What is Property Transfer?
“Transfer of property” is defined as a deed by which a living person transfers Immovable or Movable assets, to one or more living persons, in the present or future. A living person can include a company, association, or body of individuals, whether incorporated or not.
Transfer of property involves the transfer of any interest in the property and the transfer of Legal title of such property or assignment of receivables, actionable claims, or assets under litigation.
What are the laws involved in Property Transfer?
Many laws, rules, and regulations are involved in property transfer. Below is the list of the most essential laws in Property Transfer:
Transfer of Property Act 1882
It is a pre-independence law that forms the basis for the transfer of immovable assets from one living person to another. Over the years, this Act has gone through many amendments to make it coherent with the changing circumstances. This Act provides for the procedure of Transfer of Property, definitions of various terms involved in the Transfer of Property (like Registered, Immovable property, Attested, Actionable claims, Mortgage debt, etc.), lease of property, etc.
Indian Succession Act, 1925
The Indian Succession Act is another critical piece of legislation. It lays down the legal procedures for making, drafting, executing, and administering a Will. This Act applies to all persons of any faith (except Muslims).
Hindu Succession Act, 1956
Hindu Succession Act codifies the laws relating to unwilled or intestate succession among Hindus, Buddhists, Jains, and Sikhs. It gives a uniform and comprehensive system of inheritance and succession.
Types of Property Transfer deeds
Property ownership or title can be transferred in India through different methods. As per the situation, a person can transfer property through a simple sale deed, gift deed, or relinquishment deed. Below are the top five ways to transfer property ownership in India:
Any property transfer which involves the sale or purchase of the assets is to be established through a sale deed. A sale deed is crucial for both the transferor and the transferee of the property. It acts as a legal record governed by the Registration Act.
The Sale deed includes all important points like:
- Information about the buyer and seller like name and address,
- Information of the property under question, like location and address of the property.
- The total area of the property.
- Details of construction, if it is a house.
- The Sale deed also mentions whether the property under sale is free from legal disputes or not.
- The Sale deed also mentions the amount to be paid for the purchase of the property. Any advance amount paid for the property, time given for payments, and details of the bank accounts.
The stamp duty is also levied on the sale deed, which varies between one to eight percent across different states in India.
Transfer through Power of Attorney (POA)
“Power of Attorney” is a legal arrangement between two parties for the transfer of rights. It was mostly used to avoid stamp duties and registration duties. Here, the owner transfers the property rights to the transferee and all the benefits arising from it. This instrument is widely used when the property under question is under legal dispute.
Also Read: What is Power of Attorney and its types?
This deed is carried out when the owner wants to wilfully transfer the property to the co-owner and abandons his/her share in the property. Once signed by both parties and registered, the relinquishment deed is irreversible, even if no monetary exchange is involved.
Tax and stamp duty is levied as per the amount or percentage of the property relinquished by the co-owner and not on its total value. For example, if an owner holding a 10 percent share in the property relinquishes the property, then the stamp duty will be levied on only 10 percent of the property value.
A gift deed is executed when a person wants to transfer the property without any exchange of money, like gifting the property to someone. The transferor should draft the transfer of possession title on stamp paper and get it attested by two witnesses before its registration. The gift deed has to be registered with the sub-registrar, and once the deed is registered, the transfer is irreversible.