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Settlement of individually owned property
14-Sep-2023 (In Family Law)
There is a common perception that a Family Settlement in respect of immovable Properties can take place only in case where there is an HUF in existence and it can be only in respect of Joint Family Properties among the parties having antecedent title. However, in Madan Lal vs Kuldeep Kumar & Ors. on 4 October, 2013 of Delhi High Court, observed that : “The counsel for the appellant / plaintiff inspite of being prodded has been unable to in any of the judgments cited or otherwise show that a Family Settlement can only be with respect to coparcenary or inherited property and not with respect to the self-acquired joint property of family members. I am involved in an arbitration matter wherein, the arbitrator, in his interim order has held that : “Where two individuals declare each other to be owners of the property having equal share therein, an arrangement between them by way of a family settlement is permissible in law.” What is correct position of Law?
Be it a plot of land, an apartment, or an independent house, the rules for self-acquired properties are similar whether they are jointly owned by a couple or by siblings. When the property is held in the name of one's spouse, the other partner automatically becomes a co-owner. “A wife becomes the 50% co-owner of a property on marriage.”
In case of a divorce, the court may order the land to be divided equally and the share of the separating partner to be given. Alternatively, one spouse may buy out the partner's share by offering monetary compensation. A spouse can also issue a surrender deed or a gift deed and hand over his/her share to the separating partner. In such a situation, the deeds have to be registered at the registrar's office after paying the applicable stamp duty (from 5% to 12.5% in different states). However, it is important to note that one's property rights have to be transferred before the final divorce decree is passed, otherwise the transaction is treated like normal sale and the regular stamp duty will be applicable instead of the 2% duty that applies to a gift deed. “In the case of a surrender deed, the person who gets the property would have to pay a stamp duty of 5% of the market value of the property,”
But such a clear division may not be as easy when property such as a commercial building or an apartment is involved, especially when one of the partners is already residing in it. Here, the court could order the sale or auction of the property and the partner be compensated monetarily.
In case the couple has a minor child, the latter’s rights are also protected. Assume a husband gifts his share of a flat to his separating spouse. In this case she won’t be able to sell the flat without the permission of the court, because the child also has a right to the property. On the child’s 18th birthday, the rights would be transferred to him. If the wife insists on a monetary compensation, then her share will be worked out by equally dividing the ownership among the members of the family-roughly 33% if one child is involved, or less if the couple has two minor children.
A widow’s rights are equally clear-cut. She gets the share of her deceased husband in both his selfowned property and his inherited property. But once children are involved, the property rights get further divided.
Note that a widow will retain her share in her deceased husband’s property even if she remarries.
Things are more or less the same in the case of siblings. In cases where there is no documentary evidence, it is assumed that the property was purchased by the siblings jointly and each is entitled to an equal share and ownership right. Most of the property-related cases get stuck at this stage, with each party disputing the share pattern. It’s worth remembering that the onus of furnishing this evidence does not lie on the party filing the partition suit but on the other members. However, to avoid unnecessary delays, the contestant is often the one scrambling around for papers and proof.
In case of a divorce, the court may order the land to be divided equally and the share of the separating partner to be given. Alternatively, one spouse may buy out the partner's share by offering monetary compensation. A spouse can also issue a surrender deed or a gift deed and hand over his/her share to the separating partner. In such a situation, the deeds have to be registered at the registrar's office after paying the applicable stamp duty (from 5% to 12.5% in different states). However, it is important to note that one's property rights have to be transferred before the final divorce decree is passed, otherwise the transaction is treated like normal sale and the regular stamp duty will be applicable instead of the 2% duty that applies to a gift deed. “In the case of a surrender deed, the person who gets the property would have to pay a stamp duty of 5% of the market value of the property,”
But such a clear division may not be as easy when property such as a commercial building or an apartment is involved, especially when one of the partners is already residing in it. Here, the court could order the sale or auction of the property and the partner be compensated monetarily.
In case the couple has a minor child, the latter’s rights are also protected. Assume a husband gifts his share of a flat to his separating spouse. In this case she won’t be able to sell the flat without the permission of the court, because the child also has a right to the property. On the child’s 18th birthday, the rights would be transferred to him. If the wife insists on a monetary compensation, then her share will be worked out by equally dividing the ownership among the members of the family-roughly 33% if one child is involved, or less if the couple has two minor children.
A widow’s rights are equally clear-cut. She gets the share of her deceased husband in both his selfowned property and his inherited property. But once children are involved, the property rights get further divided.
Note that a widow will retain her share in her deceased husband’s property even if she remarries.
Things are more or less the same in the case of siblings. In cases where there is no documentary evidence, it is assumed that the property was purchased by the siblings jointly and each is entitled to an equal share and ownership right. Most of the property-related cases get stuck at this stage, with each party disputing the share pattern. It’s worth remembering that the onus of furnishing this evidence does not lie on the party filing the partition suit but on the other members. However, to avoid unnecessary delays, the contestant is often the one scrambling around for papers and proof.
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