Family Property Partition for NRIs and OCIs in India

 A family property partition is a process of dividing an existing estate into separate segments to show the proportionate interests of the owners. It is a way to divide a joint property among several people so that each person can get their share of the property and become the owner. According to the common law, anyone who owns a concurrent undivided piece of land can obtain such a division. Upon dividing the property, each new owner gets a more precise title and can deal with their shares in whatever way they wish. A family partition property deed is usually executed between family members to divide the property. After the property is divided, each member can gift, sell, or transfer his share according to his needs.

Types of Property 

There are two types of property that an individual can acquire in India. The succession of a property is governed by- 

1. Ancestral Property 
2. Self-acquired Property

What is Ancestral Property (unobstructed heritage)

Many people say they own ancestral property, but what does it mean? Even though ancestral property rights have existed since time immemorial, the term has not been defined in any legislation governing the property’s inheritance and succession.  

In general, ancestral property refers to property that can be inherited for up to three generations. Ancestral property is a part of the coparcenary property. It is a property inherited from the father, father’s father, and great-grandfather. 

Property inherited from ancestors includes: 

Ancestral property refers to any property inherited for up to four generations. According to the inheritance law, this property should have remained an undivided family asset until the fourth generation. Therefore, shares in such property accrue by birth. 

The rights to ancestral property are also determined per stripe rather than per capita. In other words, the share of each generation is determined first, and the percentage of the successive generations is then divided up into smaller shares. Each generation inherits from its predecessors. 

What doesn’t include ancestral property: 

• Self-acquired property is not classified as ancestral property.
• Properties divided under partition deeds, family arrangements, etc., lose their ancestral character.
• The inheritance of properties from mothers, grandmothers, uncles, and even brothers is not considered ancestral property.
• Ancestral properties do not include properties inherited by Will or Gift.

These points indicate that ancestral property can be considered coparcenary property. As a result, Hindus inherit property from their fathers, which becomes ancestral to their children. As a result, when an ancestor inherits a property from his paternal ancestor up to three generations above him, his legal heirs up to three generations below him would get the same rights as coparceners. 

Here, it is essential to note that ancestral property should not have been divided by the joint Hindu family members. In 2005, there was an amendment in the Hindu Succession Act to provide women with equal property rights. A woman now has the same right to ancestral property as a man. After the division of ancestral property or family property partition occurs, all descendants will get an equal share. Further, the Supreme Court ruled that the 2005 amendment was not retrospective. 

Exclusion from ancestral property 

Some parents or grandparents may need a better relationship with their children and may want to prevent them from inheriting ancestral property. Nevertheless, this is not legally possible.  

• Each male member of the lineage of four generations is automatically entitled to inherit the property in India. 
• Regardless, one can exclude their children from inheriting self-acquired properties. 
• In most cases, the ancestral property can be claimed within 12 years of its acquisition. However, the Court may accept and process your request if there is a valid reason for delaying the claim. 
• Individuals who wish to restrict the sale of their ancestral property may file a civil suit within three years after the sale. 

What is Self-acquired Property? 

• In the Hindu Succession Act, ‘property’ refers to the property of the deceased inheritable under its provisions. The property can be in the form of movable or immovable property and can be acquired by inheritance, demise, partition, gift, skill, exertion, purchase, or prescription. 
• A self-acquired property is any property not acquired as part of a joint family or coparcenary relationship. Hindus can own separate property even if they are joint family members. When a property is self-acquired, it has been acquired by the coparcener without using any family funds. 
• Self-acquired property is property acquired as an heir or by testamentary documents, such as a Will, or inherited from a mother, brother, or grandmother. 
• Self-acquired property is property acquired by a Hindu who is still a member of the Joint Hindu Family by exertion. 
• But most people need clarification regarding the term self-acquired property as some ancestral property is considered self-acquired property. So, the next question is when an ancestral property is regarded as self-acquired property. 
• In a joint Hindu family, a family member who has received ancestral property becomes a self-acquired property through a division or partition. 
• During the inheritance process, the self-acquired property can be merged with ancestral properties and enjoyed together. 

The laws governing the partition of NRI/OCI/PIO property under Indian Law are as follows: 

• Indian Succession Act, 1925 

The Indian Succession Act of 1925 defines two types of succession: 

1. Testamentary Succession
2. Intestate Succession 

A testamentary succession applies to deceased persons who have left a will. The property is distributed according to the Will. Without a Will, the property is distributed according to intestate succession. Different religions have different succession laws under the Indian Succession Act. For example, in the absence of a Will, Hindus, Muslims, and Christians follow different succession laws.  

Partition Act, 1893 

In 1893, the Partition Act was enacted to provide that where the property division was not reasonable or convenient, the sale of the property and distribution of proceeds would benefit all shareholders more. The Court may order the sale of the property and the distribution of profits. Moreover, the Court can allow a shareholder to buy out another shareholder at market value. And the Act also contains structured provisions on dispute resolution between shareholders. 

The Hindu Succession Act, of 1956 

With this Act, both succession and inheritance are incorporated into a comprehensive and uniform system. Furthermore, this Act deals with succession by intestate or unwilful Will (testamentary). Therefore, this Act includes all aspects of Hindu succession.  

