Sir first of fall few things gift cannot be revoked without consent of both partie, there can be no consideration (money) if property is gifted, there cannot be Amy conditional gift.

1. See mou will he considered valid but in relation to gift deed though no consideration can be received so that part will be not valid so instead of gift make an relinquishdeed or sale deed for consideration in that condition of payment can be make.for some amount of stamp duty there can be problem. Further ask your wife to pay stamp duty she is beneficiary.

2. Go for release deed specifically mention payment clause and cancellation of release deed if payments not made.

3. No revocation clause can be made in gift deed it has to be with consent of both parties under transfer of property act a gift deed should be without consideration and free will and cannot be revoked.

1) once gift deed is executed duly stamped and registered wife would be absolute owner of property

2) title of property passes on to donee

3) notarised MOU is valid

4) better execute sale deed in favour of wife as she is purchasing flat from you

5) if you execute gift deed and wife fails to pay you consideration mentioned in MOU you have long legal battle ahead

6) gift deed is executed out of natural love and affection and not for any consideration

Hello,

The basic foundation of a gift deed is that there should be no consideration and the same is given out of love and affection .

Therefore you should go for release deed and add the revocation clause as mentioned by you.

Hope this helps.

Regards.

You are absolutely correct

2) wife should close loan account

3) then only you should execute release deed

See since the loan is in your name it will be best advised that it should be closed first with bank and noc on completion of loan should be taken from bank. Then you can make a release deed in her favour so to secure both your interest you can do a sperate agreement notarised wherein you both can agree that on closing of loan by wife you shall make an release deed in her favour and subsequent payments shall be made in installments so this will serve both your purpose as she will have surety that flat will be transferred and you won't have any risk in loan as loan risk is 100 percent if she denies to pay further if it is house loan than it cannot be transferred without noc of bank. So make an agreement let her close loan first than make an release deed rest of payment she can lay in installments as agreed

Dear Sir,

My answsers are as follows:

1. Whether notarized MOU considered valid?

Ans: It is Ok for private purpose, if it is to be produced before the Court then it must be registered one.

2. Should i go for release deed or gift deed? Quantum of risk i am carrying by executing gift deed instead of release deed?

Ans; You please decide yourself after going the merits and demits of both deeds which are given below.

3. What revocation clause i should insert in gift deed to protect myself legally?

Ans: Gift deed cannot be revoked unilaterally. Instead you may execute conditional Sale Deed in which conditions will be put and on its non fulfillment the property comes to you and sale transaction will be automatically cancelled.

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When it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems.You must understand the purpose of each document before getting it drafted. Know the benefits as well as drawbacks of each.

Gift deed

This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.

However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed. The process is slightly different if you are gifting company shares. You have to fill out the share transfer form and submit it to the company or registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to complete the transfer, but the document need not be registered.

Advantages: The biggest benefit is that there is no tax implication if you are gifting property to certain relatives.However, you still have to pay stamp duty, which can vary from 1-8% for immovable property, depending on the state in which the transfer takes place. If you are gifting property to a non-relative, the stamp duty would be higher at 5-11%. You have to pay this duty even in the case of movable property. Expect to shell out 2-8% in case of relatives, and 3-8% for non-relatives. For physical shares, the stamp duty is 0.25%, but if these are in the demat form, you don’t have to pay

Limitations: Though a gift deed cannot be revoked, it can be challenged in court, coercion and fraud being the most common grounds. So, if you have been tricked into gifting property, you can take the matter to court and have the transfer reversed. It can also be challenged on the grounds that the donor was not of sound mind or a minor.Also, you cannot gift a property that’s held jointly.

Relinquishment deed:

This document is quite different from a gift deed, though the legal implications are the same. You can use this instrument if you want to transfer your rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and registered.

The stamp duty is similar to that for a gift deed. However there is no discount for relatives, nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the portion of the property that you relinquish, not on its total value. You can also use this deed to transfer movable property without registration, but it is typically used for immovable property.

Advantages: It allows seamless transfer of your share in a jointly-held property. This document is most commonly used when a person dies without leaving behind a will and all siblings end up inheriting the property. Unlike a gift deed, you can draw the relinquishment deed for monetary consideration.

Limitations: There are no tax benefits, for as per the tax laws, the term ‘transfer’ includes relinquishment, not gift. Hence, when you are relinquishing property for monetary consideration, it will result in capital gains for the transferor. If the consideration is less than the stamp duty value of the property, the difference between the stamp duty and the consideration will be taxed in the hands of the buyer. If you relinquish it without any consideration, the stamp duty value of the property will be its sales price.

