Property Dispute and Family Settlement

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WHAT DOES PROPERTY DISPUTE MEAN?

A property dispute in India is a dispute involving property. In India, property disputes account for approximately 66% of cases. Property disputes come in many forms. They can be caused by claims made by co-owners or family members, heirs to the estate, misrepresentation of the seller, a bad title, disputes over property acquired through a will, easement rights disputes, etc.

Property disputes are common in India, affecting all strata of society - low-income families to ultra-rich ones. Most people will drag it to court rather than settle the dispute. Most people are unaware that courts, while being an expensive and lengthy process, do not guarantee a satisfactory outcome. A family settlement is the best option. These points will help you better understand the concept.
 

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WHAT IS FAMILY SETTLEMENT?

A family property settlement is a mutual agreement among family members to divide property and resolve disputes without going to court. It helps maintain harmony by clearly outlining each person’s share. Such settlements are made between relatives who each have a legitimate claim to the property in question.This does not have to be restricted to real estate but can include movable assets such as jewelry or money on bank accounts. Family settlements are used to settle joint or common property owned by the family, as opposed to personal or self-acquired properties.

HOW CAN MEDIATION HELP IN FAMILY PROPERTY DISPUTES?

Mediation can be particularly beneficial in resolving Family Property Disputes. Here's how:

• Collaborative and Voluntary: Mediation offers a voluntary and collaborative approach, allowing all parties to actively participate in shaping the resolution.

• Neutral Mediator: A mediator, impartial and unbiased, facilitates communication and negotiation, ensuring all viewpoints are considered.

• Preservation of Relationships: By reducing conflict and fostering understanding, mediation helps maintain relationships, which is important in family property dispute cases.

• Tailored Solutions: Customised solutions are crafted to address the unique needs and interests of the involved parties, especially important in property disputes.

• Cost and Time Efficiency: Mediation proves to be cost-effective and swift compared to traditional legal proceedings, a significant advantage in complex property disputes.

• Confidentiality: Mediation provides a confidential environment for resolving disputes, safeguarding the privacy of involved parties and the details of the resolution.
   

PARTITION THROUGH FAMILY SETTLEMENT AGREEMENT:

A family settlement is a mutual agreement between family members, generally made to avoid any court disputes and  divide the family property  with mutual understanding. A family settlement agreement is made in the same format of a partition deed. Moreover, a family settlement agreement does not require registration and stamping. A  family settlement  agreement must be signed by all the members of the family voluntarily, without any fraud, coercion, or pressure from any family member. In addition to this, it is not necessary that the family settlement agreement is drafted in a written document and can be executed either by a compromise or by a mutual understanding between the family members.
 

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ADVANTAGES OF FAMILY SETTLEMENT AGREEMENTS

1. It helps to avoid protracted, public, and messy court battles that too within the family.

2. Quicker, more harmonious way to resolve disputes.
 

PROCEDURE:

A family settlement is a conciliation or peacemaking process where a third person, usually a  lawyer  or a senior family member, helps the family arrive at a mutually acceptable solution to the property dispute.

A family settlement may not be a single legal document incorporating the distribution of the property it can also be a series of documents spelling out the property rights of each of the family members.

A settlement instrument is neither a gift nor a transfer of property as per the provisions of the Income Tax Act. Therefore, separate transfer of property documents will have to be drawn up in addition to the said family agreement in order to bring about an actual transfer. The tax fact must be taken into consideration while a transfer of property is decided.
 

PARTITION/ SETTLEMENT SUIT IN FAMILY DISPUTES IN INDIA:

Now, before a case is filed in court for partition of property, a  legal notice  has to be sent to the other co-owners of the property regarding family property partition/ settlement. The legal notice for partition suit must state the shares of each co-owner, complete details of the property in dispute, and the requisite action required to be taken. If the co-owners do not reply to the legal notice or send an insufficient reply, a partition suit can be filed in the court.

A  partition suit  is a court case filed when none of the co-owners agrees to the terms and conditions of property division, and one or more co-owners want to divide the property according to their shares. A suit for partition is filed in the court which has jurisdiction over the area in which the property is located.

The court first determines whether the person who has filed the partition suit has a rightful claim in the property or not. Once the share is established and no additional inquiry is needed, the court may assign individual ownership of the property to the co-owners.

If the property cannot be distributed merely on the partition suit, the court may order for an inquiry to be conducted and pass a preliminary or initial decision for the appointment of a Commissioner who will then evaluate the property and submits a report. The court then determines the share of each co-owner on the basis of the said report and divides the property according to each co-owner's share.
 

CAN FAMILY SETTLEMENT OF SELF-ACQUIRED PROPERTY TAKE PLACE?

Self-acquired property settlement can't be executed during the lifetime of a person who had acquired it, but at the same time, the self-acquired property automatically becomes a part of the ancestral property upon the death of such person. However, the person can assign the self-acquired property through his/ her will to any person he desires.
 

