Property rights of a son on mother’s self-earned property – Issues and the Law

Property rights of a son on mother’s self-earned property

There has been such a massive change in the social milieu in our country that now issues arise regarding a mother’s property too – reflective of the fact that women have shares in the family property now.

In further lines of succession of property owned by a woman, a son can claim a share in his mother’s self-earned property only if the mother wants. But if the mother dies intestate, the issue of claim arises.

Distribution of property among family members of the deceased when the person has died intestate has always been a challenging task.  The issue becomes more complicated when the property consists of both ancestral and self-earned property.

Also Read: The married daughters’ right in mother’s self-acquired property

Self-earned or Self-acquired property refers to the property:

  • made by a person by his resources or
  • which he has inherited under the law of succession or
  • acquired through Will or
  • which has come to him after partition.

How an individual deals with self-earned property:

  • The Law gives an individual the full right to deal with the self-earned property in any manner that he pleases; whether it is transferring the property by way of gift, sale or a Will.
  • A person can dispose of the self-earned property to the exclusion of his heirs. The entire property can be gifted to a third person/stranger.
  • No legal heir can claim any right over the said property till the time the owner of the property is alive.
  • The legal heirs can exert their right only if the owner dies intestate.

Personal and Statutory Laws governing property rights:

The right of the children in the property of their mother largely depends upon the personal law and statutory law governing such rights.

In India, the personal laws are related mostly to the religion of the person.  For Hindus, Muslims and persons of other faiths, there are different statutory and personal laws.

 Under Hindu Law, a woman is the absolute owner of the property which she acquires by any means: gift, will, inheritance. This property becomes her self- acquired/self-earned property. She can choose to transfer the entire property to any person other than her husband and her children.

Also Read: Gift Deed- Implications, Interpretations and Information

Can a son claim on the self-earned property of his mother?

During the lifetime of the mother, a son cannot claim any share in her self-acquired property.  

However, if a Hindu female (mother) dies intestate, the property devolves among legal heirs as per the provisions of the Hindu Succession Act. The legal heirs are

  • Sons Daughters (if predeceased, their children) Husband

The children and husband of the deceased woman (mother) have equal inheritance rights.  Other legal heirs follow if the first order is missing, i.e. a woman dies leaving no children, no grandchildren and no husband, then the legal heirs are:-

  • Mother and fatherHeirs of fatherHeirs of mother

In the case of Hindus,

  • A son can, therefore, claim a right in the self-earned property of his mother if the mother has died intestate.
  • Both son and daughter have equal rights.
  • Even the share of ancestral property falling to the mother after the partition of the property becomes her absolute property and is treated as her self- acquired property.

For Muslim mothers,

  • It is the personal laws which govern the right of her son in the self-earned property.
  • Under Muslim law also, a woman becomes the absolute owner of the property which she has acquired by any means.
  • Generally, there is no distinction like the ancestral or self-acquired property under Muslim Law.
  • The children of a Muslim mother cannot claim any right during her lifetime.  Inheritance opens only on the death of the person.

Also Read: Can NRIs buy property jointly with resident Indian?

For persons of other faiths, the right of the children in the property of the mother is governed by the Indian Succession Act. The relatives of the woman and her children are given preference over her husband and his relatives.

The issue of a son’s claim would therefore largely depend on the personal laws governing that particular segment and the line of succession.

The married daughters’ right in mother’s self-acquired property

Daughter's Share The married daughters' right in mother's self-acquired property

For a long time, the concept of succession or inheritance of property has been synonymous with how and what the son will get. Right of a son in the property of his father has always been a matter of concern and discussion. 

In a society which primarily rests on the patriarchal style of relationships, it is very heartening and interesting when people seek to understand or to discuss a question relating to the right of a woman (daughter) in the property of her mother. That’s one sure sign that we have progressed in the sphere of rights of woman.

Also Read: Division of Property Among Daughters and Daughters-In-Law

A woman, thankfully, is viewed as the absolute owner of her property.

  • She has the right to deal with her property in any manner.
  • As a necessary corollary to the above, we have moved a step further and also recognize the rights of the children in the property of their mother.
  • Daughters, even though married, have the right to inherit the property of their mother.  

Remember,

  • Law has always recognised a distinction between self-acquired and ancestral property.
  • It is there primarily to decide inheritance issues.
  • Under Hindu Law, a mother becomes the absolute owner of the property – whether she gets it through a Will or as a gift or by any other means. It becomes a self-acquired property for her.  
  • If the mother has inherited ancestral property from her father (i.e. maternal grandfather of her children), although the property is ancestral, it becomes the self-acquired property of the mother. 
  • Self-acquired property of a person can be disposed of by the person in any manner.
  • No legal heir has any right over such property during the lifetime of the person.
  • It is only if the person has died intestate; the question of right in his self-acquired property arises.
  • In the case of intestate succession, the devolution of property is governed by statutory or personal laws. For persons of Hindu faith, the relevant provision of law is found in the Hindu Succession Act. 
  • During the lifetime of the mother, married daughter has no right to seek her property.

