Things you should know about the property transfer

Transferring your property to someone else can be a daunting task. There can be multiple reasons to do that like selling the property, retirement plans, demise of the existing owner, and similar others. The process can be easy if you know the tax implications and basics of the Transfer of Property Act in India.

Transfer of Property Act 1882

Under the Transfer of Property Act 1882 laid by the Indian government, real estate is divided into two categories: movable and immovable. The act came into force on July 1, 1882, to deal with the aspects of property transfer and other real estate issues between living beings. It is amongst the oldest Indian legal systems with an extension of the laws of contracts, while running parallel with the succession laws. You must be aware of the property transfer legalities under the Transfer of Property Act, especially if you are planning for immovable property.

Ways included under transfer of property act

Real estate transfer is carried out between two or more parties. The act is applicable for both individuals and companies planning to transfer their rights of property.

Key inclusions are:

• Transfer of Property Act is applicable on immovable properties
• The Act is applicable on transfers in the form of sale, mortgage, lease, exchange, gift, and actionable claims
• The Act does not cover inheritance, wills, forfeiture, insolvency, and sale through execution of a decree

Types of property transfer deeds

• Sale Deed

The property transfer made through the sale or purchase of real estate is documented through the sale deed. It is a crucial document for all the parties included under the Registration Act. The sale deed includes all the information about both the buyer and the seller such as name, address, property details, location and address of the property, total and carpet area, and construction details if any.

If there is any bank loan outstanding while property transfer, the details are also included in the document. Besides, additional stamp duty is levied on the transfer of property through the sale deed.

• Gift Deed

The gift deed is documented when the property buyer prefers transfer without any exchange of money. The transferor (who transfers the property) must draft it on a stamp paper and get it attested by the witnesses before the registration.

The gift deed is generally registered with the sub-registrar of that area. Once it is done, the transfer becomes irrevocable.

• Transfer Deed

The Transfer deed is documented for the transfer of existing property. Under this, the owner not only transfers his right to the real estate but also all other benefits included therein. It must be noted that transfer deed can not be documented for sale and purchase of any real estate. Besides, the transfer deed is not mandatory to register, however must be signed in the presence of witnesses. 

• Relinquishment Deed

The relinquishment deed is documented when the owner willfully carries out property transfer to the co-owner while relinquishing his share and rights to the property. Once it is signed by both the parties involved and later registered, this deed becomes irreversible and irrevocable. In most cases, no money is involved throughout the process. The stamp duty and other taxes are levied on the co owner’s share in the property and not the entire property value. 

While these taxes and stamp duty varies for different states, it is interesting to note here that Maharashtra has different rates for all within its state. The taxes and stamp duty for flats in Mumbai remain the highest. In addition to this, the stamp duty rates for flats in Mumbai are different for male and female owners.

Duties of the seller

• To disclose material defects in the property, if any
• To provide all the documents for examination upon request of the buyer
• To execute a proper conveyance of the property
• To care for all documents and property for smooth property transfer
• To understand their responsibilities under the Transfer of Property Act 1882
• To pay all public charges and rent crude from the property on time until the sale goes through
• To give on-time possession of the property to the buyer

Duties of the buyer

• To disclose the facts about the property that they are aware of before finalising the deed
• To pay the purchase amount on time to the seller
• To bear the cost of destruction, injury, or value decrease not caused by the seller
• To pay all public charges and rent after signing the deed

These are some of the things both buyers and sellers must be aware of for a successful property transfer. They can also ask their lawyers for further provisions under the Transfer of Property Act.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.