The main purpose that a relinquishment deed serves in real estate. It allows a co-owner or legal heir to voluntarily renounce their share or rights in a property that is jointly owned. This legal document is particularly helpful when family members are dealing with matters of inheritance, partition, or property settlement.
This enables a transfer of ownership to be carried out smoothly and without dispute. This blog covers everything you need to know about the relinquishment deed, meaning, format and benefits.
What is a Relinquishment Deed?
A relinquishment deed refers to a legal document that allows the co-owner of the property to transfer the rights to another co-owner or legal heir, without any financial compensation being involved. This deed is frequently utilised in situations involving inherited property when one or more heirs choose to withdraw or relinquish their claim to the property to another heir. Disputes within families over property are quite common, and a relinquishment deed helps resolve these issues and set clear expectations regarding ownership.
Importance of Relinquishment Deed in Real Estate
A relinquishment deed plays a major role in real estate, where several heirs or co-owners have an interest in a property. It not only provides legal clarity but also protection for transfers of property. Here are all the reasons why a relinquishment deed is so important:
- Clear Transfer of Ownership: As one of the co-owners or heirs formally renouncing their legal entitlements to a property, it brings more clarity in the transfer and ownership of the property.
- Prevents Conflicts: Without an adequate deed, the succession of property can result in disputes between heirs or co-owners. This deed provides evidence of a voluntary transfer that reduces legal controversies regarding shares of ownership.
- Marketability and Title Clarity: Whether you are buying or selling a property, a clear title is essential. The deed removes any uncertainties in the ownership records because the relinquishment is recorded in a sub-registrar's office.
- Legal Enforceability: The relinquishment deed is a legal and formally registered document that gives both parties legal protection. This deed can be presented in a court of law in case of any problems.
For Property Owners
- Clear title: A relinquishment deed ensures a clear and marketable title for the property by documenting the transfer of ownership rights.
- Reduced Liability: You are released from all legal responsibility for the maintenance, taxes, and future debts associated with the property.
- Making an Estate Plan: A relinquishment deed is a helpful tool in your estate planning strategy when allocating assets and avoiding complex inheritance issues.
For Prospective Inheritors
- Understanding Inheritance Rights: It removes any doubt or dispute about who gets what and clarifies the ownership structure.
- Avoiding Disagreements: A properly recorded relinquishment deed by other heirs prevents future disputes and ensures a seamless succession process.
- Tax Repercussions: Relinquishing your claim to inherited property may have different tax implications. Understanding the deed clearly will help you negotiate these concerns.
Who Can Relinquish a Property?
A person who holds a legal share in a property can only transfer the property by executing a relinquishment deed. The following are eligible to relinquish a property:
- Legal heirs (like children, spouse, parents)
- Co-owners (brothers, sisters, or other family members who jointly own the property)
You cannot relinquish a property to another person if you do not own the property or have any legal rights to it. Besides, your share can be given only to those who are co-owners, and no outside person can be a recipient of the share upon your relinquishment.
Benefits of a Relinquishment Deed
Here are all the benefits of a relinquishment deed you must know:
- Avoids Conflicts: The act of voluntarily giving up rights formally reduces the chances of ownership conflicts and legal tussles among family members or co-owners.
- Family Settlements: It prevents any animosity amongst families.
- Assures Clear Title: Once the deed is registered, there is legal certainty, the records of the property are updated, and the transferee acquires an unchallenged and marketable title.
- Legal Protection: A registered relinquishment deed is a legal document that protects against legal disputes.
- Economical and time saving: It is affordable and takes a shorter time to execute compared to other forms of property transfer (such as sale or gift deed).
- Voluntary and Non-monetary: The transfer is usually voluntary and does not involve the exchange of money, which is good in settling familial or inheritance issues amicably.
- Transfers Liabilities: In addition to rights, the liabilities of any property connected to the property, including taxes or maintenance expenses, are transferred.
Relinquishment Deed Format
The following are the various components that are part of the relinquishment deed format:
- Title and Date: The date and title give the place and date of execution.
- Parties to the Deed: The parties are the releasor (the one giving up his/her rights) and the Releasee (the one receiving the rights).
