift Deed?
It is a legal document that transfers the gift from a donor, i.e. the owner of the property, to the donee, i.e., the receiver of the gift without the exchange of money. The donor giving gift must be solvent and should not use this medium for illegal gains and tax evasion.
What can be Gifted?
Anything which qualifies as a gift must contain the following properties:
- It should be well defined by existing immovable or movable property.
- It should be easy to transfer.
- It should be the existing property and not a prospective property.
- It should be tangible in nature.
Process of gifting can be subdivided into three parts:
Drafting of the Gift Deed – The lawyer usually drafts it, it must contain what is to be transferred and to whom. Gift Deed is a contract between the donor and the donee which defines the reciprocal act of giving and taking.
Acceptance – Acceptance of the gift is a legal requirement after its execution and donee must accept the gift. If the donee fails to accept the gift, it is rendered as invalid. The acceptance can be validated by taking the property possession
Registration – The title of a gift cannot be passed unless and until the Deed is registered as mentioned under Section 123 of the Transfer of Property Act. At the time of registration and post-registration, the attestation by two witnesses is required.
In the case of Minor: The person who owns the property can make a gift to any other person. When the donor or donee is minor, then it is an exception to the rule, as minors are not eligible to contract, they cannot transfer property as a gift. A gift deed in case of the minor donor is not valid.
A natural guardian on behalf of Minor can accept a gift. In the case of the gifted property, the guardian acts as a manager. Once the donee becomes an adult, it is his responsibility to either accept the burden or return the gift.
The registration procedure can be done as follows-
- It is necessary to sign the Deed by both the donor and the Donee in the presence of 2 witnesses
- Valuation of the gifted property
- Submit the signed document to the nearest Sub-registrar Office.
- When mentioning 'nearest', it refers to the Sub-Registrar Office nearest to the immovable property, i.e. within its jurisdiction.
- Submit the document, pat the stamp duty and registration charges and get attestation on Deed.
Is Registration Compulsory?
Any Gift Deed, which can be movable or immovable, if challenged in court will stand as supporting evidence only if it is registered. However, for the gift deed of movable property registration is not mandatory. However, it should be remembered that the unregistered Gift Deed is not secured legally.
When the gift deed is addressed to the several donees, and even one of the beneficiaries refuses to accept the gift, then the Deed is considered as a void to the limits of the part of a property that was conferred to the party who refused the gift.
The key elements of Gift Deed:
- The Deed must specify the fact that the donee need not work to gain ownership of the gift.
- The gift deed is done with the idea that the gift is given out of the affection to the recipient.
- The donor must own 100% interest in the property that he wishes to transfer in the name of the donee.
- It is necessary to witness the Deed along with the signature on the Deed to certify it as a valid document.
- The witnesses in the gift deed act as a disintegrated party, which means that they are not receiving the benefit from the transferor are not liable to guarantee.
Revocable Gift Deed: When the donor drafts the gift deed and keeps the same in his possession until he decides the right time to give the gift to the recipient. The donor has the right to revoke the Deed even if the document is fully complete along with the signature of witnesses.
Irrevocable Gift Deed: When a gift deed is prepared and signed by the witnesses with all the legal formalities and necessities, and it is given to the donee, i,e the recipient, the donee becomes the owner immediately. As the name suggests, the Deed cannot be revoked by the donor. Therefore the deed is known as an irrevocable gift deed. The money, movable or immovable property cannot be reclaimed. Therefore, when a person thinks of making a gift deed, he should decide whether the deed should be revocable or irrevocable.