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Example:

My mother and her sister inherited their father’s property. My mother intends to buy her sister’s rights at market value. Does she have to show this as a sale or make a release deed for consideration or show it as a gift? Eventually, my mother will give her sister the market value for her share. We were told that a release deed will not be possible, and it will have to be a sale deed. Please advice.

Answer

Since your mother and her sister inherited the property in question from their father, we are assuming that the property is at present held jointly in the names of your mother and her sister. You may take one of the following steps to have your aunt’s share transferred in your mother’s name:

1) Your aunt may execute a gift deed in favour of your mother, thereby gifting her share in the property. A gift deed allows one to gift his/her assets or transfer ownership without any exchange of money. The gift of immovable property must be according to section 122 of Transfer of Property Act, 1882. Hence, your aunt must transfer her share of the property voluntarily, without receiving any consideration from your mother, and your mother must accept it during the lifetime of her sister while she is still capable of giving.

The transfer must be effected by a registered and stamped instrument signed by or on behalf of your aunt and must be attested by at least two witnesses. Stamp duty as per the applicable state is payable on the gift deed.

Since your mother wants to pay consideration at market value for the concerned portion of the property, a gift of that portion of the property will not be possible.

2) Your aunt may execute a release deed or relinquishment deed in favour of your mother, thereby releasing her share in the property in favour of your mother.

A release deed is quite different from a gift deed, though the legal implications are the same. Unlike a gift deed, you can draw the release deed for monetary consideration. A release is always an interest or share of the concerned property. The person in whose favour the release is made usually has a pre-existing interest in the property. You can use this instrument to transfer your rights in a property to another joint owner(s)/co-owner(s). Such a transfer is irrevocable.

As with all documents related to the transfer of immovable property, a release deed needs to be signed by both parties, stamped and registered. Stamp duty will be applicable only on the portion of the property that is relinquished.

3) Your mother can purchase her sister’s share by executing a deed of transfer and on payment of consideration (the latter renders the sale valid). Stamp duty will be payable on the deed of transfer, and the deed has to be registered.

Considering the facts mentioned, executing a transfer deed may be a preferred.

Please note that it is mandatory to register a gift deed, release deed or transfer deed with the sub-registrar of assurances as per section 17 of the Registration Act, 1908, otherwise the transfer will be held invalid. Thus, on execution of any of the aforementioned documents, the same will be required to be registered with the office of the sub-registrar of assurances within whose sub-district the whole or some portion of the property is situated, within a period of four months from the date of execution of any of the aforementioned documents.

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1. You can execute a gift deed in favour of your wife. This will save her stamp duty. But you will be receiving consideration from her against the flat. So what will you show that in your income tax returns? You need to explain the source of your income right!

2. This consideration will be added to your income and the same will be taxed as per your applicable income tax slab rate. So you will lose on the benefits of s.54 of income tax act

3. Under s.54 of income tax act, when owner sells the property, the capital gains will be taxed at flat 20% if the property is held for more than 3 years. In order to save this tax payment, the owner can invest the capital gains for buying a new residential house within stipulated period from date of sale of old house.

4. So if you fall in the highest tax slab, then whatever money your wife gives you, will be taxed at the highest rate. Compare that to selling the house to your wife - there you can easily save on the tax outgo.

5. However if you have held the flat for less than 3 years then you are liable to pay short term capital gains tax at 30%. So above proposition will be beneficial to you only if you have held your flat for more than 3 years.

6. I want to know whether the flat is registered in your joint names? If it's so then if you sell your half share in the flat to your wife, her stamp duty liability will only be for the half share and also you will get benefit of income tax deduction u/s 54 as above.

7. So it's better that you go for a release or sale deed and mention the consideration in the document.

8. Also since your wife says that she will be paying you in instalments - you can't do anything if a gift deed is signed in her favour since a gift is irrevocable and immediately transfers ownership to the donee. So in case she defaults in payment, then you will be in a lurch and you can't even do anything since the property would already have been gone from your hand.

9. In the sale or release deed you can have a termination clause stating that if your wife defaults in payment then the sale transfer will be terminated and reversed. Also have a clause saying that possession will be given to her only when she makes all the payment. Till such time the flat possession will remain with you. So even if the sale deed is registered in her name, it can always be nullified if your wife commits a default in payment and you can invoke the termination clause against her.

10. Your wife will not agree to pay your loan first. How can that be? If she had the money to repay your loan, then why would she agree to pay you in instalments? She could have directly paid the entire amount to you and you could then repay the bank loan from that amount and close the loan account. But this is not the case.

