This article delves into the procedure and documents required for the transfer of NRI inherited properties in India. It also discusses the various documents required for such a transfer and lists out various methods through which the transfer may happen.
Alienation refers to the transfer of the ownership of property rights, for instance, sales, gifts as well as mortgages. The first step for any individual who has acquired a property in India by way of gift, purchase, inheritance, and relinquishment, etc., is to make sure that all mutations and revenue records are executed in the favour of the individual as early as possible.
Typically, NRIs (overseas citizens) have no reliable representatives to execute transfer of property in India. Circumstances related to constraint in time, inability to travel, lack of knowledge and relevant information and increasing property prices in India entices obstacles like illegal possession of property, illegal transfer of property or even illegal sale of land by third parties.
Therefore, to shield such prevalent property frauds against NRIs, the potential buyer must diligently transfer the NRI’s property as soon as possible in his name after properly following the due process of law as provided under Indian law.
The entire procedure of transferring property title in India is quite cumbersome, especially when the property paperwork is not in order as it can result in a lot of court disputes. For instance, a property transfer without a Will can automatically make the title of a property disputable.
Different modes of property transfer in India
Transfer of property ownership can be transferred in 2 different ways
A voluntary transfer is when the rightful owner of a property willingly transfers his/ her property, which can be done in the following ways
An involuntary transfer or an involuntary alienation occurs when the court seizes the property of an individual. This mode of transfer may also transfer the assets of the joint family or undivided interest of a co- partner in such property.
An NRI, just like any other Indian citizen, can inherit any type of immovable property in India, whether the property is residential or if its commercial. In fact, NRIs have a legit right to inherit agricultural lands as well as farmhouses, which otherwise is prohibited by way of purchase under Indian transfer of property laws.
Additionally, an NRI can inherit any property from family as well as relatives. Besides this, an NRI can also inherit property from another NRI, but subject to certain regulations. For instance, RBI’s approval is mandatory in case the inheritance results in favour of a foreign citizen, who is a non resident Indian (NRI).
It is essential to remember that the individual from whom the NRI inherits the property, must have obtained the property being bequeathed, in accordance with the provisions of the prevalent law relating to foreign exchange, established at the time of the purpose. Therefore, if the property in question was obtained without acquiring permission from the Reserve Bank of India, when the approval was needed to be acquired, then such property cannot be inherited by the NRI, without prior permission (to be specified) of the RBI.
The following are the crucial documents that are obligatory to execute transfer of property title in an inherited property in India:
These documents are mandatory to prove that the legal heirs are indeed the rightful successors of the property in question.
A khata further contains additional details like the name of the owner of the property, type of property, details of taxes paid/ to be payable etc. against the property. A khata is fundamentally a piece of evidence of who owns as well as possesses the said property.
Apart from this, a khata is also a type of identification of the person who is essentially liable to pay property tax for the property concerned. Additionally, a khata is one of the key documents that are required when the owner of the property needs a trade license or a building licence or a loan from a bank or any other financial institution.
In India, the real estate sector is undoubtedly one of the most desired investment substitutes. A person can purchase/ procure immovable property in numerous perspectives, and there can be a lot of occurrences when the person desires to transfer the ownership of property to someone close like family/ friends etc.
In India, the most popularly used method to transfer or acquire a property is via the execution of a sale deed, which is commonly called transfer deed. However, the same may not be a cost- effective or a tax- efficient method.
There can be also be events like the time a property owner might want to give up his/ her share in the property to his/ her sibling or children. In such scenarios, transfer of property via a gift deed can be the most satisfactory option available.
Another possible scenario can be, if the NRI would like to guarantee that his/ her equity is given to his/ her beneficiaries according to his/ her choice, getting an execution of a Will can be a good option to consider.
Currently, the most popular mode of transfer of property in India. If an NRI holds a property and desires to sell it outright for an appropriate consideration (sale value), then an execution of sale deed is a great option to consider.
Under the Indian property laws, enrolment of the sale/ transfer deed is obligatory, and as soon as the sale deed gets enlisted in the Sub- Registrar office, the property ownership gets transferred to the new property owner.
A gift can be in the form of money (cash), cheque, house, land, building, property, shares, jewellery, or any utility good etc. which is received instinctively, or simply an asset obtained without having to pay for it, which is a capital asset for the person getting it. A gift can be cash or a movable property or an immovable property.
In case the NRI wishes to gift the property he/ she owns to any of his/ her blood relatives, then a gift deed can be utilized.
Additionally, in the event of an immovable property, it is necessary to register the said gift deed under Section- 17 of the Registration Act, 1908.
Any transfer of property by a gift deed is inevitable. This is because, when a gift (in the form of a land/ property) has been gifted to someone, then the same belongs to the person who has received the gift and once the transfer has been done then the NRI (current case) cannot switch back the transfer of the gift or even seek monetary compensation.
Apart from this, a gift deed is an economical mode of transferring the ownership of property.
In case there are several owners of assets, and in case one of the co- owner wishes to transfer his/ her rights in the property to another co- owner, then this can be executed by a relinquishment/ discharge deed.
The transfer of property via the Relinquishment Deed can either be for consideration or be without consideration i.e. without the exchange of money, for instance, a gift deed, this transfer is also inevitable.
A Partition Deed is executed by the co- owners of the property when an order of the court or the local revenue authority has to be executed.
On the other hand, in case of a Settlement Deed, the property is owned by a third person and is settled for persons who do not have any prior interest in that property and the share in the property of the heir is as per the wishes of the settler.
Contrary to a Will, a settlement deed is a non- testamentary report, which instantly becomes operational. While a Will is a testamentary document which becomes operational only after the demise of its owner.
Furthermore, a Will is a revocable document, which can be amended by the testator whenever he desires to do so, while a Settlement deed is unchangeable.
A person can obtain a land/ property through inheritance or through a Will. In case a person dies intestate (without making a Will), then the land/ property gets transferred according to the Laws of Succession as prescribed in India.
Inheritance of property or a Will deed can be reversed by the Testator (person transferring the property) any time during his/ her lifetime. According to this, the beneficiaries of Will only get to enjoy the possession rights in a land/ property after the demise of the Testator and not before that.
Besides this, post the demise of the testator, person getting the property through the Will deed or inheritance may not enroll the property in their name.
However, the new owners are required to apply to the concerned nearby civil authorities with the copy of the Will, the Succession Certificate and the death certificate of the Testator to complete the transfer of property procedure executed in his or her name.
Post the demise of the owner of the land/ property, his/ her successors, such as wife/ husband, children whether a male or a female, unmarried or married may, as specified by the individual laws, get the Patta or Khata transferred on the production of the death certificate of the owner/ testator with entire details of the transfer of property held by him/ her.Copyright 2023 – Helpline Law - HLL001