Transfer Deed and its relevancy for NRI

Introduction to Transfer Deed

As the title views, this article briefs us about the transfer deed. But why should you read this article? You can answer this question by knowing if you want to transfer any property, movable or immovable, now or in future in India. So, do you want to transfer any property in India? If your answer to this question is -Yes, this is the right time to read this article.

Firstly, let us know what the transfer deed is? As the name shows, it consists of two words: transfer and the second is deed. Let us try to understand these words in an elementary language. Elucidating, transfer means the conveyance, assignment or relocation of title and property. In the case of movable property, a transfer is completed when title and property are physically transferred. But, in the case of immovable property, only transfer of ownership is required, which ultimately signifies the transfer of property. However, it is more important to know what the law says about ‘Transfer’. Does even any law in India talk about the transfer? The answer to the question is yes. Section 5 of the Transfer of Property Act, 1882 defines the term ‘Transfer of Property. {1}

Meaning of Deed

Now, here it is discussed about the meaning of deed. A deed is a legal written document that is signed and delivered by one person to another regarding the transfer of property and legal rights. Considering the legal definition and meaning of the term ‘deed’, no Indian law defines the deed explicitly. Reference to the legal dictionary will be of great help to understand the legal sphere of expression. Conclusively, a deed is a written legal document that transfers, affirms, or confirms the legal right, interest, obligation, title, ownership or property, etc.

Understanding the meaning of the two terms transfer and deed, we can culminate that transfer deed is a legal written document used in the transfer or conveyance of movable or immovable property from the legal owner to another person which specifies the contract between the parties as to transfer. How about getting a quick overview of the transfer deed through a legal definition by Gerald N. Hill. This definition excites us to know more about the essentials or contents of the transfer deed. Why not converse about the indispensables of the transfer deed.

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Essentials of Transfer Deed

A transfer deed is not legal, valid or enforceable unless all its requirements are fulfilled. In addition, the following pointers should be noted while doing a transfer deed:

The transfer must be between two living persons. 

Interestingly, only the person who is alive and existing can be involved in the transaction of transfer. To make the transaction inter vivos, both the transferor and the transferee must be live on the transfer date. Nonetheless, that person can be either natural or artificial. Still, existing at the time of transfer as Section 5 of the Transfer of Property Act, 1882 states’ living person’ which includes company or body of individuals or association, whether incorporated or not. As per the transfer to an unborn child is concerned, Section 13 and 14 of the Transfer of Property Act, 1882 prohibits direct transfer to an unborn child, yet the interest of the unborn child may be preceded by the prior interest of any other person until the birth of a child.

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The property must be transferable.

Property transferred under the transfer deed must be transferable as per section 6 of the Transfer of Property Act, 1882. Section 6 states that property of any kind may be transferred other than the one exempted by this section itself or any other section of this Act or any other law for the time being in force. A few non-transferable properties are mere right to sue, public office, right to future maintenance etc.

Competency of Transferor

After reading the heading, are you thinking about knowing whether a person is competent or not? For that, reference has to be made to Section 7 of the Transfer of Property Act, 1882. As per Section 7, all the conditions laid down must be fulfilled for the transferor to be competent to transfer. The individual must not be a minor or an insane person. However, the person must have the title of the property, or the person must have the authority to transfer; in part or whole.

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Different Modes of transfer

Can we transfer property in any mode to make such transfer valid? According to Section 9 of the Transfer of Property Act, 1882 answer is no. Only the modes of transfer specified in Section 9 of the aforementioned Act shall be valid. Section 9 says that transfer may be in writing or not in writing. However, a transfer can be made without writing only if it is not expressly required by law. In the form of writing, the mode of transfer is reduced to transfer deed. Ultimately, the transfer deed being a document must be reduced to writing only.

A new interest should be created. 

A new interest should be created; it is not a valid transfer under the Transfer of Property Act, 1882. Accordingly, the following are valid transfers under the Act:

1. Partition
2. Charge of property
3. Relinquishment by a reversionary
4. Release deed
5. Surrender

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Fulfilment of essentials of a contract

Till now, we have been able to notice that a transfer deed is a contract. Therefore, it has to pass through the test of a valid contract in compliance with the provisions of the Indian Contract Act, 1872. The conditions or essentials of a valid contract may be summed up as follows:

1. Offer and acceptance of an offer
2. Free consent
3. Lawful consideration
4. Lawful object

Intention and proof of transfer of title 

It needs to be noted that a deed must be prepared without any vague and misinterpretation, indicates the true intention of parties to be involved in the transfer. Moreover, it must act as proof of transfer of title.

