As part of the settlement agreement for a divorce, a lump sum of ₹25 lakh is to be given to the wife ( ₹12.5 lakh has already been given at the time of the first motion in July 2019). The remaining amount will be given at the time of the second motion. Before the second motion, the wife will execute a release deed in favour of the husband as per the divorce settlement (for a jointly held property in Delhi, mortgaged to a government bank, for which a joint loan is being paid off). However, for this release deed, there is no consideration amount specified because ₹25 lakh is a holistic payment that includes everything. Should there be a release deed without consideration (which attracts no stamp duty as such), or should there be a gift deed which will have 6% plus 1% stamp duty? It is to be noted that the divorce agreement and request letter to the bank mention the release deed and not the gift deed. Further, the bank authorities have given a go-ahead to the real estate hub for a release deed for a self-acquired (jointly acquired) property, and not a relinquishment deed applicable for inherited properties.
—Name withheld on request
You have informed us that a marriage between a couple is being dissolved by mutual consent and as a part of the settlement terms, including the alimony, maintenance and so on between the husband and wife under the Hindu Marriage Act, 1955, the husband is paying a lump sum amount of ₹25 lakh in a full and final settlement of all the claims of the wife, and has paid the first tranche of ₹12.5 lakh. You have also informed us that before the balance settlement amount is paid, the wife has to release all her rights and interests in a co-owned property of which her husband is the co-owner.
To answer your query as to whether the assigning of the rights and interests of the wife in the co-owned property should be through a release deed or a gift deed and the applicable stamp duty and other charges involved, you will have to understand that the stamp duty is levied on the nature of instrument rather than the nomenclature or name of the document. To clarify, the intention of the parties is deduced from the document itself. In this particular instance, the release of rights in a particular immovable property by the wife is a part of an overall settlement for which a value is assigned. Therefore, the document should provide that the wife/ releasor is releasing all her rights and interest in the assets of the husband, including the property in question, for a lump sum consideration, and such an instrument would be in the nature of a release deed. A gift is a transfer of an immovable property as per the Transfer of Property Act for consideration, which is love and affection, which is not the case in the instant matter. Whether there will be a stamp duty or not will be determined according to the terms of the state law, that is, the Indian Stamp Act.
Can you explain the difference between joint tenancy and tenancy-in-common? I am planning to buy a house with three floors with my brother, and we will rent out each floor. We will be investing equally in it and share the rent received equally. What type of tenancy should we form?
—Aman Agarwal
Joint tenancy is a concept where two owners hold a property on a survivorship basis, that is to say, upon the demise of either of the owners, the surviving owner will be entitled to the entire property, holding 100% right, title and interest in the same.
However, under tenancy-in-common, the owners hold the property as co-owners and upon the demise of either of the co-owners, the property devolves, as per the applicable personal succession laws, upon the deceased's co-owner's legal heirs.
Depending upon your personal needs and choices, the option of either joint tenancy or tenancy-in-common can be selected for holding the property in question.
Originally published Mar 17, 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
