Effects of Family Disputes on the Partition of Property in India

Effects of Family Disputes on the Partition of Property in India

Family disputes can lead to a forced partition. Partition of property takes place when there is joint ownership of two or more persons in property, and each of them wants to have a separate share. Partition of property comes with financial and legal implications.

The partition of property in India is governed by Partition Act and Personal laws of inheritance.

Effects of Partition:

  • Once the partition is effected, joint ownership is terminated, and each co-owner becomes the absolute owner of his share and is free to deal with it.
  • When shares of all co-owners are severed, it is partition. When one co-owner is separated, and others continue as joint, it is separation of shares.
  • It involves the transfer and surrender of rights in the property.
  • The property gets divided or is sold, and the proceeds are distributed.

Ancestral or Self Acquired Property:

The property can be ancestral property or self-acquired. Self-acquired property cannot be partitioned during the lifetime of the person who acquired it.

A partition can be effected at the instance of any one of the co-owner and consent of all is not required.

Share of each co-owner:

Share of the co-owners if not defined, needs to be ascertained during partition so that each gets the appropriate share. It is always better to take expert legal assistance to avoid unnecessary disputes.

Family Disputes and Partition:

Family disputes arise more often in case of joint family property. Partition of joint family property can be effected by:

  • Amicable Settlement
  • Forced Settlement – By Arbitration /by court

Amicable Settlement:

Family arrangement – The family arrangement can be done amicably. The members negotiate and settle for their share as per mutually agreed terms and conditions. The family arrangement can be oral or written.

If the family arrangement is only a record of what has been settled, it may be reduced in writing and need not be registered. However, if the document is to be used as an evidence of settlement, then the document is registered.  A partition deed can be executed when the partition takes place with mutual consent.  The partition deed clearly defines the share of each co-owner. The deed is registered, and stamp duty is paid.

Forced Settlement:

Filing a partition suit –If there is a dispute and no amicable solution is there, partition suit is filed, and settlement is arrived at through intervention of the court. The court may physically divide the property, or distribute the sale proceeds of the property.

Court proceedings are time-consuming and at times, a drain on resources. It is better to settle the disputes amicably out of court.

Share of each co-owner is assessed, either with mutual consent or the court appoints a local commissioner for ascertaining the respective shares.

Partition by Arbitration:

An arbitrator is appointed by all the members of the joint family to decide their share and divide the property accordingly.

Partition in case of HUF

Hindu Undivided Family is a concept where all the members are a lineal descendant of a common ancestor. All have equal right in the property. People go for HUF status to avail tax benefits. There is a presumption in case of HUF that assets of HUF are joint property unless the contrary is proved. Only coparceners, i.e. members limited to four generations can seek partition. Daughters married or unmarried can also be coparceners. When partition takes place, all assets are equally divided among all the members.   

Filing partition of property with joint owners in your absence can become a nightmare, Beware!

Filing partition of property with joint owners in your absence can become a nightmare Beware

Life is very hard for some people. When a person goes through a lot of financial hardships, getting a property worth crore of rupees is nothing less than bliss.

Can we imagine cases, where people are not even aware that they are being duped by their own siblings or close relatives ?

We were approached by a person who had gone abroad many years ago. After the demise of his father, he and his mother had faced a lot of hardships in life. Their relatives informed them they have some property in India and they are filing the partition of the same to give them their share. They were happy to hear the news and gave the power of attorneys to do all the partitions on their behalf.

Since they never been to India from a long time so they had no idea about the actual value of the land and property. They were shown a rosy picture by their relatives and they fell into the trap. Anyhow somebody told them about our firm and they came for a free legal consultation just to check on whatever they are being told by their relatives is correct or not.

Our team did all the appropriate research work. We carried massive search to inquire if any joint ownership existed in the client’s father’s name. We ultimately got the success. The property was found. Partition was done among the co-owners and shares were transferred to legal heirs but to our shock the whole partition was biased. Their relatives took all the expensive chunks to themselves and gave them the least valued portions.

We immediately took the actions and devolved all the partition their relatives had done. It was a massive work that our team did by making several applications and explaining the ill intentions their relatives had. After that, we filed the new partition where everybody got the fair share of the land and property.  The family received their rightful share worth crores of rupees.

