In India, the biggest issue for most people is whether their property is held jointly or as general property. And among Indian families, most disputes are also related to property. People don't transfer their property to their children's names during their lifetime, because they fear that their children might evict them from the house. Also, very few people make wills so that there are no disputes among their children after their departure.
But when the head of the family passes away, or if the property is in the name of a son, then it stays in the family. There's confusion about how to change the ownership of this property now, and if it needs to be sold, how to go about it.
Many people assume that if they're the father, mother, or son, the property will automatically be transferred to their name and they can sell it, but emotions don't work in law. Today, we will discuss how you can transfer property after the death of parents or spouses and how you can sell it. We will cover all cases where there's a will, where there's no will, where there's only one brother, or where there are both brothers and sisters, and how the property will be transferred.
Or if there's a loan on the property, what will happen in this entire process, what documentation will be required, where you'll need to go, how much it will cost, and some common questions around this. This blog is important for everyone because this situation can happen to anyone. Plus, if you're buying property, you should know what documentation will be required for such transfers in the case.
Now, properties can be of two types: self-acquired or ancestral property. Self-acquired means the father, grandfather or husband bought the property with their own money. Here we are only talking about transfer between three generations, like from grandfather to grandson. Ancestral property means family property that has been passed down for the past four generations.
It means this property was bought by your great-grandfather, it's a family property with many shares, and that's why its process will be a bit different. Today, we will only discuss self-acquired property.
Now, when the property owner dies, the first question that arises is who is the legal heir of the deceased, meaning who will get the property. Now, there are two cases here: one where there's a will and the other where there's no will. Let's start with where there's a will.
Usually, people make wills when they have multiple properties, multiple assets, and they want their wife and children to get different assets. Now, wills can be of two types: registered will and non-registered will.
Registered means it's been registered in the court. Getting a will registered incurs nominal expenses, and if your estate is large with many assets, ideally you should get your will registered. Registered wills are more authentic, and if the will gets lost, you can get a copy from the registrar's office.
Now, it's not like you can't change or challenge a registered will. Now, the last will decided by the law is considered valid, whether it's registered or not. Even if it's registered, someone might come and challenge that after the registered will, another will be made, which wasn't registered but proving the validity of any registered will and challenging it to prove it invalid is a very difficult task.
But in India, the majority of people don't register their wills. Many people just write their wills on paper, without even using stamp paper. There's no specific requirement in law that they will must be registered to be considered valid.
Or that the will must be in a specific format to be valid. A will written on a piece of paper is also equally valid, provided it mentions certain specific things. The name of the person making the will should be there, the date on which the will was made should be mentioned, details of all their properties and assets should be mentioned, who will get which property should be clearly mentioned.
The executor of the will should be named, it should be signed by two witnesses, and the signature of the person making the will should be in front of these witnesses. These two witnesses cannot be beneficiaries of the will, meaning they shouldn't receive any assets through the will.
Otherwise, the will can be considered invalid. Ideally, witnesses could be two relatives to whom you're not giving any assets directly. Or some old neighbours or family friends who can come to court if needed and testify that this will is correct. Because anyone can challenge an unregistered will, and they can claim that it's fake, so you can't use an unregistered will directly for asset distribution.
First, its validity needs to be proven. Whether an unregistered will is authentic or not, meaning whether it's genuine or not, needs to be confirmed. For this, you'll have to get probate from the court or take a letter of administration. Probate is a legal document that certifies that the will has been validated, and it can be executed.
Some states require probate, while others may accept a letter of administration. Getting the will probated is mandatory, and in some states, you can only work with a letter of administration. A letter of administration is where the court authorizes someone to manage and distribute the deceased person's assets.
The difference between probate and a letter of administration is that probate is granted to someone whose name is mentioned in the will, while a letter of administration is granted when the will doesn't mention an executor, or the person nominated refuses to manage or isn't in a position to manage, or if there is no will.
To get probate or to take a letter of administration, you'll need some basic documents such as the death certificate and ID proof of the deceased, the original will if there is one, a list of legal heirs, and all documents related to their assets.
Now, whether to get probate or to take a letter of administration depends on the value of the property, but there's a maximum ceiling, which is between 50,000 to 1 lakh, and this varies from state to state. Now, what happens if someone hasn't made their will?
In such cases, if there are multiple assets that are to be distributed among different people, ideally, you should get a letter of administration. But if there are fewer assets, you can also get a legal heir certificate or a surviving member certificate.
There's no difference between these two documents; both provide proof that the deceased's legal heirs. You can get a legal heir certificate from the district court, and a surviving member certificate from the office of the district magistrate or the tehsildar. Who needs to apply for these certificates? All surviving class one heirs need to apply. Now, who this class one heirs are, we will discuss further.
Normally, it takes one to two months to receive a surviving member certificate. In some states, you can also apply for a surviving member certificate online. There is no direct fee to obtain this certificate; you only need to pay the lawyer's fee and the paperwork expenses. Now, if there's a will, it will clearly mention who gets what.
But if you've obtained a legal heir certificate, then the question arises: who has the first right on the property? Legal heirs are divided into two categories: Class One and Class Two. The first right belongs to Class One legal heirs, and if there's no Class One heir, then it goes to Class Two. All Class One legal heirs have equal rights.
