A Deed of Settlement is a legal document which formalizes an agreement between relevant parties to settle a dispute. It is an
alternative to litigation, and has legally binding terms the parties have
agreed upon.
A Brief on Settlement Deed
Settlement deed in terms of immovable
property like land/building, is a legal document wherein parties settle their
differences or disputes. Legal Definition states Settlement is a disposition of
property/properties – whether movable or immovable, as per the choice of the
owner of the said property/properties. A settlement deed for it to be valid has
to be brought down in writing and has to be registered. Usually the nature of
disputes settled through a settlement deed are court cases, property division, and
payments settlement. A settlement deed between members of a family is a family
settlement deed, and most often it is related to the division of property.
Settlement deed is a legally enforceable document and has to be registered.
Only those properties can be settled which have been self-acquired (properties
inherited and received through family partition are also considered
self-acquired properties).
Parties to a Settlement Deed and what is
conditional or absolute settlement?
The party executing the settlement
(executants) is called the Settlor and the claimant (beneficiary) is called the
Settlee. A settlement deed can be conditional or unconditional (absolute). In
case of conditional – the settlor can impose certain conditions which the
Settlee has to observe/follow such as pay certain amount of money to the
Settlor every month / every year and non-abiding of such a clause will
invalidate the Settlement and The Settlor has option to Void(Revoke) the
Settlement due to non-fulfilment of said condition. So a Settlor can insert a
clause to this effect and enjoy the benefits and life interest for his/her
lifetime along with their spouse. In case of unconditional/absolute settlement,
the property gets transferred to the Settlee without any conditions and the Settlor
cannot revoke the same.
Consideration
In case of sale, there is monetary exchange
involved which is basically the consideration for the property bought. In case
of gift, it is imperative that there is no consideration (no monetary exchange
for the property) so gifted (only out of love and affection). In case of
settlements, consideration is not as direct as in the case of sale. Love and
affection can be considered as Consideration for property settled by a Settlor
to a Settlee (Settlee may be a family member or even non-relative). Settlee can
even be for Charitable or Religious Trust – wherein mental satisfaction is the
Consideration, even marriage is consideration for a settlement.
Difference between gift and settlement?
Gift and Settlement are often used
interchangeably – however they are not the same.
For gift there is no consideration however
for settlement love and affection, mental satisfaction and marriage may be
consideration.
Gift has to be accepted by the receiver but
in case of settlement there is no need for acceptance needed.
Registration of Settlement
Deed
In case of immovable asset like land/building
for a settlement deed to be valid it has to registered. Along with the
settlement deed the following have to be presented at the Concerned
Sub-Registrar’s office – a few of the other documents required are the title
document (parent document and Patta) in original, Encumbrance certificate of
the property (till the date of the registration), ID proof, Aadhaar proof of
the parties – this list is not exhaustive and varies on a case-to-case basis
depending on the property settled and the conditions contained therein the
settlement deed.
Registration Fees to be paid in case of
Settlement:
The settlement fee is as follows:
a.
If Settlement is in favour of family member, then the Stamp duty is 1% of the
market value of the property subject to a maximum of Rs. 25000/- and the
registration fee is also 1% of the market value of the property subject to a
maximum of Rs.4000/-
b.
However, Settlement for other cases - then the Stamp duty is 7% of the market
value of the property and the registration fee is 4% of the market value of the
property.
Note: The definition of
family member varies from state to state in India – but usually – family member
consists of mother, spouse, son, daughter, grandchildren, wife of pre-deceased
son.
WITH
WARM REGARDS
RANJEET
KUMAR MUNDHRA
ADVOCATE & FINANCIAL ENGINEER
M : 9331618264
E – MAIL : TRLC1857@GMAIL.COM
No comments:
Post a Comment