How do you approach partition of joint property?

Immovable Property is generally owned jointly. Joint property means a property where more than one party is the owner of the property.

Arising of disputes is inevitable in such properties. Partition is a solution. It is a division of property as per the share of each co-owner. Partition of joint property can take place by:

  • mutual understanding among co-owners
  • demanding one’s share

For partition, we need to know our share in the joint property. Share can exist due to inheritance or through some title document (sale deed, will etc). In the absence of clear title, other documents like land records, tax receipts, survey documents, help to prove a title.

What about certified copies of the documents related to property?

If a party has no document available with him, he can file for inspection of documents in the Registration Office where the property is located and get the certified copies of certain documents.

  • Shares in joint property:

Till the time property is joint, shares of co-owners are undivided. After partition, each co-owner gets a share in the joint property as per his entitlement according to the law.  Law of inheritance is also applicable when partition takes place. Each co-owner becomes the absolute owner of his property (share). He is free to dispose of the property.

  • Partition deed for smooth partition:

A partition deed, drawn in a clear and unambiguous manner, executed on a stamp paper is required to be registered at a place where the property is situated.  Names of the parties and their respective shares need to be clearly mentioned. It must carry the date from which the partition will be effective

  • Partition by Family Settlement Agreement:

The partition can take place through a family settlement agreement. It is drawn on the same lines as a partition deed but does not require any registration or stamp duty. It need not necessarily be a written document, can be oral based on mutual understanding.

  • Partition by filing suit in court:

Here, the court determines the share of each person and property is divided accordingly. It is filed in the court which has the jurisdiction in the area where the property is located.

Why do you need expert guidance?

Generally, the partition is not very easy as the shares in the property are not well defined.  A partition deed executed under expert guidance and legal advice helps to sail through such problems.

Why transfer of Property?

Why transfer of Property

Partition of a property is an act of dividing up a concurrent land into separate portions representing the proportionate interests of the renters either by a court order or otherwise.

In India, there are two modes of transferring a property. They are:

  • Voluntary Transfer
  • Involuntary Transfer

In the voluntary transfer of property, the owner will divide the property willingly to a new owner by ways of:

  • for consideration e.g. by lease, mortgage, sale, or exchange,
  • by gift, and
  • by Will

In the involuntary transfer of property, the owner transfer property without his/her consent as per the judgment of a federal court.

How to transfer property?

The property transfer is an important and equally complex task for the owners as to understand how to transfer one’s ownership rights to another individual, regardless of whether it is a small item of little value or a large real estate property that costs millions of dollars. The complexity of the process rises if the item to be transferred is more expensive.

NRI’s who have few or no trusted representatives for transfer of property in India, determinants like the restriction of time, inability to often travel, little information and rising real estate prices in India attracts more complications. They often face problems of unlawful possession, illegal transfer or even illegal sale of their property by third parties.

Following are the legal ways on how to transfer property

Basic Property Transfer

Real estate has been the most complicated subject matter for property transfers in India. The most common means of transferring ownership is through a Bill of Sale. It is a legal document that outlines the contract between the buyer and the seller arranging a for the transfer of property/real estate for currency.

The property sales stand apart from the Bill of Sale as it usually has to be witnessed or notarized, depending on the regulation of the state.

Transfer of Property as Gift

Another way of transfer of assets is through the gift. This mode of transfer of ownership describes that the donor does not receive the full remuneration in return. It is a different type of transfer from the sale. Family members most commonly accomplish this way of transfer among themselves. Gifts of real estate should also be notarized or testified.

Transfer through Relinquishment

Relinquishment of rights regarding a given piece of property or land can be considered a legal form of property transfer. For this purpose also a document mentioning waiving of rights by you or another party has to be testified or notarized to be effective. However various jurisdictions can and do regulate the matter differently. It is therefore always better to consult a lawyer to see if relinquishment is possible, and if so, what the necessities are.

Transfer through a Will

A Will is a document that states the form of transfer of property that takes place at the moment or after the death of the owner. The full assignment of rights may rest on the beneficiary accepting the Will’s terms and the way in which they obtain the property.

