GIFTING OF PROPERTIES LEGALLY

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Gifting of Properties to the beloved ones on different occasions is a way of expression of love and affection.Gifts are made even for other purposes including philanthropic, religious or charitable purposes. When such gifts are made and accepted, According to Law, there is transfer of property in favor of the Donees from the Donors.Transfer of property can be both movable and immovable. Whereas this Article, deals with gifts of immovable property.

‘Gift’, is defined in section 122 of the Transfer of Property Act, 1882, as a transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the Donor, to another, called the Donee and accepted by or on behalf of the donee. Section 123 of the Act stipulates the procedure as to how transfers of immovable properties are affected.

Characteristics:

For a valid  Gift, it  must have the following essential characteristics;

(1) Donor must be a competent person,

(2) it must be made voluntarily,

(3) it should be without consideration,

(4) there must be an offer by the Donor,

(5) there must be an acceptance by the donee or on his behalf,

(6) acceptance  must be done during the life time of the Donor and the donee; and

(7) must be an existing property and not a future one.

A gift is essentially a gratuitous transfer. In other words, non-acceptance of monetary consideration in return from the donee by the Donor is the hallmark of a gift. Even an undertaking by the donee to pay a token sum would tantamount to consideration and the transaction would not qualify to be treated as a gift. A gift cannot be made with an intention of placing the donee under a legal obligation. Section 123 of the Transfer of Property Act, postulates that an immovable property requires registration and for want of registration oral gift is not admissible in view of Section 17 of the Registration Act. Therefore, gift of immovable property can be effected only through a registered instrument. The Donor must sign a deed of Gift and at least two witnesses must attest his signature. A deed of gift needs the donee’s acceptance and therefore the general practice is that donee, is made a party to the deed and also to be made an executing party. If the donee does not accept the gift, the mere fact of registration will not make the gift legal. A gift is complete upon the execution of the deed of gift and its delivery to the donee, which constitutes his acceptance of the gift.

Contents:

A gift deed must contain a brief narration as to how the Donor got possession of the property; whether it is his self-acquired property or his share of ancestral property, whether the property is encumbered or not and if encumbered, how he will indemnify the Donee against any monetary loss, whether the Donor is competent to deal with the property and whether the donee is competent to accept the gift.

If the gift is to a Public trust or a charitable institution, it is always advisable to follow the procedure adopted for affecting the sale of an immovable property by scrutinising the title as to its ownership, marketability and encumbrance. It must be in writing.

Intention of maker:

The donee obtains his interest in the property immediately on execution of the gift deed by the Donor. Hence, even if there exists a recital in the gift deed that the gift is revocable, in effect it is irrevocable.It is the intention of the maker and not the nomenclature of the document, which requires consideration to find out as to whether a document is a gift deed or not and the document must be read as a whole. Further, Donor can gift to the donee only an existing property and not the future property. The Donor must ensure that, the donee is competent enough to accept the gift. Only a major can make a gift and not a minor unless the guardian of the minor is empowered to do so.A minor can accept a gift, if he is capable of understanding the transaction. Otherwise, he can accept it through his Guardian. Indian Registration Act requires that all non-testamentary gifts if reduced into writing require registration with an exception as provided in sec.129 of the Transfer of Property (T.P.) Act dealing with the gifts of Mohammedans.

Acceptance and delivery:

Acceptance of the gift must be given by the Donee or on his behalf during the lifetime of the Donor and if the donee dies before acceptance, the gift becomes void. The Donee is not bound to accept the gift in the same form, in which it is offered to him. Mere dedication of some land for the purpose of a temple will not qualify to be considered as a gift in the absence of acceptance by the donee. Post-acceptance by the donee of the gift also is impermissible. A gift is not valid unless it is accompanied by delivery of possession of the subject of the gift from the Donor to the Donee. But, where from the nature of the case physical possession cannot be delivered the Donor must do all the Acts so as to entitle the donee to obtain possession.

Undue influence:

While effecting any gift, the Donor should not be under pressure or under undue influence of the Donee and the gift should emanate from a free will and at the discretion of the Donor. Suppose, X, the Donor, has been looked after by Y, the Donee during the last phase of his life and thereby X develops love and affection towards Y leading to execution of the deed of gift. This circumstance cannot be considered to be a circumstance of undue influence. If a gift is not spontaneous and independent, there may be a case of undue influence against the Donor.

Separate Property of Co-Parcener:

The Karta of a Hindu family has the power to make a gift within reasonable limits of the ancestral immovable property for pious purposes. A Co-Parcener, throwing his separate property into common stock makes no gift. It has been held by the Supreme Court in the Mallesappa Bandappa Desai vs.Desai Mallappa [1961 (3) SCR 779] case; that the doctrine of throwing into common stock inevitably postulates, that the Owner of a separate property is a Co-Parcener, who has an interest in the Co-Parcenary property and desires to blend his separate property with the Co-Parcenary property. The Act by which the Co-Parcener throws his separate property to the common stock is a Unilateral Act. By his individual volition he renounces his individual rights in that property and treats it as a property of the family. When a Co-Parcener throws his separate property into the common stock, he makes no gift under the Transfer of Property Act.

