Property Settlement Deed

Written by CS Shirish Bhootra

Ram is the owner of seven industries and five farmhouses. He has four sons and wants to distribute these properties among all four sons. Ram wants the distribution to be fair and unbiased so that in the future, no dispute arises among sons related to property. He was watching a movie wherein property is transferred to a son subject to the fulfillment of conditions, and the deed was executed in this regard. He also decided to execute a deed to distribute properties among sons. He consulted an advocate and executed a property settlement deed wherein every aspect related to property, including the share of all sons, was mentioned. It was duly registered, having the free consent of all parties, and properly stamped.

Property Settlement Deed: Meaning

A Deed of Settlement is a legal instrument that formalizes an agreement among parties involved in a dispute. It is a tool that settles disagreements between parties involved. When the parties have agreed and signed the deed, it discloses stipulations legally binding on the parties involved. The deed of settlement is a fast and simple approach to putting an end to the situation. Every person has diverse views and personalities, which can lead to a disagreement of this nature. In case of court lawsuits, property partitions, and payment settlements, conflicts are settled or resolved through settlement deeds. Another variant of settlement deeds is a family settlement agreement. It is a legal instrument or contract between family members that discloses that in the occurrence of a situation of disagreement, all family members adhere to the same terms and conditions. A settlement deed among family members involves family members that are generally related to property distribution.

Settlement Deed: Importance

The settlement deed achieved its importance when it became a tool for certain other means of resolving disputes in matters. A process of settling disputes in a court of law or other competent authority is known as Litigation. It is most prevalent for resolving disputes regarding cases to be considered before a court of law. Two other variants are Arbitration and Mediation. Like others, litigation has pros and cons, such as relevant costs, time consumption, and many other related factors. However, in the case of settlement, it is said that it is cost-effective and time-saving, time efficient, subject to fulfillment of the interest of the parties involved, and the dispute can be easily resolved in cases. If parties want to avoid litigation costs and save time, the settlement can be out of court also. To maintain privacy and fulfilment confidentiality, the parties to the settlement may include a secrecy clause in the settlement document.

Settlement Deed: Format

The settlement deed is similar to other agreements in that it follows particular protocols. The parties involved must share their free consent concerning terms and conditions; it must not be affected by coercion or undue influence, or deception. It can be either an oral or written agreement; if written, all signatures must be part of it [all parties involved and eyewitnesses’ signatures].

Gift Deed and Settlement Deed: Difference

A deed of settlement is said to be an agreement binding on the parties involved, which aims to formalize a dispute settlement agreement among the parties involved.

A gift deed is considered an act of giving. It is a deed in which financial compensation is absent, and exchange is made for the sole reason of love, attachment, and appreciation. It is a gift agreement that transfers property from one person to another.

Deed of Settlement: Can it be Challenged?

A settlement agreement can be cancelled only by a court order. In case during court proceedings it is found that there is fraud or coercion or deception, or illegal execution, a settlement agreement can be cancelled or contested.

Settlement Deed: Is Recording Essential

Registering an oral settlement agreement is unnecessary. However, if the settlement is for collateral, there must be a stamp of agreement rather than registration. In the case of a written agreement, it requires registration to be considered legal evidence admissible in a court of law. An unregistered settlement is considered illegal in the eyes of the law. However, in the case of an unregistered family settlement, it is valid and enforceable in a court of law as it has already been signed and has the legal heirs of the dead titleholder. It can be either oral or written.

Relevant Case Law

P.K.Mohanram vs B.N.Ananthachary & Ors SC [2010]

In this case, Mr. Perumal Iyer, the property owner, executed a settlement deed in 1969 in favour of the appellant and respondent. Post execution of such deed, Mr. Iyer does not possess any right to cancel for any reason or alter the terms of the settlement deed.

Conclusion

To have clarity regarding all aspects of property, property settlement deed execution is essential. It discloses the property's value, person-related share, and other related factors. A well-drafted property deed minimizes the chances of dispute occurrence in the future, which in turn would save relevant costs and time for parties involved and also fewer cases in the court of law, and the court may be able to consider other important cases.

References:

Indian Kanoon, P.K. Mohanram vs B.N. Ananthachary & Ors on 15 March, 2010 (Indiankanoon)
Lawyered, Property Settlement Deed (Lawyered)