Contents of Transfer Deed

The transfer deed must contain the following information:

1. The actual demarcation and other details of the property.
2. Its use and all rights, annexed to the property.
3. The complete chain of titles, i.e., from all legal rights up to the present seller.
4. Name, address and other required details of transferor and transferee.
5. The method of delivery to the buyer of the property.
6. Nature of transfer
7. The consideration of the memo, stating its receiving.
8. For the entire transfer of ownership rights, any further applicable terms and conditions.
9. If used, Power of attorney.
10. Memo regarding the ownership of the property.
11. Sign of transferor and transferee.

Types Of Transfer Deed

Sale deed

Whenever the sale of movable or immovable property is made, it is compulsory to be documented in the form of a sale deed. The sale deed discloses details of buyer, seller, property and fact of legal transfer of interest.

Gift deed 

If a person transfers his property to any person without any consideration wilfully, the gift deed is prepared to signifying the happening and particulars of the gift.

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Warranty deed

A warranty deed is documented guarantee from a seller to a buyer that the seller has the right to sell the property and that the property is free of debt or other liens.

Special warranty deed

Being a little differentiated from a warranty deed, a special warranty deed guarantees against problems and claims during the ownership of the seller and the whole history of claims as to property.

Quitclaim deed

This deed is prepared between persons acquainted with each other as like family members. This deed is to transfer the interest and claims in the property without any monetary exchange.

Bargain and sale deed

This deed resembles to quitclaim deed other than the requirement of monetary exchange. However, this deed does not guarantee the buyer that the seller owns the property free and clear.

Grant deed

A grant deed transfers the interest in property in exchange for a fixed price. The said deed guarantees that the seller is the owner of the property and can legally sell it free of debt but does not provide a guarantee against defects of title.

Registration and Stamp Duty

Are you wondering if it is enough to draft the transfer deed in a document, or else it is required to be registered? Yes, registration of transfer deeds is compulsory. The transfer deed is executed on non-judicial stamp paper, and for registration, we need to present the transfer deed to the nearest Registrar’s Office. The registration process will be completed only on the payment of registration charges and stamp duty. These charges vary from State to State.

Enforceability of the Transfer Deed

Now, talking about the enforceability of any transfer deed, it is valid only if the condition under Section-10 of the Indian Contract Act,1872 is fulfilled.

Section 10 of the said Act specifies some conditions which need to be satisfied in the mandate to create a valid contract. A contract is defined under Section-2 (h) of The Contract Act, 1872, defining “any agreement which is enforceable by law.”

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Is Transfer Permitted Through GPA?

In a landmark judgement of the honourable Supreme Court, in the matter of Suraj Lamp and Industries Pvt Limited vs the State of Haryana case (2012)1SCC656, held by a three-judge bench, headed by Justice RV Raveendran, has duly observed that any transaction related to transfer of title of immovable property, by way of PoA does not hold any legal validity, provided the bonafide nature of such POA is proved.

The verdict came after interpreting various provisions of the law concerning property sales. It became effective retrospectively, saying it would not affect the validity of sale agreements and PoAs executed in genuine transactions. However, it was strictly instructed that the municipal bodies should not entertain mutation requests for properties through GPAs.

Conclusion 

To transfer a property several conditions, need to be satisfied. First, whether ancestral or self-owned, the property has the right to be transmitted to its heirs. In addition to this, it is clear that there are several kinds of transfer. Each kind of transfer has been explained with its different procedures. Moving on to the discussion on the essential elements, its registration, and the stamp duty followed by its enforceability involved in transferring the property is a vital requirement. Hence, to make a transfer deed a valid document, all the legal requirements must be duly followed to ensure its legitimacy later. 

References

1. Section 5 of Transfer of property act. Section 5 in The Transfer of Property Act, 1882 (indiankanoon.org)
2. Section 7 of Transfer of property act for conditions- indiankanoon.org/doc/1839218/
3. A legal definition is given by Gernald n. Hill  Legal Dictionary | Law.com
4. Suraj Lamp & Industries Pvt Limited vs the State of Haryana case https://indiankanoon.org/doc/1069252/

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