In this article, We'll talk about the Scope of Relinquishment Deed and why it's used. Read to learn more!
The term ‘Relinquishment deed’ describes when one co-owner of a property abandons and surrenders their rights, title, and interest in favor of the other co-owners. Hindu joint property co-owners have the option of giving up their claim to the immovable asset by giving up their ownership.
The need for a release deed often arises when a property owner passes away intestate (without leaving a will) and the legal heirs of the property desire to transfer their ownership interest to any of the co-owners of the property.
Scope of Rights in Relinquishment Deed
The act of giving up one’s rights and claims in a part of a property in favour of another is referred to as relinquishing rights. Although it is a common practice, it is not defined by the Transfer of Property Act. A right cannot be given up without compensation; this compensation may take the shape of cash, a trade in goods, or a family arrangement.
The “Deed of Relinquishment,” which must be signed by all parties, witnessed by two witnesses, and registered, is another requirement for giving up ownership of immovable property. Relinquishment, in contrast to a gift, has no tax advantages and is subject to capital gains tax.
Relinquishment, in contrast to a gift, is subject to capital gains tax and does not enjoy any tax advantages. Both the “Donor” and the “Relinquisher” in the above instances must be over the age of 18, be of sound mind and be able to make rational decisions regarding the disposition of property.
They should be as well as be able to enter into contracts. A legal heir may transfer his ownership interest in a property by a few different legal instruments, such as the sale, gift, or will of the property. Only in cases of inherited properties is it possible to transfer ownership rights through a relinquishment deed. These would comprise all of your inherited property, to which you are legally entitled by birth under Hindu law. The scope of relinquishment deed is different from a gift deed.
Gift deed
The gift is defined as the voluntary transfer of ownership rights in a property under Section 122 of the Transfer of Property Act, of 1882. It is done without any material consideration when natural love and devotion to a living person is the only consideration. Except in cases where it is supplied for any special purpose, such as educational, charitable, or religious.
It must be free, voluntary, absolute, and unconditional. Gifts are usually irrevocable, but when they are made with a specific purpose in mind, the property reverts to the giver if the intended use is not fulfilled due to the “donor’s” will or pleasure.
As required by Section 17 of the Registration Act of 1908, it must be made by a written instrument called a “Gift deed,” lawfully accepted by the “Donee”. It should be witnessed by two witnesses, and registered with the Registrar/Sub-Registrar of Assurances. Aside from the cost of the stamp paper used to produce the gift deed,
There are no tax repercussions if the gift is made to a spouse, blood relative of either spouse, lineal ascendant, or descendant of either spouse or any family member. Gifts to non-relatives are permitted without restriction, but they are taxed.
Who Can Create the Relinquishment Deed?
The scope of relinquishment deed is limited to legitimate successors of the property. And only they can relinquish their rights in the property. Also, they are only permitted to give up their share in favour of other co-owners of the property, such as their mother, brother, sister, wife, son, etc.
Essentials Elements of Relinquishment Deed
- Legal document: An heir can transfer or release his legal right to the inherited property with this legal instrument
- Consequences: The release of one co-share owner and the enlargement of the shares of the other co-owners are the results of such a transfer of rights
- Irrevocable: A relinquishment deed is irrevocable even if it is made without any consideration
- No third party: It is not possible to relinquish in favour of a third party
- Must be in writing: the relinquishment of rights can only be accomplished in writing
- Witness: it must be signed by all parties and witnessed by a minimum of two witnesses
- Must be registered: A release of rights in the immovable property must be registered
- Consideration: Relinquishment deeds can be executed with or without consideration
- Easy process: It takes only a few days to create and register a relinquishment deed, and it is not expensive.
Can The Relinquishment Deed Be Revoked?
An officially registered relinquishment deed cannot be cancelled. According to the Registration Act of 1908, you cannot change a decision after it has been registered. It can, however, only be cancelled under the following situations.
- If you do a deed under coercion or the influence
- if fraud has taken place to dupe the relinquishment deed
- If the intentions are misinterpreted in the final document
You should go to the civil court if there are any discrepancies.
Time Limit for Revocation of the Relinquishment Deed
Within three years of the relinquishment deed’s execution, it can be revoked. The deed is irrevocable after three years.
Is It Necessary to Register the Deed?
An instrument that is used to create or transfer a right relating to real property must be registered under Section 17(1)(b) of the Registration Act of 1908. Thus, to provide the necessary legal legitimacy, a relinquishment deed must necessarily be registered. According to Section 49 of the Registration Act, relinquishment deeds that are not registered are not admissible in court if there is a dispute regarding them.
How Does a Relinquishment Deed Get Registered?
To register the deed, the parties involved must complete this step-by-step procedure:
- Firstly, On a sheet of paper with a ₹100 stamp, you would need to write down all that should be included in a relinquishment deed.
Make sure this draft is error-free and that there are no grammatical or typing errors in any of the details. The agreement should be very transparent to all parties involved in the draft and written in a way that makes it evident to them all.
- Following that, you and all other parties involved in the transaction must go to the sub-office registrars in the concerned area. Also, you need two witnesses. The original identity and address documents, as well as a copy of their passport-sized photo, should always be kept on hand by each individual
- A nominal fee of ₹100 & ₹250 needs to be paid for registering a relinquishment deed
- If the official is fully pleased with the deed, it will be registered, and a registered relinquishment deed will be produced within a week. You can then go to the sub-office registrar’s and pick up the documents for your future use.
Conclusion
The Scope of Relinquishment deed is different from that of a gift deed. In a relinquishment deed, only co-owners of the property may relinquish their rights; whereas, in a gift deed, there are no restrictions and one may voluntarily transfer property. If you are someone who wants to draft a relinquishment deed but don’t want to get into all the nitty-gritties of the process, our experienced team at Vakilsearch can help you get it done in just a few clicks.