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LEGAL REQUIREMENTS:

Merely reaching a consensus is not enough there are a few legal formalities that must be completed to ensure that the agreement is valid.

• The settlement document must be signed by all the family members involved. A missing signature can easily become ground for challenging the document in court at a later date.

• As a safety measure, the document should be attested by two witnesses, though it is not mandatory.
   

REGISTRATION:

The next step is to register the agreement. According to Section- 17 of the  Indian Registration Act , a family settlement that purports to assign immovable property must be mandatorily registered or the deed would be invalid. Stamp duty is applicable to such deeds and the amount would depend on the value of the property involved.
 

BINDING FACTOR:

While a duly executed family settlement cannot be revoked, except by a court decree, it can be challenged in a court of law under the following circumstances.

• An agreement that is brought about by fraud or coercion

• Any misrepresentation of facts regarding the title of the disputed property, too, can lead to future altercations.

• Improper execution.

Paying heed to these common tripwires while drawing out an agreement will result in a foolproof, amicable, and binding family settlement, which benefits everybody.
 

WHEN CAN A FAMILY SETTLEMENT DEED BE CHALLENGED?

There are certain situations when a Family Settlement Deed can be challenged. These are stated below: 1. Fraud: When fraud is involved in the making of the agreement, the same can be challenged before the appropriate forum. 2. Coercion: If the Family Settlement Agreement has been entered into through force or coercion, it can be challenged. 3. Manipulation: In a situation where facts related to the title etc. of the disputed property have been manipulated, the agreement can be challenged. 4. Irregularity: If there has been an irregularity in executing the deed, the same can be challenged before the appropriate forum.
 

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WHAT ARE SOME OF THE JUDGEMENTS BY THE SUPREME COURT ON FAMILY SETTLEMENT?

• Kale & Ors. vs. Deputy Director of Consolidation (1976) The Supreme Court laid down the fundamentals of a family settlement agreement in the case of Kale & Ors. vs. Deputy Director of Consolidation (1976), which are as follows: 1. The purpose of the family settlement must be to settle existing or potential disputes among family members and to ensure fair distribution of property among them. 2. The family settlement must be genuine and entered into voluntarily, without any fraudulent, coercive, or undue influences. 3. An oral family settlement is valid, and registration is not required. 4. If the family settlement is in writing, then registration is necessary. 5. The document that records the family settlement does not create or terminate any rights in the property and thus does not require mandatory registration. 6. Only those who have an antecedent title, claim, or interest in the property can enter into a family settlement.

• Subraya M.N. v.Vittala M.N. (2016) The Supreme Court held that getting the Memorandum of family settlement registered not only makes the settlement more definite, but also increases the sanctity of the same. Even without registration, a written document of a memorandum of family settlement / family arrangement can be used as a corroborative evidence.

• Ravinder Kaur Grewal & Ors. vs Manjit Kaur & Ors. (2019) The Supreme Court held that a Memorandum of family settlement is a documentation of the agreed-upon terms of settlement between the involved parties. In such cases, the registration of the document is not mandatory but still legally valid because it does not establish or terminate any rights or titles. The Supreme Court referred to the Kale case to emphasize that family arrangements should be recognized as legitimate and not dismissed on technical grounds. The Memorandum of Settlement, which is created after a family settlement has been reached, is only intended for the court's record-keeping purposes and does not need to be registered under Section 17 of the Registration Act, 1908.
   

CONSEQUENCES OF NOT ADDRESSING THE ISSUE TIMELY

In India, property disputes between siblings have become common. Property disputes are on the rise in India, whether it is between wealthy or low-income families. The unhappy beneficiaries can challenge even the strongest wills and property disputes can last for years without a resolution by the courts. It is therefore important to resolve the matter as quickly as possible, with the assistance of an experienced lawyer who can guide and assist you in your case.
 

WHY DO YOU NEED A LAWYER?

Often, the legal system and law can be confusing. This is especially true when it comes to disputes involving family property. One may not know how to identify the legal issue or the relevant area, if the matter requires court proceedings, and how the court process works. You can understand your options and determine your legal recourse by consulting a lawyer. A property lawyer with years of experience can provide expert advice to help you resolve your property issue. A property lawyer with experience is knowledgeable about the laws, and can help avoid costly mistakes. Hiring an attorney will help you avoid delays and ensure that you get your share of the property as soon as possible. LawRato offers a Free Legal Advice service that will provide you with free legal advice from property lawyers.
 

FAQs

Q1. Is registration obligatory for a family settlement agreement?

Yes, registration is indispensable in finalizing a family settlement agreement. As per Section 17 of the Registration Act, 1908, a family settlement regarding property lacks validity unless registered.

Q2. Can a family settlement agreement face legal challenges post-execution?

Yes, a family settlement agreement may face legal challenges under specific circumstances, such as if fraud, coercion, or undue influence tainted its formation. Moreover, if the terms of the agreement are deemed unfair or unlawful, a party reserves the right to contest its validity in court.

Advocate Chikirsha Mohanty

Greater Kailash - 1, Delhi
5 years

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