- Recitals/Background: Explains the background, how the parties are co-owners or heirs, the facts about the joint property, and how the share to be relinquished was obtained.
- Operative Clause (Relinquishment Statement): Releasor formally declares that they are giving up share, rights, and interest in the property voluntarily in favour of the Releasee.
- Consideration Clause: A clause that explains whether there is any monetary consideration.
- Acknowledgement by Releasee: The acknowledgment of the releasee that he has taken the relinquished share and that he is the sole owner now onwards.
- Warranties and Declarations: Warranties by the Releasor that the relinquished share is free of encumbrances or disputes and warranties of good title.
- Possession: Clause stating that the possession of the property is being transferred to the Release.
- Binding Effect: Statement that the deed is binding on both parties and their legal heirs.
- Execution and Signatures: Both parties' signatures, and spaces where they can write the date and place.
Is a Relinquishment Deed the Same as a Gift Deed or Sale Deed?
No, a relinquishment deed and a gift or sale deed are different. Here's how:
- A gift deed is a document that helps you gift or transfer property to another person, including a non-family member, without any payment.
- A sale deed is a document that you can use to get money from the buyer when selling a property.
- A relinquishment deed is a document by which a transferor gives up their legal share in a jointly owned property to the transferee.
Is Registration of a Relinquishment Deed Mandatory?
Yes. A relinquishment deed can only be legal if it is registered at a sub-registrar's office. If you don't complete the registration, then the deed is not legally valid.
The registration of the document ensures that the new owner has the right to sell the property without any claims from the person who has relinquished the share. The person who is transferring their rights becomes the sole or majority owner.
Documents Required for Relinquishment Deed
Here is a list of the documents required to sign a relinquishment deed:
- Property's legal documents
- Co-owners details
- Deed particulars
- Property description
- Details like name, address, and age of both parties
- Aadhaar Card, PAN Card, and ID Proofs of the parties
- Intention of relinquishment
Stamp Duty on Relinquishment Deed
Generally, in most states, the stamp duty on the transfer of property is affordable if the transaction is among blood relatives. However, transactions between non-family members attract higher stamp duty rates. The best way to know the exact figure is to contact the local registrar's office or a legal practitioner. Stamp duty on a relinquishment deed is based on two factors:
- The state in which the property is situated
- Whether the transfer is among family members or not
Steps to Register a Relinquishment Deed
Here is how you can register for a relinquishment deed in India:
- Write the Agreement: Consult a lawyer for a relinquishment deed that contains all mandatory details and is printed on a non-judicial stamp paper of the correct value.
- Pay the Stamp Duty: The amount of stamp duty that is charged differs from state to state. While some states set a flat rate, others calculate it as a percentage of the property's value.
- Go to the Registrar's Office: Both parties have to go to the local sub-registrar's office together with all the needed documents, valid ID proofs, and photographs.
- Make the Registration: Along with the two witnesses, sign the deed in front of the registrar. After you've successfully registered it, the deed is legally binding.
To Conclude
A relinquishment document is an effective legal document for dividing up property rights among co-owners, particularly within families. To finish the property transfer procedure, a relinquishment deed charge needs to be paid in full, just like any other deed. It also helps you avoid potential legal issues and handle property transfers more easily.
FAQs
1. Can I relinquish my share of the property in favour of a minor sibling?
Yes, you can relinquish your share of the property in favour of a minor sibling, but the minor's legal guardian will need to accept the share on their behalf until they turn 18.
2. Do I need my property documents if I’m only giving up my share?
Yes, you’ll still need original or certified property documents during registration, even if you’re only relinquishing.
3. Can one legal heir refuse to sign a relinquishment deed?
Yes, the relinquishment deed is voluntary. No one can be forced to relinquish their share without consent.
4. What if the property is under a dispute? Can I still execute a relinquishment deed?
It isn’t easy. If the property has legal disputes or pending cases, executing a relinquishment deed can complicate things further.
5. Will the relinquishment deed need to be updated in the municipal or property tax records?
Yes, after registration, the new ownership should be reflected in municipal records, mutation entries, and tax receipts.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply