Sir/ Madam, We would like to purchase a property from a person to whom it was gifted by another person. Original or first owner has owned the property through bank loan. After clearing the loan, the property was gifted to his relative ( to a lady whose husband's grandmother and the original owner's mother are sisters ) by the first owner. But though she is a relative but not come under relative as per section 56(2) of Income tax act and Sub registrar offices at Andhra Pradesh follow same rule of relative as mentioned in Income tax Act. However, in the Sub-registrar office, it was accepted and got registered as gift deed in the name of his relative ( now she became second owner). So the question is whether the property can be purchased from the second owner (who has received the property as a gift from Original owner) or kindly let me know any legal issues are there? If so, what are they and what are the things to be done before proceeding for purchase of the above said property? Second thing is there are two registrations being done in that apartment. One is respective flat along with common areas, undivided share of land and car parking and the other registration is with respect to builder's share via office construction in the parking area. The builder has sold his office area of 50.8 Sq.yards to all the 11 owners equally after demolishing his office in the parking area. But in our case, the original owner has given gift only flat which has registered as gift deed. Unlike other owners of other flats, this original or first owner has neither gifted nor sold 4.61 sq.yards (i.e. 1/11th part of 50.8 sq.yards) to his relative. So, can we directly purchase 4.61 sq.yards from Original owner ? Or should we ask the second owner to acquire even the builder's share of land from the first owner and then should we purchase from the second owner ? I would be extremely grateful, if you could kindly answer the above two questions in detail and any other important points that I need to take care of before proceeding to purchase the above said property. Thanking you.
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You can purchase the flat from from second owner in whose favour flat was gifted
2) once gift is executed duly stamped and registered donee becomes absolute owner of flat
3) as far as 4.61 square yard is concerned purchase it directly from the first owner
If the seller has clear and valid marketable title to the property now offered to sell by a registered title deed on his/her name, and when the link documents are clear about the chain of title, then there should not be any problem to purchase it, however a proper legal opinion can be obtained from an experienced local lawyer and proceed only if recommended.
If the original owner had not transferred the other part of the property consisting undivided share of 4.61 Sq. yards to his relative, then your vendor cannot sell the property to which he or she do not have title.
You may have to enquire about it and have to get a registered sale deed executed to taht portion of property separately from the person who is still holding title to the concerned property.
Dear client,
The purchase of a property from a person who has received it as a gift from the original owner can be a complex process, especially if there are legal issues involved. Here are some of the things you need to consider before proceeding with the purchase:
Legal issues related to the gift deed: The first thing you need to check is the validity of the gift deed through which the second owner received the property. You need to verify if the gift deed was executed legally and if all the necessary legal requirements were met. You also need to ensure that the property was not encumbered or involved in any legal disputes at the time of the gift.
Verification of ownership: You need to verify that the second owner is the legal owner of the property and that there are no other claimants or legal disputes involved. You may need to obtain a title search report and conduct due diligence to ensure that the property is free from any encumbrances.
Income tax implications: As per Section 56(2) of the Income Tax Act, gifts received from non-relatives are taxable under certain conditions. You need to check if the second owner has paid any taxes on the gift received or if any taxes are due. You may also need to consult with a tax expert to understand the tax implications of the purchase.
Builder's share of land: You need to verify if the first owner has sold or gifted the builder's share of land to any other party. If the first owner has not sold or gifted the builder's share of land to the second owner, then you may need to negotiate with the first owner to purchase the 4.61 sq. yards of land directly from them.
Documentation: You need to ensure that all the necessary documentation related to the purchase is in order. This includes the sale agreement, sale deed, and other documents related to the transfer of ownership.
In summary, before proceeding with the purchase of the property, you need to verify the validity of the gift deed, ensure that the second owner is the legal owner of the property, understand the income tax implications, check the ownership of the builder's share of land, and ensure that all the necessary documentation is in order. It is advisable to consult with a lawyer or a real estate expert to guide you through the legal process and ensure a smooth purchase of the property.
Yes it can be purchased if there is no encrumbrance in said property
So, does it mean that anybody can give gift to anyone if both donor and donne are willing and donor has rights over the property irrespective of their relationship ?
If a person is having clear and marketable title to an immovable property then he can transfer his property in favor of anyone and by any mode.
Donor is at liberty to execute gift deed in favour of donee
it is not necessary it should be in favour of close family relative
Yes anyone can gift even if they are not relatives
Dear client,
In general, yes, anyone can give a gift to anyone else if both the donor and donee are willing and the donor has legal rights over the property in question. However, there may be some restrictions or conditions that apply depending on the specific circumstances and the laws of the country or state where the property is located.
For example, some countries or states may have laws that limit the amount or type of property that can be gifted without incurring taxes or other obligations. Additionally, if the property in question is subject to a mortgage, lien, or other legal encumbrance, the donor may need to obtain permission from the lender or other interested parties before transferring ownership.
It is also important to note that certain relationships may give rise to additional legal considerations. For example, if the donor and donee are family members or spouses, there may be laws that regulate the transfer of property between them, such as community property laws or laws related to inheritance and estate planning.
In any case, it is always advisable to seek the advice of a qualified lawyer before making any significant property transfers to ensure that you understand the legal implications and obligations involved.
s. 56 of IT Act does not apply in case of gift of immovable property
for that the transfer of property act applies
so the gift is valid and the second owner appears to have a clear title
as the share in the office was not gifted, you will have to acquire that from the first owner by a separate deed of transfer
Sir/ Madam, it is heard that first owner has several debts and banks have started attachments. In this scenario, can the property gifted be purchased from the second owner who has received the property as a gift from the first owner ? Or will any legal problems arise ?
You can face legal complications later as property may have been gifted to defraud creditors
creditors can file suit to set aside gift deed
don’t purchase the property
In continuation to my question, I would like to bring to your kind notice that the second owner has shown the original documents to us and also EC has been checked and no discrepancy is noticed. In November 2022, the first owner has gifted the property within two days from the date of clearance given by bank through which the first owner has purchased the property by acquiring a bank loan in 2013. So, I would be grateful, if you could kindly let me know whether there is any risk involved in purchasing the above said property pls ?
If loan has been repaid you can purchase the property
If Liam has been repaid by first owner and it is not subje to any attachment by court orders gift deed can be executed by donor
If the property which was transferred by a registered gift by the owner of the property was not part of the collateral security, then it cannot be termed as secured asset.
Moreover this property was transferred even before the sarfaesi act was invoked, this will not come under the assets of borrower.
Hence the subsequent purchaser need not be worried on this count.
If this property was not part of the properties offered as collateral security, then the subsequent purchaser need not be worried about it for any reason.