Under Hindu Law, daughters have equal rights as sons in the property of their mother.

Also Read: Daughters have equal shares in Ancestral Property, even though they were born before enactment of the Hindu Succession Act – A Judgement by Supreme Court

For right in the self-acquired property of a mother, it is essential to understand two things:

  • All the property acquired by a woman becomes self-acquired property.
  • Self-acquired property can be disposed of in any manner.
  • Any right in the self-acquired property arises whenever the person dies intestate

If a Hindu mother dies intestate, the property gets devolved as per the Hindu Succession Act.

The Act says that the property of a woman gets devolved to 

  • her children
  • the children of predeceased children 
  • her husband 

All these three legal heirs inherit equally.

There is no distinction in the Act for married or unmarried daughters. Thus whether the daughter is married or unmarried, she gets equal rights in the self-acquired property of her mother along with her brother and husband of the deceased woman. 

Read Also: Property Rights of Indian Daughters

The property of a mother also includes any share of the mother in her father’s ancestral property. Once this property is partitioned and the mother gets her share, the share becomes self-acquired property. Even if the mother has died before partition, her children can claim this share later after partition. 

In the eyes of the law, Married daughters can enforce their right by filing a suit in the court for devolution of property as per the Hindu Succession Act.

Gift Deed- Implications, Interpretations and Information

Gift deed Information, Implications and Interpretations

Can parents take back the property gifted to their children?

Let’s skip the mystery and come straight to the point! 

The answer is – YES

 Parents can indeed take back the property they have gifted to their children. 

Remember:

  • All Gift transactions come under the purview of the Transfer of Property Act. Under this law, a valid gift once made and accepted, is irrevocable.
  • However, one can challenge a gift deed if any of the elements vitiating the contract is present like undue influence, coercion or fraud. 
  • By its inherent nature, Law is dynamic and changes with change in the social milieu and other politico-cultural factors.

With a rapidly shifting society and apparent differences in the value system in human relationships, the question of parents being able to take back gifted property often arises. 

Also Read: NRIs and commercial property

Family spaces have gradually moved from being Joint Family setups to nuclear ones. Children move out of family environs to build their career and independent lives. 

There is an ethos of continuity, lineage and life security that motivates parents to gift property to their children. Normally one would expect the same to be reciprocated – meaning thereby, that children take care of their parents when the latter reach seniority. Unfortunately, there are increasing cases of children mistreating their parents once the property is transferred in their names.

Also Read: Can NRIs buy property jointly with resident Indian?

Moreover, in India, the governmental support system for the elderly is still not very strong. 

  • Given the frequent cases of the abuse or ill-treatment of the elderly, Indian Law has provided a right to the parents to take back their gifted property from the children.
  • This right has been recognized in the ‘Maintenance and Welfare of Parents and Senior Citizens Act, 2007’.
  • It is social welfare legislation meant for care and well being of the older adults.
  • It protects the rights of the elderly and has made it a legal obligation of the children to look after their parents. 

Section 23 of the Act, as mentioned above, allows the cancellation of a gift deed by the parents. When a gift is made to the legal heir/child by the senior citizen upon a condition that the receiver will take care of the basic needs of the donor, but the receiver fails to fulfil the same; the gift can be cancelled. The condition can be expressed or implied.

Also Read: Saving yourself from fraud while buying or selling a property

If a child fails to fulfil such a condition it would be considered as an exercise of fraud, undue influence or coercion in the gift transaction, depending upon the facts of the case. The donor can challenge the gift deed and seek annulment of the same. 

This provision assists the elderly persons who have made the gift of the property after coming into force of the Maintenance Act and want to cancel the gift deed later.

Parents gift a property to their children with an understanding that the donor (parent) would be taken care of after transfer of the property. But if the donee (child) is not fulfilling his obligation under the contract of the gift, the same can be cancelled.

NRIs AND COMMERCIAL PROPERTY

NRIs and commercial Property

Like other resident Indians, NRIs too have become conscious of putting in their money where the bigger buck is!

Hence, investment in commercial property is being preferred over-investment in residential properties by NRIs. 

Why?

Well, the rise in rental income from commercial property and growth in demand for commercial property is the main reason behind the shift in the trend. The growing economy and liberal policies of the Government of India are attracting investment by NRIs in the commercial sector.

Also Read: Can NRIs buy property jointly with resident Indian?

 What kind of properties can NRIs invest in?

  • NRIs are permitted to invest in commercial property, i.e. those purely intended for business purposes.
  • An investment in commercial property could broadly mean purchasing factories, office spaces, industrial units, retail complexes, malls, medical centers, hotels, retail outlets, warehouses, and garages, etc.  Or for commercial renting.
  • Residential Properties

Can NRIs finance the investment?

  • Fact is, NRIs purchase commercial property by using funds from their bank accounts in India (through funds in NRE/NRO/FCNR account) or through remittances using normal banking channels. 
  • NRIs can also avail loans for the purchase of property in India just like resident Indians. They can claim benefits under Section 24 and Section 80C of the Income Tax Act.
  • The added advantage being that, by availing loan from a bank, an NRI gets the facility of getting the property papers evaluated by bank officials who exercise due diligence before sanctioning the loan. 