Classes of Heirs under the Hindu Succession Act 1956 

Classes of the legal heir are described in the Hindu Succession Act 1956. These are used to define the members of a family who will acquire a portion of the ancestral property. 

Must Read: When do NRIs need a Succession Certificate and Legal heir Certificate?

Class 1 heirs primarily include: – 

1. Son or Daughter 
2. Widow 
3. Mother 
4. Son or Daughter of a pre-deceased Son 
5. Son or Daughter of a pre-deceased Daughter 
6. Widow of a pre-deceased Son 
7. Son or Daughter of the pre-deceased son of the pre-deceased son (3rd level) 
8. A pre-deceased Son’s ( of a pre-deceased son) widow 

Class 2 heirs mainly include: – 

1. Father 
2. Son’s daughter’s son 
3. Son’s Daughter’s Daughter 
4. Brother 
5. Sister 

Class 3 heirs include: – 

Agnates: Agnates are distant blood relatives of male lineage. 

Class 4 heirs include: – 

Cognates: Cognates are alien blood relatives of the male or female lineage. 

Class 1 heirs are permitted to get a share in the property, but if no one from class 1 heir can inherit the property or assets, then class 2 heirs are entitled to inherit, and so on. If class 2 heirs are also not alive or can inherit the property, then it is passed to class 3 heirs and, at last, given to the class 4 heirs. But if there is no heir from any of the above categories to inherit the property, then the property or assets is passed on to the government. 

Procedure for the Partition of an Ancestral Property 

A partition of ancestral property occurs when two or more family members want to claim ownership of their share separately. The property partition amongst family members can then occur, which may be contested (i.e., without mutual consent) through filing a partition suit or uncontested by a partition deed or family settlement. 

If the partition is contested, anyone from the family member can file a partition suit. However, a suit for partition must be filed when all the legal heirs in the family are not in agreement regarding the terms and conditions of the division of the property. In this matter, a legal notice for partition can also be set. Whereas, when the division of property is done with mutual agreement among members of the family, then anyone from the family can enter into a partition deed or a family settlement.  

To divide a jointly owned property among the co-owners, the family members with rights over the property can execute a partition deed. A settlement agreement can also be drafted between co-owners of a joint property if they intend to separate without causing a legal dispute. 

Different Ways to partition ancestral property 

Partition deed 

• This is the most used method for splitting ancestral property in India. A family property partition deed is usually made when all the heirs of the property have a mutual agreement and consensus. In a partition deed, the proportion of each heir is specified and agreed upon by all parties. However, not many families can use this method due to the lower chance of consensus within the family.
• It is essential to mention all the family members and the family tree. To make the family property partition deed legal and binding it needs to be registered at the office of the Sub-Registrar. Next, the parties must get the deed registered and drafted on stamp paper clearly and unambiguously. The signature and thumb impression of all the legal heirs to the property is crucial. Moreover, a person cannot deny giving his thumb impression. When a concerned person fails to include any family member, and later that person files litigation against the deed, then the partnership deed will be to stay.
• Heirs to a property are determined through classes of heirs mentioned in the Hindu Succession Act of 1956.
• It is more beneficial to attach a map of the ancestral property along with the partition deed to keep clarity relating to each individual heir’s area and avoid any future conflict. In addition, it will make it easier for a person to get a loan. However, a person must pay hefty stamp duty charges depending upon their property’s state and DLC rate. Here, the DLC rate is the District Level Committee rate of the property, and it is the minimum property rate used to calculate the stamp duty.

Partition suit 

When there is no agreement between the member of the family regarding the partition of the ancestral property, an individual can file a partition suit in Court. 

Oral agreement 

This approach is usually used to save on paying the stamp duty. All family members, orally or verbally, agree to the partition of property. However, this can raise conflict in the future. Because you may decide to partition, but your future generation may not agree to the oral agreement and file litigation. 

Memorandum of family settlement 

In a recent judgment of the Supreme Court, it was clarified that if a person makes a memorandum of his family and mentions the partition of the ancestral property, then that memorandum will be valid in the eyes of the law. A family settlement deed can be utilized to divide the property. The family settlement deed need not be on stamp paper or registered. Also, it need not be written, but it must be with the complete satisfaction of all the co-owners. 

Conclusion 

Fighting over property matters waste many years of an individual life, and only some of the family members can utilize the benefits of the ancestral property. So, it is essential to know how a person could get his portion of the property. There are many ways through which a person can separate his partition from ancestral property. One can use any one of the given methods mentioned as in the inheritance law or discussed above. NRIs must try to choose a suitable method to fight for their portion of the Indian property. However, drafting a memorandum of family settlement is the most prescribed method as it is valid in the eyes of the law and economical for the family. 

On the other hand, it is not preferable to use oral agreement as it can lead to conflicts in the future for NRIs or OCI cardholders who are unable to come to India to attend every date of the hearing in the civil suit. In that case, the suit for partition and share in property can be filed through power of attorney without coming to India. 

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