Know if a private trust in India can sell its property in India, and learn the steps to do so including obtaining the consent of trustees and beneficiaries.
A Private Trust Sell its Property in India is a legal relationship where the property is held by one or more individuals, called trustees, for the benefit of one or more beneficiaries. There are three types of trusts: private, public, and public cum private. A private trust is created by an individual for the benefit of specific individuals or organisations, while a public trust is created for the benefit of the general public. Registering a trust, whether it is private or public, allows it to be recognised as a legal entity.
May it be a public trust or a private trust, Vakilsearch helps in the quick trust registration through an easy online process. The experts here are very approachable and can cater to all your needs with respect to the registration of a trust. When you own a private trust and looking to sell its property, you might wonder if it is really possible to sell it in India. Let us explore it in detail.
Registration of a Private Trust:
To register a private trust in India, there are a few steps that are to be followed. They are as follows:
- Write a trust deed on stamp paper of the appropriate value. The trust deed should include the name of the trust, the trust address, the type of property (movable or immovable) being transferred to the trust, the names of the two trustees, the name of the settlor (the person who establishes the trust), and the character of the trust (charitable or religious)
- If you are transferring property to the trust while you are still alive, you must pay stamp duty and register the transaction in accordance with the Indian Registration Act
- If you are transferring property to the trust through your will, no stamp duty is required to be paid when the property is given to the trust.
Can a Private Trust Sell Its Property in India?
The simple answer to the question, ‘Can a private trust sell its property in India?’ is yes but it comes with certain restrictions. The Delhi High Court has stated that prima facie, no trust property can be held, sold, mortgaged, or exchanged without obtaining prior permission from the court. This rule applies to all types of trusts, including both religious and non-religious trusts, and applies to properties belonging to churches, temples, and other places of worship.
Also note that according to section 11 of the Indian Trusts Act, 1882, a trustee is required to carry out the purpose of the trust and follow any directions given by the person who created the trust at the time of its creation, unless those directions are modified with the consent of all competent beneficiaries. If the beneficiary is not competent to contract, their consent may be given by a principal civil court of original jurisdiction. However, a trustee is not required to follow any directions that would be impractical, illegal, or harmful to the beneficiaries.
Steps to Follow Private Trust Sell its Property in India:
Private Trust Sell its Property in India, but it must follow certain procedures in order to do so legally and effectively. Here are the steps that a private trust in India should follow when selling its property:
- Check the Trust Deed: The trust deed is the legal document that outlines the terms and conditions of the trust. It should specify whether or not the trust has the authority to sell its property, and if so, under what conditions
- Obtain the Consent of the Trustees: The trustees are the individuals who manage the trust and make decisions on behalf of the trust. In order to sell the property, the trustees must agree to the sale and sign a deed of conveyance
- Obtain the Consent of the Beneficiaries: The beneficiaries are the individuals who will benefit from the trust. If the property being sold is not the primary source of income for the trust, then the beneficiaries must also give their consent for the sale
- Obtain any Necessary Approvals: Depending on the nature of the property being sold, there may be certain approvals that are required before the sale can proceed. For example, if the property is being used for charitable purposes, then the approval of the charity commissioner may be required
- Conduct Due Diligence: Before the sale is finalised, it is important to conduct due diligence to ensure that the property is free of any legal issues or encumbrances. This may involve obtaining a property valuation, reviewing the title deeds, and carrying out any necessary repairs or renovations
- Execute the Sale: Once all of the necessary approvals and consents have been obtained, the trust can proceed with the sale of the property. This will typically involve executing a sale agreement and transferring the title deeds to the buyer.
Conclusion:
Thus we can conclude that a Private Trust Sell its Property in India can sell its property, but it must follow certain procedures and obtain the necessary approvals in order to do so legally and effectively. At Vakilsearch, our team of experienced legal experts is dedicated to simplifying the process of selling private trust through our online services. If you are thinking about selling property, don’t delay – visit our website today to get started.
FAQs – Private Trust Sell its Property in India
Is it legally permissible for a Private Trust Sell its Property in India?
Yes, a Private Trust Sell its Property in India can sell its property under certain conditions as long as it has trust property sale permission within the framework of the law.
What are the regulatory constraints on property transactions involving Private Trusts in India?
Private trusts in India are governed by the Indian Trusts Act, 1882. The sale of trust property must adhere to applicable laws, including property laws, taxation regulations, and local ordinances.
How does the process of selling property differ for Private Trusts compared to individuals or corporations in India?
The process of sale of trust property for private trusts involves obtaining the consent of trustees and beneficiaries, valuing the property and complying with legal requirements. It may also require obtaining the Charity Commissioner's consent.
Are there tax implications specific to Private Trusts when selling their property in India?
There may be tax implications specific to private trusts when selling their property in India, such as capital gains tax or other tax liabilities related to the sale of property.
What legal considerations should Private Trusts be aware of before initiating a property sale in India?
Private trusts should be aware of the trust deed, the Indian Trusts Act, 1882, and any other relevant laws and regulations. They should also ensure transparency and avoid self-managing the sale process by hiring experts such as the Vakilsearch property wizards!
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