11. So there can be one arrangement. Your wife can take over your loan liability and she can directly pay the instalments to your bank against the EMI. Any excess left after the bank loan will be your capital gains which you can invest in another residential house and save on paying capital gains tax.

Gift deed in not advisable in the present case.

Try to convince your wife to close the loan account first, and later you'll execute a release deed in her favour. In any view of the matter, a gift deed must be totally avoided. This will put you in a difficult situation at any time your wife recuses from her promise.

Give this arrangement, the one entered in between you and your wife, a shape of a memorandum of understanding.

Is there any revocation clause that i can mentioned in the gift deed to protect myself in case she refused to pay my money in future?

There is no consideration passed in a gift, and if there is any consideration passed then the gift deed is null and void.

A gift deed is voluntary and free of passing any consideration and also it is irrevocable.

1. Whether notarized MOU considered valid?

An unregistered document is not valid and not admissible as valid evidence before court of law.

2. Should i go for release deed or gift deed? Quantum of risk i am carrying by executing gift deed instead of release deed?

You are worried about the stamp duty to be paid now hence opting for gift deed, whereas the gift deed with conditions is actually not valid and not enforceable.

Since she is a joint owner and not a co-sharer, a release or relinquishment deed will not be applicable to this situation.

Instead, since she is closely related, a conditional settlement deed may be executed in her favor which would contain the contents describing the conditions of future installment payments and also the consequences of revocation of the settlement deed in the event of defaulting the payment or not making any payments in future.

You can discuss about this option with your lawyer and proceed.

3. What revocation clause i should insert in gift deed to protect myself legally?

A gift deed cannot be executed with conditions.

Hence there can be no revocation of registered gift deed or the cancellation of the same for any reason, especially because of the settlement amount.

For more details you may read the above answer

If you dont trust your wife then you may not agree for this condition.

First of all you canot execute a release deed for the reasons:

1. The property is under mortgage home loan, hence without NOC from the banker/financier, this cannot be made;

2. A joint owner cannot execute a release deed, he can, after obtaining NOC from the lender, may execute a registered gift deed or may execute a registered conditional or unconditional settlement deed or a registered sale deed in favor of her.

Since her oral agreement for repayment in installments have no guarantee, there is no guarantee for your money hence you may decide an alternate arrangement/agreement.

You may think of entering into a loan amount towards the balance of amount she may have to pay you which she agreed to pay by installments.

The loan agreement should contain the exact amount and the terms for repayment in number of installments to have a proper mention in that, this loan agreement need not be registered, but should be duly witnessed by at least two witnesses.

You can also discuss with your advocate on any more options more effective than this.

1) You can sign release deed and against this you can take from her promissory note signed.

Dear Querist

My opinion on your queries are as under:-

1. Whether notarized MOU considered valid?

Opinion:- Yes, but if there is any dispute and opposite party wants to withdraw then it will be difficult to proved the MOU's terms and conditions.

2. Should i go for release deed or gift deed? Quantum of risk i am carrying by executing gift deed instead of release deed?

Opinion:- Release deed with the condition will be better.

3. What revocation clause i should insert in gift deed to protect myself legally?

Opinion:- Default clause can be mentioned in the release deed along with the expenses/penality clause too.

No need to worry, execute a conditional release deed and if she is not ready to obey the terms and conditions then you may revoke the same and the property will be yours.

Even you may be canceled the mutual consent Divorce

Feel Free to Call

1. Whether notarized MOU considered valid?

Answer: Yes it is considered valid in the eyes of law;

2. Should i go for release deed or gift deed? Quantum of risk i am carrying by executing gift deed instead of release deed?

Answer: Gift Deed is made out of love and affection. When you are planning to get divorce, then how could there be love and affection. Therefore you should opt for Release Deed.

3. What revocation clause i should insert in gift deed to protect myself legally?

Answer: Revocation clause generally don't happen. Moreover, if there is a clause in the gift deed that it could be revoked at the will of the donor in future, then such gift deed itself is void in the eyes of law.

You should get the loan account closed and then execute the release deed. The sequence of this only makes sense.

Ask a mediator lawyer to help you sort this out, so that she also is bound by it legally at all times.

It is very dicey that she will pay or not but once you execute a gift deed or release deed then the said flat will in her name. You can include a revocable gift deed if she doesn't pay the same will be cancelled. It is better that she takes a mortgage loan on the said flat and pay you in advance before executing the gift deed or you execute the gift deed after the full payment or the agreed amount. Even if you trust her after non payment you will again have to approach the court for specific performance of the said terms.