It is important to note and identify that all modes of property transfers are subject to taxation. It is imperative to comply with the tax regulations more now after GST to avoid unpleasant surprises. Researching one’s state laws and understanding them is one tall task for a layman, and ensuring that the transfer complies with them is another. Therefore, to make sure that the ownership is transferred correctly with appropriate means, one must consult a good lawyer.

Partition of Property Amongst Family Members

Partition of Property Amongst Family Members

Ever since the beginning of time, the property is deemed to be a mark of high economic status. Numerous displays of family disputes over property in movies and novels, only go on to prove this point. The partition of property amongst family members may be:

Contested – In this case, a lawsuit may be filed in the court, and the decree passed by the court on the basis of the inheritance document or facts of the case, will be binding.

Uncontested – In this case, the following may be drafted:

Partition Deed – It allows a joint division of the family property, amongst its members, as per the law applicable to them, so that each member becomes an owner of the share allotted to him.

Family Settlement – It does not require registration and stamping like a partition deed, however, as per Halsbury’s Laws of England- It is an agreement of compromising the doubtful or disputed property rights and avoiding litigation to save the family honour. In Lala Khunni Lal v. Kuwar Gobind, the Privy Council held that courts must give full force to family settlements, which are bona fide and without fraud.

Advantages of family settlements

  • Capital Gains tax does not arise because such transaction is not treated as a transfer.
  • Clubbing provisions of land will not be applicable on the same.
  • There is equitable distribution of property, rather than claiming as per laws applicable.
  • Registration of oral agreements is not necessary.

Essentials for family settlements

Registration is necessary when you are doing partition of property amongst family members where the terms of the family settlement are reduced to writing, and any unregistered document shall not be admissible as evidence in the court. However, there is a difference between the document containing terms and recitals of the family settlement and a memorandum prepared for the purpose of record or information of the court for making necessary mutation.

Features of the divided property

  • It acquires a new title and each owner gives up his interest in the share of the co-owners.
  • Each owner may sell, transfer, exchange or gift his property as its absolute owner.
  • The property in share is inheritable.
  • If an NRI or Person of Indian Origin (PIO) inherits such property, wealth tax will not be attracted to it.
  • If the division is done by way of a partition deed, it is necessary to register it in the office of the sub-registrar, as it creates new owners of the property. The deed should also contain the date from when the partition is effective and names of parties with respective shares.

PARTITION OF PROPERTY UNDER MUSLIM LAW

PARTITION OF PROPERTY UNDER MUSLIM LAW

Succession is a matter of right and a necessity as well. Every person will have to renounce the world once and with that, all the legal rights and obligations of the person are dissolved and passed to someone else. In India, succession comes under personal laws which are based on religion. Hence, the law of succession is dependent upon one’s religion. Among Muslims, that is people believing in Islam, THE MUSLIM PERSONAL LAW (SHARIAT) APPLICATION ACT, 1937 deals with matters of intestate succession, the special property of female, inheritance and transfer of property under a gift or any other provision which is a subject of personal law.

The two types of succession have been recognised in the Muslim law also. In a case where a man has left a valid will, testamentary succession will happen and so the property will be divided accordingly. Whereas, in the case where there is no will, intestate succession takes place. Since the joint family system is not recognised, the heirs are only the immediate family members of the person. Also, the Muslim Law makes no differentiation between self-acquired and inherited property. Hence, all the property of the concerned person goes to the heirs.

Under the Muslim law, there are three classes of heirs

  • SHARERS, they are entitled to a prescribed share of the inheritance. In case of a man’s property, his wife/wives are the sharers of his property. The wife is allowed to inherit a fixed share from the property of the husband which is 1/6th of the total share.
  • RESIDUARIES, who do not have any prescribed share in the inherited property but they are eligible to inherit whatever is left after giving away the part of sharers. The children, both sons and daughters, are the residuaries in the father’s property. A daughter is allowed to take her share in the partitioned property irrespective of her marital status. They are to distribute the remaining 5/6th part of the property among themselves. The share of the son and the daughter are in the ratio of 2:1. The son is entitled to double the amount of property than the daughter.
  • DISTANT KINDRED, are all those people who are related to blood to the property owner but do not fall into the category of sharer or residuary. There right is not ipso-facto present on the property, but needs to be proved.

Hence, the partition of property among the heirs of an individual will be divided according to the above-mentioned procedure.