GIFT DEED

Overview

A ‘Gift Deed’ is a legal document that represents a transfer of gift from one person to another person under the provisions of the law. Gift Deed is a legally binding written legal document defined under section 122 of the Transfer of Property Act, 1822, through which the donor can transfer his movable or immovable property to the donee voluntarily. A Gift Deed is valid only if it is given out of love and affection, without any consideration in return by one family member/friend to another. Also, under Section 17 of the Registration Act, 1908, it is mandatory to have a registered Gift Deed when you want to transfer immovable property and the registered documents must be signed by the donor and attested by at least 2 witnesses. However, in this case, the witnesses attest only to the fact that it was the donor who has signed the registration instrument but not to the actual details of the documents.

Gift Deed

In case of Minor

Since the contracts with a minor are ‘void ab initio’ which means ‘to be treated as invalid from the outset’ and a gift deed is a legal contract. Minors are not eligible to be a donor and therefore a gift deed where the minor is the transferrer is not valid in the eyes of law. In a circumstance where the donee is a minor, a natural guardian has the right to accept the gift on his behalf.

What can be Gifted?

  • It must be well defined and in existence.
  • It can be both movable and immovable property.
  • It must be transferable.
  • It should exist in the present. It should not be a future property.
  • It should be tangible.

COMPONENTS OF GIFT DEED

Consideration Clause

The Consideration clause should be clearly mentioned in the Gift Deed that the transfer is being made out of love and affection and there is no exchange of money or any other type of consideration is involved. It is irrelevant how small the consideration is, it would not be considered as a gift.

Possession of Property

The property you want to gift must be in your possession i.e. you must be the titleholder of that immovable property. While making a gift, the property must be in existence, you cannot gift something that you might get in the future. The movable property must be purchased and the same must be in your possession.

Free Will of Transferor

The transfer should be free from any type of coercion, undue influence, threat or fear. The gift should clearly state that the transfer is voluntary and that the transferor has a clear intention of doing so.

Information about Property

A detailed description of the property is a must. It should clearly specify the structure, address, color, area, location, etc.

About Donor and Donee

The relationship between donor and donee is important as to whether they are blood relatives or not. Some state governments also offer a concession on stamp duty if gifts are made to blood relatives.

Rights and Liabilities

Under this clause, if any additional rights or liabilities are attached to the gift shall be mentioned. For example, any rights relating to the further sale, or leasing it further.

Rights of Donee

A clear mention of Donee rights forms an inseparable part of the Gift Deed. It includes the done rights to enjoy the property peacefully, to make changes to the property and receive rents or any profits that might arise from that property. 

Delivery

A delivery clause talks about the action (express or implied) which would confirm the delivery of the possession of the property.

Revocation Clause

The Revocation clause will help in avoiding future complications. It has to be expressly mentioned, not implied. And donor and donee both have to agree on this clause. Though, the revocation is not mandatory but advisable to include in deed.