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What Is A Gift Deed? Under What Conditions Can It Be Revoked?

A donor makes a deed of gift to a donee under certain conditions, but any violation of the agreement could lead to its withdrawal or cancellation.

Outlook Money
November 29, 2023
Gift Deed

Gift Deed

Senior citizens can leave their legacy by gifting their valuable possessions to their children through a gift deed and avoid possible family disputes over who gets what after they are gone. An individual can make a gift deed to transfer any movable or immovable property under Section 122 of the Transfer of Property Act 1882. According to the statute, a gift deed is a legally binding document in which the donor states his desire to gift a property to the donee. For a gift deed to be legally binding, it must meet several conditions, or else, it could result in the document becoming void; these conditions are as follows:

Requirements for a Gift Deed

1. Deed Registration

To be deemed legitimate, a deed must be registered with a sub-registrar office under Section 17 of the Registration Act, 1908. The donor should create the deed without any motive of monetary or personal gains as stated under Section 123 of the Transfer of Property Act. Suppose it is a physical property, like a house. In that case, the donor must provide a purchase agreement, the property’s registration certificate, both parties’ Aadhaar and PAN card details, and the necessary fee for the deed’s registration.

2. Free Consent

The Property Transfer Act states that the deed must be a gift and that the donor should not be pressured into signing the deed by the donee or any other party. A gift, therefore, should be executed with the free consent of the donor, untainted by force, fraud, or undue influence.

3. Existing Property:

A property that does not exist or is in the process of being created cannot be transferred by the donor. The property, movable or immovable, to be transferred must exist. The share of a joint family property earned through partition can also be donated. A gift deed will also be considered valid if the share of a property to be gifted is obtained after a court’s preliminary decree for partition.

4. Without Monetary Consideration:

A deed will be void if it is made considering monetary benefits or in anticipation of any spiritual or moral gain. For example, a gift deed by a parent to a daughter to take care of him in old age will be considered void. A transfer made in exchange for a donee taking on the donor’s liability is not gratuitous and, therefore, not a gift.

5. Legal Age

A donor providing a gift to another person must be ‘sui juris’, meaning the person must be of legal age. A minor cannot lawfully transfer any property. The donor should also be of sound mind and capable of making their judgments regarding money, property, or legality.

Circumstances for Revoking A Gift Deed

A gift deed can be revoked under two conditions:

A. Unsound Mind or Hidden Motives:

A gift deed can be revoked under Section 126 of the Property Transfer Act. The deed may get rejected later if the person is found to be of unsound mind, or has made it with a motive of monetary or other gains, or the person does not hold ownership of the property to be gifted or it may be in the process of acquiring. However, it is advisable to add a revocation clause while executing a gift deed to mutually revoke the agreement at a later stage if required.

B. Mutually Revoking the Deed:

The donor can include a “clause” in the deed that will act as a navigator if or when the deed is rescinded. The clause can also describe the circumstances of revocation, such as any specific event or a period after which the donor wants to revoke the deed where mutual agreement is required.

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