Let's understand with an example who falls under Class One and Class Two legal heirs. Let's say Mr. Property Owner has both parents alive, and he has two children, a son and a daughter, both of whom are married. Now, if Mr. Property Owner passes away, the first right will belong to Class One legal heirs.
Here, the Class One legal heirs will be the mother of the deceased father. The wife of the property owner and the daughter will fall under Class One. In 2005, a ruling was passed that daughters also have equal rights in parental property. Daughter means the son and daughter of the predeceased son or daughter.
If the father's death occurs before the grandfather's death, then the grandson or granddaughter will be Class One legal heirs in their grandfather's property. If the mother is not there but the grandparents are alive, then after their death, the children can claim rights to their property.
If there's no son, then his wife, meaning the widow daughter-in-law, has equal rights in her father-in-law's property. Who is Class Two legal heirs? They include the father, brother, sister, and then other distant relatives such as the daughter's daughter, the son's daughter, etc.
Children are the most important individuals here. We've seen how you become the legal heir of the property in cases where there's a will and where there isn't one. But being a Class One heir, having your name in the bill, or having a surviving member certificate doesn't make you the owner of the property.
Many buyers make the mistake of looking at the date certificate of the property owner and the surviving member certificate, assuming that a wife or son can sell the property. But the property is safe only if the name in the property papers matches. For this, you'll need to transfer the property.
Now, if all legal heirs have to transfer the property equally into their names, you'll need to visit the Registrar's office with some documents. Such as the application form, death certificate of the property owner, probate will or surviving member certificate, legal heir certificate, ID proof, address proof of the legal heirs in whose names the property is to be transferred.
Most importantly, there's no stamp duty on this transfer, and the paperwork involves very nominal charges. However, in reality, it may not always be this straightforward in India. Daughters also have full rights to their parents' property, but many sisters still relinquish their share to their brothers.
Plus, if let's say there are two properties and two brothers, and both decide that one keeps one property and the other keeps the other, both will have to relinquish their share in the other property. In such cases, you'll need to get an NOC (No Objection Certificate) or a Release Deed along with the other mentioned documents submitted at the Registrar's office.
An NOC stands for No Objection Certificate. It's an affidavit where the legal heir declares that they have no objection to the property being transferred in the name of another legal heir, and neither they nor any other legal heir will claim any share in this property. There's no direct fee for an NOC; it's just the affidavit and the lawyer's fee. In many states, an NOC is not acceptable, and you'll need to create a Release Deed.
A Release Deed means I am giving up my share, and my share is being given to the remaining legal heirs. Now, if there are three legal heirs, and one is giving up their share, ideally, the property should be divided between the remaining two. An NOC is not the right process; you should only create a Release Deed because when you are selling the property, sometimes banks refuse to grant loans if there's no Release Deed.
So, it's better to get a Release Deed made. The charges for a Release Deed vary from state to state, but one common thing is if Class One legal heirs are making a Release Deed without any financial transactions, then the charges are very nominal. But if one Class One legal heir is paying another legal heir or Class Two legal heirs are making a Release Deed, then stamp duty will be applicable.
Again, this varies from state to state in terms of charges and the process. If you are giving up your share by taking money from another legal heir, like a brother giving up his share by taking money from another brother, then it's necessary to make a Release Deed. Charges for the Release Deed vary from state to state, but if there's no monetary transaction involved, then it's like a normal transfer.
Let's discuss an interesting scenario here. Suppose there are two brothers and one sister. Now, the sister doesn't want her share, but she feels that one of her brothers received more attention from their parents and should get a larger share. In such a case, you cannot create a Release Deed.
If you create a Release Deed, the remaining share will be equally divided between both brothers. So, in such cases, you'll need to create a Gift Deed. Now, a Gift Deed is a detailed topic in itself, and therefore, we will cover it separately. Otherwise, this article will become very long. Now, let's address some common questions.
The first question is, if you have transferred the property to your name at the Registrar's office, is the process complete? No, you still need to get the mutation done so that property taxes are generated in your name in the future.
In some states, this is an automatic online process, while in others, you may need to do it physically. You'll also need to transfer electricity and water bills to your name, and if you live in a cooperative housing society, you'll need to transfer the society's share certificate to your name as well.
The second common question is, what happens if there's a home loan on the property? Nowadays, all companies provide loan insurance. So, if there's insurance, the insurance company will settle your loan, and you'll only need loan closure documents for buying.
If there's no insurance, you'll need to settle the entire loan yourself before transferring the property.
The third common question is, what will be the tax implication when the property is transferred to your name? In such cases, if you haven't conducted any financial transactions, there won't be any tax implication. When you sell the property, capital gains tax will apply.
To conclude, in reality, this process is quite complicated. However, if you hire a good lawyer, the entire process becomes very smooth, and it doesn't involve too much expense. The important thing is to know these steps so that you can better manage the process.
The best-case solution is for everyone to have a registered will so that there are no issues in the future. We hope you found today's article useful and valuable. If you liked it, do share this article with your friends, family and colleagues so that they can also increase their real estate property buying knowledge. We will continue covering Indian real estate in this manner. Thank you.