What is the Meaning of a Conditional Gift Deed?

Introduction

A deed of gift is executed between the donor and donee for the transfer of movable or immovable property. There are two types, which are

1. Conditional gift deed and
2. Unconditional gift deed

The gift is transferred during the parties’ lifetime and usually without any consideration. The gift may or may not have any conditions attached to it, and the donor must complete the necessary actions mentioned in the conditions attached to own the property.

What is meant by a Conditional Gift Deed?

A conditional gift deed is prepared when an individual transfers their immovable property to another without consideration. However, they attach certain conditions to be met by the recipient. The condition stated will always coexist with the transfer or gift.

These conditions should be legally acceptable and not immoral because that will make the conditional gift deed void, and the transfer will be terminated.

The donor can either require the donee to do something or to refrain from something on the condition that the donee must oblige.

Essential Elements in a Conditional Gift Deed

• Property transfer: The conditional gift deed is made to transfer a movable or immovable property by the donor who does it voluntarily.
• Condition: The donor attaches a condition with the conditional gift deed that is to be completed and acted upon for fulfilment of the transfer.
• Property details and existence: The property involved should be existing and tangible. The conditional gift deed must briefly mention the details to avoid future litigations. The donor cannot transfer a future property through a deed of gift as it becomes void.
• Competence: The donor should be of a sane mind and above 18 years of age. The conditional gift deed should be done either in the presence of family members or by taking legal consultancy services to avoid any errors and execute it properly.
• Voluntary transfer: The donor should state in the conditional gift deed that they have chosen to transfer this by their wish and that there was no fraud, forgery, undue influence, or coercion involved. The donor should be a “sui generis.”
• Acceptance: The conditional gift deed may become void if the donor does not accept it in their lifetime. The transfer and approval are made during their lifetime to become legally valid and registered to make it legally enforceable.
• Delivery of possession: The valid conditional gift deed will state the exact day and date when the transfer will be made, and the donee will become the legal owner of the property. This occurs after both have duly signed and registered the necessary documentation by taking legal consultancy services.

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Types of Conditional Gifts

There are two types of conditional gift deeds made, which can be effective as per the law provisions if executed correctly. These are as follows:

• Condition Precedent Gift: In this type of conditional gift deed, the donee must meet the requirements or conditions before accepting the transfer of immovable property from the donor. The conditional gift deed should have a reasonable need that can be achieved to take effect.
  • Example: A father gifts property to his son because he must graduate from college within five years. If the son fails to graduate within the specified time, the gift will not take effect.
  • Legal Implication: Under this condition, the gift is contingent upon fulfilling a specific requirement. Failure to meet the condition results in the gift being void.

• Condition Subsequent Gift: This type of conditional gift deed requires the donee to follow the conditions after the transfer for the next interval. The gift deed will be revoked in case there is any violation or breach of the agreement.
  • Example: A woman gifts a piece of land to a charitable organization with the condition that it must be used solely for educational purposes. If the organization later uses the land for commercial activities, the donor has the right to revoke the gift.
  • Legal Implication: This type of condition places ongoing obligations on the donee. Failure to comply with the conditions can lead to legal consequences, including the revocation of the gift.

A Valid Conditional Gift Deed

It is to be noted that not every conditional gift deed is valid or enforceable because there is a regulation in the conditions that are attached. For executing a valid conditional gift deed, one must follow all the legal criteria, such as:

• Reasonable condition: The conditions attached to the conditional gift deed should be reasonable as a basic rule. The donee can have a choice to oblige to the condition or not. The donor cannot state any extreme or immoral conditions against the law. It should not be immoral, harmful, criminal, or vengeful. Any kind of condition that might be like a punishment for the donee is not enforceable by law. It becomes void.
• Ethical and legal: The conditional gift deed should not contain illegal conditions because that can make it invalid. The conditional gift deed should not ask the donee to engage in any criminal or illegal activity, divorce or get married to a said person, change into some religion, or damage public or private properties.
• Clear description: The conditional gift deed must be executed in a clear and precise way. There must be no vague or unclear sentences or conditions attached to a conditional gift deed.

The transfer of property through testamentary is not accepted as a gift by the law, but inter vivo transfer is a gift per The Transfer Of Property Act 1882. The gift becomes invalid when the transferee is not obliging or can follow the attached terms and conditions in the conditional gift deed.

