What Happens If A Co-Owner Wants To Give Up His Ownership Rights?
Swapnil Singh, one of our users asks, "How does surrender of property from one co-owner to another workout. Are there are any charges involved?" Many of you might have had a similar question. In simple words, you can transfer your property to another person in three ways — i) a sale/transfer deed ii) a gift deed iii) Relinquishment deed.
The latter is what will come into play in Swapnil's case. A co-owner in a property who is willing to give up his or her rights over the property can resort to the relinquishment deed which allows for a smooth transfer. Often, legal heirs who are giving up their stake in a property are asked to sign this deed for clarity.
For example, take Mahima Sinha's case. When 28-year-old Sinha got married, her mother insisted that she should sign the relinquishment deed before she goes to her new home. She was compensated in terms of liquid money because the property was to be shared among two of her brothers who lived with their mother. Signing the deed meant that Sinha wouldn't (or couldn't) come back for a share in the property.
Let's look at what it entails:
- It is usually signed by a legal heir relinquishing the property in the favour of another legal heir. It could be an ancestral, parental or joint property. It also takes place when a parent dies without leaving a will. The property must be owned by more than one person.
- It is irrevocable even when the one who is relinquishing without being compensated.
- As with all documents related to the transfer of immovable property, a release deed needs to be signed by both parties, stamped and registered. Stamp duty will be applicable only on the portion of the property that is relinquished.
- You cannot relinquish the property in favour of a non-co-owner. If you plan to transfer your property to someone else, it would be treated as a gift deed and would attract stamp duty charges.
- As per The Registration Act of 1908, relinquishment comes under Section 17 which means it has to be compulsorily registered at a sub-registrar's office.
- The document may be presented for registration either in the office of the Sub-Registrar in whose sub-district the document was executed or in the office of any other Sub-Registrar under the State Government at which all the persons executing and claiming under the document desire the same to be registered.
- Unregistered relinquishment deed is not permissible as legal proof of relinquishment.
- Since relinquishment is a transfer and not a gift, there are no tax benefits.