During the life span of a person, he/she makes hard-earned money which he invests to purchase an immovable property, which after his/her death will be devolved into his legal hires, sometimes according to the wills and desire of the person which were codified in a document called will and in rest of the cases the property goes through by way of succession under the provisions of Indian Succession Act, 1925. Commonly, after the demise of the individual his/ her property shall be devolved equally among the heirs and they enjoy the right, title, interest jointly over the property. This joint enjoyment keeps followed by all the heirs until either of them wants to separate his or her share from the joint family properties by seeking partition of undivided family property. As partition takes place every co-owner gets its respective share in the family property and they solely owned their own share and enjoy the title, right, and interest in the partitioned property.
A partition can be claimed either by the mutual consent of all the co-owners or co-shares or through court by filing a suit for partition. In the case where partition takes place through the court either of the heirs among all the legal heirs had denied for the partition and the members of the family failed to obtain the mutual consent of the co-owners. Where there is presence mutual consent among the family members the partition can be carried out by making an instrument called a deed of partnership or family settlement deed. A family settlement deed is an instrument in writing which may be executed to accomplish partition of property/ properties of the co-owners and require compulsory registration as per the provisions of Indian Registration Act, 1908, and applicable charges of stamp duty will be paid as per the provisions of Indian Stamp Act, 1899.
A settlement deed will be the best option if the family didn’t want the court to interfere or out of court. A family settlement deed needs to be signed by all the members of the family acknowledging that the said instrument is not made with any fraudulent means or under any undue influence or coercion from either of a family member. The deed is not only limited to properties but to the shares, claims, family feuds. The agreement must mention all the names of the family members, detail of ownership of the properties and the specifics terms for the distribution of the property, and the concerned documents which may include maps, areas, house numbers, or so on. The members must declare that they are agreeing to the terms and conditions of the deed and the same as the legal effect as the same would have a binding effect on every person agreed.
In cases where no such documents were executed and planned, a Memorandum of family settlement works. In simple words it an arrangement between the family members which is recorded orally and agreed by all for division of family property. As an oral declaration, it does not need any registration and stamp duty. However, it is recorded in a deed namely Memorandum of Family settlement for keeping a record of terms orally dictated, agreed by all the Co-owners. It is the most common method adopted by the family as compared to partnership deed for division of family property.
Essentials of a family arrangement or memorandum of family settlement
In a landmark judgment, the Supreme Court laid down the main essentials of family arrangements titled “Kale Versus Deputy Director of Consolidation” 1976.
- In order to resolve present or possible future in between family members and the arrangement should be bona fide and it must assure equal distribution of property.
- This should not be made under any influence, coercion, and fraud.
- A family arrangement can be either in writing or oral
- Memorandum of family settlement, in itself, does not create or put on any right in immovable property though not required compulsory registrable.
- Parties in the arrangement must have antecedent title rights, claims, and interest in the property.
- Fair and equitable arrangement is final and binding on the parties to the settlement.
Memorandum of family settlement requires no registration or stamp duty charges but the question regarding registration precisely answered by the Supreme Court as the terms mentioned under the said arrangements are already agreed by the family members subsequently it does not put or create any title, claim and interest in itself hence does not require any registration. These settlements are made only for the purpose of recording the information or information of the court, are not require to be registered. Memorandum Family settlement and partition deed both often confuse as both talks about the partition of the property, the main difference between them is that the Memorandum of family settlement records the oral term of the family arrangements that are already decided and agreed by the family members whereas in partition deed the terms and recitals of the family arrangements were made. Another vital difference between both is partnership deed requires compulsory registration as it creates, assign, limits, and extinguishes rights and title in the property whereas the other does not need such condition to be fulfilled.