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Tuesday, July 16, 2024

what is partition deed? where we need a partition deed?

# partitiondeed #deed # registration #property

What is a partition deed?
Partition deed is that legal document drafted and executed at the time of division of a common property. A partition deed is mostly used by families, to divide members’ shares in inherited properties.

After the division through the partition deed, each member becomes the independent owner of his share in the property and is legally free to sell, rent or gift his asset, according to his wishes.

When do you need a partition deed?
The need for a partition deed arises, when it becomes important to create a clear division of shares in a common property.

After a partition deed is executed,each member becomes the independent owner of his share in the property and is free to sell,rent or gift his asset.

Once the partition deed comes into effect,each divided share of the asset gets a new title.

To attain in legal validity,a partition deed must be registered with the sub-registrar or the area in which the immovable asset is located.

The beneficiaries are not liable to pay any capital gains tax after the division of a property through a partition deed.

Contents of a partition deed
A partition deed would mentioned the following information:
• Date of partition
• Statement of partition
• Name, age and address of the joint owners
• Description of their share
• Signatures of the joint owners
• Names and signatures of the witnesses

Documents needed for partition deed
To execute a partition deed, the following documents are required:

• Original title document
• Land records
• Land map
• Valuation of property
• Registration fee
• Stamp duty
• ID cards of all the parties
• Address proof of all parties
• PAN card

Income tax on partition deed
Since no transfer has taken place as such through the partition, the beneficiaries are not liable to pay any capital gains tax after the division.

Partition deed: Legal asepects
How is property divided through a partition deed?
If a property is being divided between two people who have invested in the purchase, the division is based on their respective contribution. If two siblings bought a property for, say Rs 1 crore and each contributed Rs 50 lakhs, the property will be divided equally between the two parties through a partition deed. If the ratio of their contribution is 60:40, the division would be in this manner. However, the law assumes each member to have an equal share in an undivided property, unless documentary proof stating otherwise is produced.
In case of inherited property, co-owners would get their share in a property based on their treatment in the inheritance law governing their religion.

Application of inheritance laws on partition deed between family members
Partition of any property is subject to the laws of inheritance. This brings into picture inheritance laws governing property division among Hindus, Muslims and Christians. At the time of partition, the share of each member is determined, based on his entitlement under the applicable inheritance laws.

Partition of property under Hindu law
According to the Hindu Succession Act, 1956, a deceased Hindu’s assets are divided among his legal heirs, either according to his will, or under the rules stated in the Act if the person has died without leaving a will – i.e., intestate. While the Hindu Succession Act, 1956, is applicable on the partition in a Hindu Joint Family, the Hindu Partition Act of Property, 1892, is applicable on partition of a property that is jointly owned.

What happens to a property after a partition deed is executed?
Once the partition deed comes into effect, each share in the property becomes an independent entity. Each divided share of the asset gets a new title. Also, members surrender their claim in the shares that have been allocated to the other members.
For example, if Ram, Shyam and Mohan divide a property through a partition deed, then, Ram and Shyam would give up their right in the part that has been allocated to Mohan. Similarly, Mohan would give up his right in the shares allotted to Ram and Shyam. Apart from the common areas where easements rights are applicable, each one has an independent property within an estate, after its partition. This also provides them the right to deal with their share in a manner they like.
After the partition, each party must also complete the property mutation process, to make the change legally valid.

Is it compulsory to register a partition deed?
the process of partition of properties belonging to a Hindu Undivided Family (HUF) and the receipt thereof by a coparcener, do not fall under the definition of ‘transfer’. Consequently, it is not compulsory to register such partition deeds. Note here that in case the partition has been affected through a partition deed, which has not been registered, the deed will not be admissible as a proof in a court of law.

What if partition deed is not registered?
If the partition deed is not registered by paying the applicable stamp duty and registration charges, it will have no legal validity. Consequently, the unregistered partition deed will not be admissible as an evidence under Section 49 of the Registration Act, 1908.

Difference between partition deed and partition suit
Under the provisions of the law, a property would be divided, either by way of a partition deed or by a partition suit. The need to go for the second option arises, in case of a dispute or in cases where the co-owners do not mutually agree to the partition. In this case, a partition suit must be filed in an appropriate court of law.

Before one can file a suit, they will have to issue a request to all the co-owners, demanding partition. In case the parties refuse to entertain your request, you are within your legal rights to move court over the matter. Under the Indian laws, the aggrieved party must approach the court within three years, from the date when the right to file a partition suit accrues.

Both the instruments, however, serve the same purpose – they create and extinguish rights of co-owners in a jointly owned property.

Treatment of verbal partition of property or family settlement under the law
Under the laws governing inheritance among Hindus, Jains, Buddhists and Sikhs, Class-I heirs of a property can enter into a verbal memorandum of family settlement and divide the property on mutually agreeable terms. Since this oral agreement has been reached without using the partition deed as an instrument, the need to register the transaction is entirely avoided.

“It’s legally permissible to arrive at an oral family settlement dividing/partitioning the properties and thereafter, record a memorandum in writing, whereby the existing joint owners, for the sake of posterity, record that the property has been already partitioned or divided,” the bench held.

“Courts have recognised oral partitions in cases of joint families. An oral partition is not an instrument of partition, as contemplated under Section 2(15) of the Stamp Act. Therefore, as it is not an instrument, no stamp duty is payable on an oral partition,” the HC further said.
However, in the absence of a partition deed, the shares of the co-owners remain undivided in this kind of arrangement. This also means, they are not free to sell, gift or transfer their share in their property on their own.

Partition deed sample
This deed of partition made at ___this ____ day of
(1) Mr.______, S/o.____, Age ___years, Occupation___, Residing at__________. Hereinafter referred to as the first party.

(2) Mr______, S/o.____, Age ___years, Occupation___, Residing at__________. Hereinafter referred to as the second party.
(3) Miss______, D/o.____, Age ___years, Occupation___, Residing at__________. Hereinafter referred to as the third party.

1. (a) The property described in the first schedule shall be allotted to the first party exclusively.
(b) The property described in the second schedule shall be allotted to the second party exclusively.
(c) The property described in the said third schedule shall be allotted to the third party exclusively.
Now this deed witnesseth that
Schedule A
(Details of Undivided properties belongs to Joint Family)
Description of the property
(Property allotted to the share of Sri.__________First party)
(Property allotted to the share of Sri.__________Second party)
(Property allotted to the share of Miss___________Third party)
The first party
The second party
Third party

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