Gift Deed

There are various factors which must be considered while drafting a gift deed. This paper seeks to explain the procedures and essential features of a gift deed.

What is a Gift Deed?

A gift is a common method of transferring either movable or immovable property. This transaction must be made voluntarily and without consideration by the donor to the donee. The donor must not simply execute the gift deed but, must also possess the intention to gift. If there is any fraud or undue influence such as exercising power or authority over the donor would make the gift void. In Poosathurai v. Kappanna Chettiar was held that, more than mere influence must be proved to make it undue influence. Influence can be used wisely, judiciously and helpfully as well.

A gift must be given without anything in return, if money is given in return it will become a sale and if something else is given in return it will become an exchange. A gift deed can only be made of existing property movable or immovable property, future property cannot be given as a gift.

A gift can be absolute or limited. If it is an absolute transfer there is complete ownership of the property by the donee. However, in a limited transfer there is only a life interest created, the property revert backs to the donor heirs after the donee’s death.

Registration

A deed which intends to gift an immovable property must be compulsorily registered. The same will be required to be registered with the sub-registrar. The stamp duty for a gift deed can vary anywhere from 1-8% depending on the state where the transfer takes place. The stamp duty is usually higher when the transfer is done to a non-relative.

If gift deed are made to certain family members or relatives no stamp duty has to be paid. This is usually the case when it comes to Hindu Unified Family or transfer to a spouse.

Acceptance

A gift deed is only valid if there is acceptance from the donee before the donor’s death and while he is still capable of giving. A gift is also void if the donee dies before acceptance. 

The acceptance of a gift can be implied. For instance, if the donee changes the name of the property in the registrar or begins to collect the rent from the property.

Once a valid gift is accepted it cannot be cancelled unless it is conditional gift. On acceptance of a gift the donee acquires absolute rights in the property, depending on the rights created.

Anyone is eligible to be a donee even a minor. If the minor is too young for acceptance, someone can accept it on his behalf. A gift can also be held by a guardian until the minor attains adulthood.

Transfer

When the donor wants to gift immovable property it has to be a written document. An oral gift of immovable property is void, even if it is registered.  For transfer of movable property, it has to be either delivered or registered in the name of the donee.

If a gift compromises of both existing and future property it is only valid to the extent of the existing property. This is because the Transfer of Property Act, 1882 declares gifting of future property void.

When a gift is given to two or more donees and one of them refuses, the gift is void as to the interest he possesses.

Conditional Gift

A conditional gift is when the donor and donee agree that the gift is transferred only on the occurring of a certain event. This event should not depend on the will of the donor but, must be uncertain. So, a gift where the parties agree that the gift is revocable by donor is void. This is an exception to the rule that, gifts cannot be revoked.

The condition presented may be certain or uncertain. A condition cannot be immoral or illegal. It can neither restrain nor alienate a right completely. So, a condition cannot prohibit the donee from selling or alienating a property unless he only has a life interest.

While condition can usually be attached to gift, it is prevented by the Muslim personal law. So, Muslims are restricted by their personal law from attaching conditions to their gifts. In Hafeeza Bibi vs Shaikh Farid the court held that, under Mohammadan law a gift has to be unconditional. So, gifts with conditions expressed in them can be treated as void. While a conditional gift is valid the condition itself is void.

This article is written by Haridya Iyengar, a passionate writer at Aapka Consultant, India's leading online one stop business service provider, whose key focus areas are Trademark Registration, Company Registration, Business Compliance's, Copyright, Tax Compliance's, Legal Documentation etc.

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