Transfer of Property in India

In India transfer of property is governed by the Transfer of property Act, 1882. Transfer of property means an act by which a living person conveys property in present or future to one or more living persons or to himself or any other living person. This Living person could be anyone, a company or association or body of individuals, whether incorporated or not.

Modes of Transfer of property

The owner of a property can transfer or give up his rights to another person through various modes. While the common and known mode is through Sale of property where a consideration is made to transfer the ownership rights, however there are other methods wherein the consideration amount is not paid for transfer of ownership such as Gift, WILL, Partition, etc.

Under the transfer of property act 1882, various options are available to transfer the property and can be categorized under following heads

Sale : It’s an out and out transfer of property with a consideration of money in exchange. Sale of property is one of the methods through which transfer of property takes place and exchanges hands.

Usually a written document with mutually agreed terms & conditions with consideration value in terms of money is required to complete the sale process and is termed as Sale Deed. A sale deed is a legal document that records the transfer of ownership from one seller to the buyer. Sale deed is a proof which confirms the transfer of property from one to another person.

A sale deed is made on non judicial stamp paper of a prescribed value given by the government. The registration of Sale Deed or Sale agreement has to be done in the office of sub registrar in order to transfer the ownership of the property in the new owner’s name.

Once the sale deed has been registered, the next step is to get the Mutation of property recorded in the name of the new owner in the records of government department.

Gift : In this form of transfer of property or assets of one person to another person, there’s no consideration of money or any other form in picture at all. By way of a gift a house, cash, jewellery, etc. can be transferred from one person to another person through a GIFT DEED.

Section 122 of the Transfer of Property Act 1882, defines a gift deed as a legal document that records the act of giving a gift and is executed between the donor and donee. Even though it is not mandatory to execute a gift deed while gifting any asset, yet it does creates a record of the gift. As gifting is a voluntary action, the gift deed should mention that the deed is made voluntarily and out of donor’s own choice. The gift deed also mentions that the gift is being made without any consideration. It may be noted that the acceptance of donee is mandatory and should be very well signed and accepted. The acceptance of gift should be during the life time of the donor.

As per the provisions of Section 17 of The Registration Act, 190 the gift deed has to be registered with sub registrar so as to pass on the transfer of ownership in donee’s name. If the gift deed is not registered, the transfer of property is not termed as valid.

In case of gift of property, stamp duty has to be paid as per the value of the property as per the rate decided by the government. Further it is to be noted here that the Gift deed has to be between two majors as a minor is not capable of entering into a valid contract. Since the contracts with a minor are avoid ab initio and a gift deed is a legal contract, minors are not eligible as donors.

It is of utmost importance to understand that a gift once made cannot be revoked by donor or donee. Further a donee is exempted from the tax on the Gift received from relatives


Relinquishment of property : is the process of transferring property from one co-owner to another co-owner.

When a person dies INTESTATE i.e. without leaving a WILL, his property straight away goes to his Class 1 legal heirs.

In case there are two or more legal heirs and wish to divide the property further, they can do so by mode of Relinquishment Deed.

A relinquishment deed is a legal document through which one of the legal heirs gives up his legal rights in the inherited property to another legal heir with or without any consideration amount. The relinquishment deed needs mandatory registration for it to be valid.

Relinquishment of property can not be made in favour of a person other than co-owner and in case the relinquishment is made in favour of a person who is not a legal heir in the specific property, it will be termed as Gift.

The relinquishment deed can be revoked by the consent of both the parties involved. If the beneficiary of property is not ready to cancel the deed, the other party can approach the court for cancellation within 3 years as per the Limitation act.

Family Settlement or Partition Deed : A family settlement is an agreement to resolve the disputes pertaining to property division among family members effectively without following the procedure of litigation. The family settlement may be oral and in that case it does not need registration. A family settlement if not written, does not require any stamping and registration whereas the written partition deed requires both registration and stamping.

Partition deed for a property is executed to divide the property among legal heirs. A partition is a division of property held by several co-owners so that each co-owner gets his due share in the property and becomes an owner of the share allotted to him/her.

Mortgage : As per The Transfer of Property Act 1882, a mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of a loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The instrument by which the transfer is affected is called a Mortgage Deed. Here the transferor is called a mortgagor and transferee is called a mortgagee.

Lease : One of the modes of transferring property for a particular period of time is Lease. A Lease is transfer of an interest in the property for a stipulated time without transferring the ownership of that property. This means that a lease gives the right of possession without right of ownership. A lease is governed by the Transfer of property act 1882 under section 105 to 117.

Basic essentials of a Lease deed are :

  • Both Lessor and Lessee should be competent and in agreement to enter into a contract.
  • Lessor should be entitled to the property and have absolute rights over the property
  • Consideration of the lease can be taken in the form of Rent or lease amount
  • Lease always take place for a particular period of time and needs to be specified in the lease deed. If the lease is for a period of 1 year or more, it has to be registered to be valid.

As per Section 106 of The Transfer of property act, in absence of lease period, lease deed or agreement can be dissolved by any of the parties by issuing a notice to end the lease.

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