Gift Deed

Introduction

A gift deed is a legal document that allows a person, known as the donor, to transfer ownership of property to another person, known as the donee, without receiving any consideration in return. This means that the donor is giving the property to the donee as a gift. Gift deeds can be used to transfer both movable and immovable property.

Movable property is any property that can be moved from place to place, such as cars, furniture, and jewelry. Immovable property is any property that is fixed in place, such as land, houses, and buildings.

A gift deed holds great importance with respect to the legitimacy of the transfer and these points are discussed below:

1. Legal Confirmation: A gift deed serves as a formal legal document, acknowledging the transfer of ownership from the donor to the donee. It's a recognized proof of the gift and holds weight in legal proceedings, essential for validating the transfer's legitimacy.
2. Dispute Prevention: By explicitly stating the donor's intent to gift and the donee's acceptance, a gift deed helps prevent potential disputes or conflicts regarding the property's ownership in the future. It acts as a reference point in case of disagreements, ensuring clarity and reducing the likelihood of disputes.
3. Tax Implications Clarification: The gift deed plays a crucial role in addressing tax implications for both the donor and the donee. It serves as documented evidence for tax purposes, especially in determining the tax-exempt status of the gifted property under the specific provisions of the Indian Income Tax Act.

Gift Deed Sample Format

Important Clauses to Add to Your Gift Deed

1. Maintenance Clause: The donee shall be responsible for all maintenance expenses, including repairs and upkeep of the gifted property, from the date of transfer. However, major structural repairs exceeding [specified amount] shall be the responsibility of the donor.
2. Revocation Clause: In the event of the donee failing to adhere to the conditions specified herein or engaging in activities detrimental to the property's value, the donor reserves the right to revoke this gift deed upon providing a [specified notice period] to rectify the situation.
3. Succession Clause: In the event of the demise of the donee, the gifted property shall revert to [specific beneficiary or stipulations], ensuring the continued utilization in line with the donor's intentions.
4. Usage Restrictions: The donee shall use the property solely for residential purposes and shall refrain from any commercial use, structural modifications, or alterations without prior written consent from the donor.
5. Contingencies: Should the gifted property be affected by eminent domain, natural disasters, or any unforeseen circumstances resulting in its substantial impairment, the donor and donee agree to mutually determine the appropriate course of action.
6. Termination: This gift deed shall be terminated if any party breaches the terms herein and fails to remedy the breach within [specified period] following written notice from the other party.
7. Reservation of Right: The donor reserves the right to utilize the gifted property for personal use for [specified duration or under certain conditions], after which full possession shall be vested in the donee.

Types of Gift Deeds

Based on Movability

1. Movable Property: Gift deeds involving movable property, like cash, jewelry, or vehicles, must adhere to Section 123 of the Transfer of Property Act, of 1882. For the validity of a gift of movable property, it needs delivery of the property to the donee.

2. Immovable Property: Gift deeds for immovable property, such as land or buildings, must comply with Section 122 of the Transfer of Property Act, of 1882. It requires a gift deed signed by the donor and acceptance by the donee. Registration of the deed is mandatory for the transfer of immovable property.

Based on Conditions

1. Outright Gift: This involves the transfer of property without any restrictions. Both movable and immovable property can be gifted without imposing any specific conditions or obligations.

2. Onerous Gift: In this type of gift deed, the donor may impose conditions or restrictions on the use or transfer of the property. However, if the conditions imposed are against public policy or illegal, they may be deemed void. For example, an individual gifts a house to a family member but includes a condition in the gift deed that the house cannot be sold or transferred to anyone outside the family for the next 15 years. However, if this condition significantly restricts the donee's rights and is considered unreasonable by law, it might be deemed void or unenforceable.

Based on Revocability

1. Revocable Gift: Section 126 of the Property Transfer Act provides for situations wherein a gift deed may be revoked by the donor. This permits the donor to revoke or cancel the gift under specific circumstances or conditions. Therefore, it is important to add a clause in the deed that pertains to the revocability and under the circumstances under which it can be practiced.

Based on Situation

1. Inter Vivos Gift: This type of gift deed is executed during the donor and donee's lifetime, applicable to both movable and immovable property. Section 123 and section 128 of the Transfer of Property Act of 1882 respectively specify the transfer of movable and immovable properties that must deliver the possession of the property from the donor to the donee.

2. Causa Mortis: This deed pertains to gifts made in contemplation of death. Section 118 of the Transfer of Property Act of 1882 defines a gift made after the death of the donor and Section 122 states how the terms of the deed should have been drawn during the donor's lifetime to be legally valid.

Conclusion

A gift deed serves as a vital legal document facilitating the transfer of property from a donor to a donee. It encompasses both movable and immovable assets. The deed clearly outlines the donor's voluntary transfer and the donee's acceptance of the property.

Gift deeds manifest into diverse types, considering aspects like imposed conditions, movability, revocability, and the contextual situation. Drafting a comprehensive gift deed involves integrating specific clauses beyond boilerplate content to ensure its security and legal validity. This article provides insight into various clauses, aiding in the drafting process.

Furthermore, it addresses pertinent FAQs related to gift deeds, delving into tax implications, legal implications, and more. By exploring these facets, individuals can navigate the complexities of gift deeds, ensuring a thorough understanding of their implications and legal obligations.