A family property dispute is no less than a battlefield with extreme drama and potentially even bloodshed unless it is settled amicably among the family members. Property disputes are not limited to just one strata of the society, it is common everywhere including humble income households to extravagantly rich families, which is why property disputes is an extremely common occurrence among Indian families.

And the only apparent solution that most families find is the way towards courts by getting stuck in litigation rather than settling down the dispute amicably which is where these people don’t realize that litigation is not just expensive but at the same time a tedious procedure. Besides this, there is guarantee to get a satisfactory outcome from litigation either.

Therefore, the best option is to try and settle family disputes pertaining to property amicably to be in a win-win situation and without breaking the family ties.

Let us understand the concept of family settlement:

What is family settlement?

A family settlement is precisely a mutual agreement between family members regarding the distribution of property assets among themselves. The parties to this family settlement must be related to each other and must have a legal right to share in the property in question.

Moreover, a family settlement may or may not be limited to property, but can also enclose movable assets like cash, money in bank accounts, cars, bikes, jewellery, etc. However, a family settlement agreement is ordinarily used to amicably settle common property or joint property that a family owns as against self- acquired or individual property.

Property partition through family settlement agreement

A family settlement is a mutual agreement among family members, ordinarily made to completely prevent getting involved in court battles by splitting up the family property through mutual understanding among the family members.

The family settlement agreement is supposed to have the same format as that of a partition deed. Apart from this, it is not mandatory to register and stamp the family settlement agreement.

However, a family settlement agreement requires signatures of all the family members voluntarily i.e. without

• any fraud (in good faith),
• Any coercion or undue pressure from any family member or anyone.
  
  

Furthermore, it is not completely essential for a family to draft the family settlement agreement as a written document, but the same can be executed either by a mutual understanding among the family members or by a compromise.

What are the advantages of a family settlement?

A family settlement is highly beneficial for:

• those who do not wish to get involved in unnecessary court battles that may or may not get messy ultimately,
• Achieving swifter and more conflict free way of settling family disputes.
  
  

Procedure of a family settlement agreement

A family settlement is a peacemaking procedure where an outsider, generally a senior family member or a lawyer, counsels, assists as well as guide the entire family to arrive at a mutually acceptable solution regarding the property dispute.

Additionally, this family settlement agreement does not necessarily have to be a single legal document comprising the entire division of the family property when it can also be a bunch of legal documents analysing the property rights of every family member.

As per the provisions of the Income Tax Act of 1961, a settlement agreement is neither a transfer of property nor a gift. As a result, exclusive transfer of property documents will also have to be pulled out with the said family settlement agreement to be able to execute an actual transfer of property.

Family settlement/ Partition suit in family disputes pertaining to property

The first step towards any litigation including a partition of property suit is to carefully draft and send a legal notice to the other legal heirs of the property related to family property partition/ settlement.

The legal notice for such a partition must mention the shares of each co-owner (legal heir), entire details of the property in question as well as the required action that has to be taken.

In case the co-owners fail to reply to the legal notice or in case the co-owners send a vague reply, a partition suit can be filed in the court where the jurisdiction of the property would lie.

A suit for partition of property is a court case filed when all of the co-owners fail to mutually agree to the terms and conditions towards property division, and when either of the co-owners wish to divide the property according to their shares in the property.

The first step for the court is to analyse and determine whether the person/ co-owner who has approached the court to file the partition suit has the genuine claim in the disputed property or not. Eventually, once the right to share in the property is established and no extra inquiry is further required, then the court may allocate individual ownership of the property to the rightful co-owners of the property.

In case, the property cannot be divided solely on the partition suit, the court has the authority to order an inquiry. This inquiry is conducted to pass a introductory decision for the appointment of a Commissioner who then evaluates the property and presents an official report. The court then establishes each share of every co-owner solely on the basis of the report by the Commissioner and distribute the property according to each co-owner’s rightful share in the property.

Can family settlement of a self- acquired property be done?

A self- acquired property is the property:

• made by an individual by his own resources or
• which the individual has inherited from someone according to the law of succession or
• has inherited or obtained through Will or
• which has come to the individual after partition of property

As a result, settlement of a self- acquired property cannot be executed during the lifetime of the individual who had originally obtained it, however at the same time, a self- acquired property naturally becomes a part of the ancestral property on the death of such individual. Although, the individual can allot the self- acquired property via his/ her Will to any individual he wishes.

Legal requirements in a partition/ family settlement suit

Simply accomplishing an agreement among the family members is not sufficient; there are a couple of legal requirements that must be fulfilled to ensure that the partition agreement is legal:

• The property settlement document has to be signed by all the family members involved in the division of property. This is because even one missing signature of a relevant family member can very easily become a legal ground to challenge the legality of the document in court at any later date.
• Therefore, to safeguard this, the document must be attested by 2 witnesses, although this is not compulsory but is only a safety measure.
  
  

Registration

The following step for the co- owners is to get the registration of the agreement. As under the Section- 17 of the Indian Registration Act, 1908  a family settlement that claims to allot the immovable property must be compulsorily registered to ensure that the partition deed is valid. In addition to that, a stamp duty is also applicable to a partition deed. The cost of the stamp duty depends on the value of the property in question.

What is the binding factor of a family settlement/ partition deed?

There is no way to revoke a duly executed family settlement deed, except by the decree of a court.

However, a family settlement deed can be challenged in a court in the following situations:

• When the agreement has been brought in by fraud
• When the agreement has been brought in by coercion
• When there has been manipulation of facts relating to the title, etc. of the disputed property
• When there has been irregularity in execution of the deed.

Therefore, it is critical to be self aware of frequent ambushes while trying to draft and execute an agreement to ensure there is no dispute on the same in the future.

What can be the consequences of not tackling the issue in time?

India witnesses tons of property disputes among family members. Due to this, even a registered Will can be challenged in a court by an aggrieved family member resulting in a dispute in the family till the dispute is resolved amicably or by the court. Therefore, it is pertinent to address the property dispute issue as early as it arises. It is recommended to address the same with the assistance of an expert property lawyer, who can share his knowledge, assist as well as guide towards the best effective legal route for the same. The presence of a lawyer by your side can completely remove the confusion of the different aspects of law and the legal frame work especially when the dispute has risen due to a family disagreement pertaining to property. Therefore, taking help from a lawyer can help avoid significant mistakes while even understanding as well as learning the nitty-gritties of law.

#tags: Property Dispute, Family, and Settlement