ORAL PROPERTY TRANSACTION

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There are many many types of transaction in property dealing and documents like Koorchit, 'Memorandum Recording Ear­lier Oral Partition,' 'Memoran­dum Recording Family Arrangement,' Baagappirivinai Kathu and so on. Large number of property transactions takes place orally but we must see how valid are these transactions and are these documents valid? Let us see what the law says. The division of property is known as partition. It is also the specific ascertainment of share held by the co-owners.

A family arrangement, on the other hand, is a settlement of issues or an arrangement on the basis of claims that may arise regarding the property. Sometimes the claims may be unreal. However these claims must have a basis. The family arrangement includes the elements of a partition.The documents regarding the transactions are also not stamped and registered. Whether such documents require be stamping and registering is an im­portant issue.

Ownership transformed:

Partition is a process whereby the joint property is partitioned or divided for the individual enjoyment of the property of the co-owners. It is only a specific determination of each share. Each one of the sharers will have had a prior title. Partition is not regarded as a new transfer therefore there is no conferment of a new title.

For the purpose of family arrangement it is important to understand the word family as the word 'Family' will be interpret­ed depending on the nature of the document and the transaction. For eg; Under the Indian Stamp Act, ‘Family’ for the purpose of settlement includes father, mother, husband, wife, son, daughter and grandchild. In the case of any one whose personal law permits adoption, 'father' shall include an adoptive father, 'mother' an adoptive mother, 'son'  an  adopted son, and 'daughter' an adopted daugh­ter.

The same concept is extended to transactions like 'Release' and 'Partition.'But the word family in case of family arrangement has to be understood in a wider sense so as to include not only close re­lations or legal heirs, but even those who may have some sort of antecedent title, a semblance of a claim or a possible claim. The reason behind for this is that it ensures that future disputes are settled permanently.

In case of family arrangement it is necessary that the parties must be related to one another and has a claim or a possible claim or even a sem­blance of a claim to the property. This ground could be something like "affection," "legal claims," "claims that have arisen," "claims that could arise in fu­ture," etc. These claims need not have strict legal backing or validity.

Family arrangement:

In order to avoid future disputes and to maintain peace and harmony if a such a situation arises, the members of a family it necessary to make a family arrangement. The terms of the arrangement or partition are concluded orally by the parties in an oral agreement. After that the parties may reduce this to a mem­orandum or execute, stamp and register a property document. Both types of documents are valid.The question of stamping or registration does not arise as there is no document in case of oral arrangement.

Stamping necessary:

If any right, title or interest is created, declared, assigned or extinguished by reason of family arrangement or partition then it must be stamped and registered as per the Indian Stamp Act and the Indian Registration Act.

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In each case it is to be determined it is a question of fact whether the terms have been documented by the nature of phrase­ology and the circumstances in which and the purpose with which it was written. However no stamp duty or registration is required in a document like a memorandum, evidencing a family arrangement or a partition which had already been entered into and had been prepared merely as a record, in order to avoid false notions.

The document requires stamping and registration if the transaction is a contemporous one but stamping and registration may not be required if the transaction has already taken place, and is merely recorded as a past transaction. If the family arrangement or partition is stamped but not registered, it can be examined by courts for collateral purposes. Whether the purpose is a collateral purpose, is a question of fact depending on the facts and circum­stances of each case. A right or title to the property cannot be claimed by any person under the said document which can be considered only for collateral purposes.

If the documents contain such wordings as to the family arrangement or partition that it requires stamping and registration, then a person cannot get a valid title under such a document. It will not be accepted as evidence in Court. Mere usage of the past tense will not, by itself, indicate a prior arrangement or transaction. The document has to be read as a whole. Therefore, the wordings in the document and the facts and circumstances relating to the oral transactions are critical.

Therefore in order to determine the validity of the document all the above factors have to be considered. It is preferable verify the documents in the light of the above position and take remedial measures wherever needed.

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