A minor can accept a gift and the minority by itself is not a bar to his acceptance of the gift. A gift can be made to a class of persons provided the members there of, are existing at the time of gift. Where a gift is made to two Donees and the gift to one of them is invalid, the other would take the whole estate. Acceptance of gift may be either express or implied. Even silence on the part of the Donee is sufficient to infer that the Donee accepted the gift.

Differs from Sale:

A gift is distinguishable from a Grant, Sale and Will.

In the case of grant, neither acceptance nor delivery of possession of the property is necessary. A gift is voluntary and without consideration while a grant may lack both. A gift conveys the corpus while a grant may convey only the right of enjoyment of property without conveying any interest in the corpus. A gift must be unconditional, but a grant need not be so.Property acquired by gift is transferable, but one obtained by grant is not necessarily so and the grant depends upon its subject, purpose and terms. A grant may be revocable at the Will of the grantor, while a gift is irrevocable at the will of the Donor.

In the case of sale, consideration in money or money’s worth is a must while a gift is a voluntary transfer of property without any consideration. In sale of property, unlawfulness of consideration would render the whole transaction void since consideration is an essential element of sale. But, in the case of a gift, as consideration is of no consequence, unlawfulness of consideration would not invalidate the gift.

The criteria to be adopted for ascertaining whether an instrument is a Will or not is by examining whether the disposition takes effect during the life time of the Executant of the instrument or whether it takes place after his demise and whether it is revocable or not since in the case of gift,the transfer of property takes place immediately upon execution and delivery of the gift deed. In the case of a Will, the Donor must reserve to himself the power of revocation,the Will must not be expressed and intended to operate in presenti but only in future on the death of the Donor and regard must be had to the intention of the Donor and the language used by him.

When invalid:

A gift is considered as invalid; (a) if the property gifted is not in presenti, (b) if one of the Donees refuses to accept his share (in respect of that Donee), when the gift is made jointly to the Donees, (c) if it is a revocable gift, (d) if it is an illegal transfer and (e) if it is transferred by an incompetent person.

Stamp Duty:

If the Gift is given to the family members, Stamp Duty is applicable as per Karnataka Stamp Act. The family members in relation to the Donor for the said purpose means; husband, wife, son, daughter, daughter-in-law, grand children etc.

If it is other than the family members, that is any trust, charitable institutions etc., Stamp Duty is payable as a Conveyance as per the market value.

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SUCCESSION CERTIFICATE

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

The Indian Succession Act 1925, deals with the Succession certificate.The relevant sections are 370 to 390 in Part X of the act.

The Succession certificate is representative in nature.During one’s lifetime one might have lent money or acquired securities.He might have not have recovered those debts or money due under securities, when he was alive. When such a person, a creditor dies, somebody should recover such debts or money from the borrowers, which is generally done by the legal heirs, of the deceased.The law has facilitated this process and section 370 of Indian Succession Act provide for issue of Succession certificate in such cases.

But the issuance of Succession certificate has some limitations.The Succession certificate cannot be granted in respect of any debt or security to which rights have to established by letters of Administration or Probate as per Sections 212, 213 of Indian Succession Act.

As per the section 212, no right to any part of the property of the person who has died without making a Will, can be established in any Court of Law unless letters of administration are obtained from a Court of proper jurisdiction.Similarly no right as an executor can be established in any Court of Law unless a competent jurisdictional court grants probate of Will. 

But it should be borne in mind that the Succession certificate does not finally adjudicate as to the legal succession.The certificate simply authorizes some person to recover the debts and as stated earlier it is merely representative in nature. All the money recovered and obtained has to be disposed off as per the rights of the persons who are finally entitled to it.The Succession certificate serves dual purposes, it prevents debts from being time barred, on account of disputes among the legal heirs and helps the borrowers, who can discharge the debts by paying to the representative of the deceased, which provide a valid discharge.At certain times the court will insist on the security from the person to whom certificate is granted as source of indemnity to the persons ultimately entitled for such moneys.The grant of the certificate does not confer any title on the grantee.

The word debt has a wide meaning than generally understood.An amount due under life insurance policy is a debt and succession certificate can be obtained.Likewise amounts under provident fund; bank deposits, are also covered under debts.A share certificate is a security under which money is due and court grants succession certificate.However, in one interesting case (Ranchhoddas Vs Govindadas Banetwala (1976) 78 Bomb LR 219: (1976)) the court held that succession certificate cannot be granted in respect of gold jewels pledged by the deceased in a bank as there was no element of debt in that transaction.

It has been made clear in the Succession Act that no court shall pass a decree against a debtor of the deceased person for payment of debt to a person claiming, on succession, to be entitled to the assets of the deceased person or any part thereof except on production of Succession certificate with the particular debt specified therein.

Any person who has beneficial interest in debt, or security of the deceased can apply for Succession certificate provided he is a major and of sound mind.  A guardian appointed under Guardians and Wards Act can also apply for Succession certificate.Any application for Succession certificate has to be made to the district court in accordance with the procedure prescribed by the code of civil procedure.