How to avail a loan: 

The conditions are general and may vary from bank to bank.

Also Read: Saving yourself from fraud while buying or selling a property

  • The NRI can be a salaried person or self-employed. Different banks have different eligibility criteria. 
  • The income of NRI matters while taking a loan. The income slab is different depending upon the country of residence of the NRI. 
  • Many banks require a co-applicant who is a resident Indian, preferably a person who is a close relative of the NRI and should ideally be from the place where the loan has been applied for. 
  • The period of loan also varies from bank to bank. The period of repayment in case of commercial loans for NRIs varies from 5-15 years. The period is shorter for NRIs as their repaying capacity is more than resident Indians.
  • The rate of interest depends upon the loan amount and the repayment period selected.
  • 80-85% (some banks allow only 60-65%) of the loan amount is permitted against the value of the property. The loan amounts that can be availed depends upon the income also.

What are the required Documents and concerned rules for availing a loan?

An NRI would require the following:

Also read: Transfer of Property on the basis of Registered or Unregistered Will

  • Passport
  • Work permit
  • Salary certificate
  • Proof of residence
  • IT returns
  • IDs – photographs

Please Note: The Aadhar Card is not mandatory for availing a loan. 

Loan Document rules:

  • NRIs can execute the documents on their own by ensuring their physical presence in India or through a Power of Attorney.
  • This would be subject to all rules related to the execution of the POA by NRIs.

Loan to NRIs for business activities against bank deposits:

  • RBI permits sanction of loan to NRI for doing business activities in India against their bank deposits.
  • This loan is not for investment in real estate business but is granted only for carrying a business activity other than this. 
  • RBI issues guidelines for permitting the amount of loan to NRIs for carrying business activities against the NRE/FCNR/NRO accounts.
  • The bank may fix minimum and maximum limits as per the said guidelines. 
  • The loan amount is sanctioned after scrutiny of all documents. NRI also has to make a personal contribution towards the commercial property purchase before a loan is disbursed.

How do NRIs repay their property loans?

  • The loan amount is repaid as per decided EMIs. For repayment of the loan, an option of prepayment of the loan amount is also available to NRI subject to the foreclosure charges.
  • Repayment is made through Internet Banking or ECS from NRE/NRO account as permitted by RBI. 

Can NRIs buy property jointly with resident Indian?

Joint Property - Can NRIs buy property jointly with resident Indian

Some things in this world are still going fine jointly! Take property ownership in India, for instance – especially when we live in a country where the property is still one of the most coveted ways to connect with your roots.

For NRIs, purchasing a property in India is much more than an investment opportunity. It is a way of seeking connections to the native place – and also to find a ‘home’ for oneself. 

It helps if the property ownership is joint with a known relative or friend who is a resident Indian. 

Read: Saving yourself from fraud while buying or selling a property

What do you keep in mind while buying property jointly?

  • As with other things, the purchase of property by NRIs in India is also governed by guidelines issued by RBI. 
  • While the RBI has issued General guidelines for purchase of property by NRIs also, in some cases, special permission from RBI or approval from Government is required before making an investment in the immovable property by NRI.
  • RBI allows NRIs to jointly own a property with another NRI or a resident Indian. 
  • However, in cases where the resident Indian is otherwise ineligible to buy property, then the NRI will also not be allowed to buy the property with that resident Indian (irrespective of the financial contribution of the other person). 

Remember:

  • Residences or commercial property can be bought by NRIs freely. 
  • There is no restriction on the number of properties that can be purchased. 
  • There is no requirement of obtaining any specific permission in such cases and also no need to send any information to RBI for this purchase. 
  • There is no need to file any document with RBI in this regard. 
  • In case the interested NRI is unable to come to India for completing the property purchase, the same process can be carried out by giving a special POA (Power of Attorney) to another person. 

But,

  • For the purchase of any agricultural property or a farmhouse or plantation, NRIs need to apply for specific permission from RBI. 
  • However, NRIs can inherit the same from any resident Indian.

Read: Transfer of Property on the basis of Registered or Unregistered Will

What does the FEMA say?

  • There are no specific guidelines under FEMA for purchase of property by NRI jointly with resident Indians.  
  • An NRI is allowed to sell or gift any immovable property to any resident Indian. 
  • Any property can be gifted to NRI by an NRI other than agricultural property, plantation or a farmhouse.
  • The restrictions which apply to NRIs for purchase of agricultural property, farmhouse or plantation continue even if it is a joint purchase.  
  • The transactions have to be routed through proper banking channels under FEMA and RBI guidelines.
  • For all purposes of investment in real estate, NRIs are treated at par with the PIOs.

Read: How to obtain probate of a Will

What if a person becomes an NRI after buying property in India?

  • In case an individual has bought property in India and acquires an NRI status after that, he can continue holding the property
  • All taxes will apply to the property as per the laws of the country

So Yes! Relax NRIs – You CAN buy property jointly with resident Indians or other NRIs. Make sure you adhere to RBI and FEMA rules regarding the same.