Undoing a Gift: The Legal Intricacies of Revocation and Exceptions in Conditional Gift Deeds

Revocation of Conditional Gifts

Revoking a gift means cancelling or withdrawing it. In the context of conditional gifts, revocation can be a complex process governed by specific legal principles:

1. Revocation by Failure of Condition: If a gift is conditional and the condition is not met, the donor may have the right to revoke the gift. This is often explicitly stated in the gift deed. Example: A man gifts a property to a hospital with the condition that a new wing must be built within two years. The man may revoke the gift if the hospital fails to meet this condition.
2. Revocation by Agreement: Both the donor and the donee can agree to revoke the gift. This must be done in writing and often requires the same formalities as the original gift deed.
3. Revocation by Operation of Law: Certain legal circumstances, such as insolvency or illegality, may lead to automatic revocation.

Exceptions to the General Principles of Gift-Giving

While gifts are generally considered irrevocable, there are exceptions to this rule, especially in the context of conditional gifts:

1. Illegal Conditions: A gift may be considered void if it is subject to an illegal or immoral condition.
2. Failure to Comply with Legal Requirements: If the gift deed does not comply with legal requirements, such as registration (for immovable property), it may be subject to revocation.
3. Gifts Subject to Life Interest: A gift may be given with the condition that the donee can only enjoy it for their lifetime, and then it must pass to another person. This creates a unique exception where the gift is not absolute.

Understanding Conditional Gift Deeds: Legal Citations, Supreme Court Judgments, and Statutory Provisions

Legal Citations and Supreme Court Judgments

In the realm of conditional gift deeds, the Supreme Court of India has played a pivotal role in shaping the legal landscape. For instance, in the case of Reninkuntla Rajamma v. Sarwanamma (AIR 2009 SC 3114), the Court clarified that a conditional gift deed becomes complete upon compliance with the conditions mentioned in the deed. This ruling set a precedent for understanding conditional gifts’ legal nature and enforceability.

Sections of the Transfer of Property Act

The legal framework governing conditional gift deeds is primarily derived from the Transfer of Property Act, 1882. Specifically, Section 122 of the Act defines a gift as the transfer of certain existing movable or immovable property made voluntarily and without consideration. Furthermore, Section 126 allows for the revocation of a gift on the failure of a condition, providing legal grounds for the cancellation of a conditional gift deed if the conditions are not met.

Case Examples

Real-life examples further illustrate the complexities of conditional gift deeds. In the case of Naramadaben Maganlal Thakker v. Pranivandas (1997 (7) SCC 480), the Supreme Court held that a gift deed could contain conditions, and the donor could retain possession of the property until the fulfilment of those conditions. This case emphasizes the importance of clearly defining conditions and understanding the legal implications of conditional gifts.

FAQs and Common Misconceptions: Demystifying Conditional Gift Deeds

Q1: Can a conditional gift deed be revoked after the conditions are met?

A1: No, once the conditions specified in a conditional gift deed are met, the gift becomes irrevocable. The donor cannot revoke the gift unless a specific provision allows revocation under certain circumstances.

Q2: Are conditional gifts only applicable to immovable property?

A2: No, conditional gifts can apply to both movable and immovable property. The conditions must be clearly stated in the gift deed, and legal requirements must be followed.

Q3: Can any condition be attached to a gift deed?

A3: No, conditions attached to a gift deed must be legal and ethical. Any condition that is illegal, immoral, or contrary to public policy may render the gift void.

Q4: Is registration mandatory for all conditional gift deeds?

A4: Registration is mandatory for conditional gift deeds related to immovable property. For movable property, registration is not always required, but it is advisable to have a written and witnessed document.

Q5: Can a donor impose conditions that allow them to use the property after gifting?

A5: Yes, a donor can impose conditions that allow them to retain certain rights over the property, such as a life interest. However, such conditions must be clearly stated in the gift deed.

Common Misconceptions:

• Misconception: Conditional gifts are always revocable.
  Truth: Conditional gifts become irrevocable once the conditions are met unless specific provisions allow otherwise.
• Misconception: Conditional gifts are less legally binding than unconditional gifts.
  Truth: Conditional gifts are as legally binding as unconditional gifts, provided they comply with legal requirements and ethical standards.

Conclusion

A conditional gift deed can include any condition with it, but the only requirement is that the states should be legally and morally correct. The donor can take legal help from a professional to execute the conditional gift deed properly and efficiently.