Succession certificate can also be revoked in some instances; like, the proceedings were defective in nature, the certificate was obtained by making false suggestion or concealing some information, the certificate was obtained by means of untrue allegations,the certificate has become useless, inoperative on account of circumstances that a decree or order made by a court in a suit or other proceedings with respect to the effects of debts and securities specified in the certificate renders it proper that the certificate should be revoked.

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CONSUMER COURT CAN HELP IN REAL ESTATE ISSUES

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

When a New Delhi based homebuyer approached a consumer court to file a case against the developer who did not deliver the project on the promised date, she did not know that consumer courts to admit cases involving possession of property or any kind of delay in construction.These cases are taken up by the civil courts. In the above mentioned example, the customer has already paid 95% of the total cost of the property, but is still to get possession. The matter is sub judice.

Like our friend from New Delhi, many homebuyers do not know that such cases do not come under the purview of consumer courts. However, delay in construction is not the only problem that homebuyers face.There are other cases such as deficiency in services at various points even after possession of flat, where you can seek help of consumer courts. Here's a list of some such problems in which you can take the developer to the consumer court.

Construction defects and maintenance:

There could be variations from what you were promised, in the final design of the apartment. If you do not get the same design or outlay as mentioned in the advertisements or shown in the sample flat, it is a deficiency in services on the developer's part.

Even poor construction quality can be the basis of a consumer complaint where you can drag the developer to a consumer court. "For the first year after possession, the builder is liable to take care of damages such as leaks in water pipes or cracks in the walls. If he refuses to do so, you can lodge a complaint with the consumer court." Says Rajesh Goyal, Managing Director, RG Group, a New Delhi-based real estate firm.

Also, it is the developer's responsibility to maintain parks, parking spaces, clubs and other such amenities for the first three-five years. However, in case he is not doing the same, you can ask for a refund of the amount that. you have already paid at the time of buying the property. If he acts stubborn, you can drag the  lover to the consumer court.

Escalation Clause:

The price of the flat can go up, though marginally, during the course of construction. This can happen any time during the construction. If you look at the agreement paper signed with the developer, you will find a rise-and-fall or alteration clause which allows the developer to take a unilateral decision on price change during the course of construction. Though price changes depend on various factors such as demand and supply in the housing sector, home loan rates or prices of raw materials, the clause doesn't mention the range of price rise. "There is nothing much that you can do about the change if you have signed the builder-buyer agreement." Says Snehdeep Agarwal, Director, Bhartiya Group, a real estate firm with projects in Bangalore. However, if the developer is not able to justify the reason for a hike in price, you can seek help.

Misuse of common areas:

The developer cannot sell the open spaces within the premise for setting shops and offices. Selling of common spaces of the complex may take away the extra space that you have paid for. It has been observed in the past that developers sell common spaces without the permission of the resident’s welfare association. Even setting up telecommunication towers on the roof of building need permission of the residents in writing.

Delay Compensation:

Although the property possession cases are taken up by civil courts, you can approach the consumer court if the developer fails to pay you the delay compensation charges in such cases. Most builder- buyer agreements have a delay- compensation clause. According to this clause, an amount at the rate of, say, Rs.5-7 per sq.ft has to be paid to the homebuyer in case the property is not delivered on scheduled date.

Case Hearing:

The hearing in consumer courts is taken on a fast-track basis. You may get a judgement in a single day if all the necessary documents are in place. If the court finds the developer guilty, it orders a compensation amount that he needs to pay to you. The Consumer Protection Act, 1986, provides a three-tier system of redressal agency - first, at the district level known as the district forum; second, at the state level known as the state commission; and third, at the national level known as the national commission. These forums deal in matters of real estate as well as consumer goods.

"A consumer can file complaint in the district forum of the district concerned where the value of goods, services and compensations, if any, up to Rs.20lakh. He can approach the state commission for cases involving sums of money between Rs.20lakh and Rs.1crore, and the national commission for more than Rs.1crore." Says Sunder Khatri, a Delhi- based lawyer practicing in the Supreme Court.

There is provision for appeals against orders of a particular forum by the aggrieved party before the next higher forum / commission and even from the findings of the national commission before the Supreme Court.

How to go about it:

Approaching a consumer court is fairly simple. In fact you do not even need a lawyer for filing a case in a consumer court. You can write your problems in a piece of paper and send it to the court through post. In your note, you need to mention the problem and the name of the person who is responsible for the deficiency in service. Says Khatri, "While, you should address the particular court and mention the subject is one line at the start of your application. Following this you should mention all the facts of your complaints under section 12 of the Consumer Protection Act."

Most importantly, it is a must to mention the compensation amount in terms of money that you want as refund from the developer. However, you need to justify the amount with proper documents, adds Khatri. If you name the developer, the court will summon the same. The developer may appoint a representative to appear in the court on his behalf. If your case is an old one, you can ask for an increased amount of compensation based on the fact that property rates have also increased over the period.

However, before you approach the consumer courts, discuss the issue with the developer. In most cases, developers would want to avoid legal battle and would want to solve the matter outside the court.

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