Explaining a Gift Deed
If you have any inkling of knowledge about the Contract Law in most countries, you will know that contracts without any consideration (cash or kind) are considered null and void, save for a few exceptions. Let us take an example to explain this slightly complex statement. When you want to get a new house, you go to a homeowner who no longer wants his, and quote a price so that the homeowner should relinquish the ownership. So this ‘consideration’ from the point of view of the seller is the cash he gets, while the consideration from your point of view is the ownership of the home. Furthermore, the contract law in most countries doesn’t recognize deals done without consideration for both parties and where there is only one benefactor.
Except in the case known as a ‘gift’. When one person ‘gifts’ his large, plush, and priceless property to another, he receives nothing in return by way of consideration or compensation. The receiver of this property pays nothing. The consideration here is said to be ‘love’, and hence, the contract stands fulfilled.
When you give your immovable asset to another person, which is, you grant your right of ownership over an immovable property to another, for no consideration, or in other words ‘for free’, the gift deed is the piece of documentation which records that. The deed shows that the buyer has received the property for no consideration, as a gift and its ownership for all practical purposes, rests with him.
A deed is a legal document, which means that it needs to follow a certain format, and can be contested in the court of law. Being a legal document, there are a few things to be kept in mind when drafting it.
The deed is drafted by the person giving the property as a gift, or the donor. It speaks of his willingness to give that specified asset away, in return for no consideration and completely out of love and affection for the person receiving the gift, or the donee. The donor’s signature is often not enough, and signatures of witnesses are essential. While the number of witnesses may vary depending on the rules of the state, normally two witnesses are enough to seal the deal. The witnesses, of course, cannot be people who have material interest in the property themselves, and as such, need to be disinterested parties that stand to gain nothing from the contents of the deed. For example, the donee cannot pose as the witness as he directly acquires the ownership as a result of the deed. Lastly, it also contains the signature of the donee signifying his acceptance.
A gift deed is basically made when deals without consideration for immovable property are made as they serve the basic purpose of establishing the transfer of the right of ownership.