Does putting a land in stock leads to title transfer?

Bharat Kashyap (Querist) 06 June 2020 This query is : Resolved
Experts

Me and my friend are thinking to do a business in Partnership.
As a capital contribution..
I will put Rs 10 lacs
and my friend will put his land in stock
The Land is in my friend's name.

So, my question is if I put 10 lac and my friend put a land as a contribution in partnership.

To transfer the title of the Land Sale deed/conveyence deed is needed to be registered with sub registrar as per Section 17 of Registration Act.

Follow Query

Report Abuse

Quick Summary

When contributing land to a business partnership, simply putting it 'in stock' doesn't automatically transfer ownership. To transfer the title, a registered sale deed or conveyance deed is typically required, incurring stamp duty. Alternatively, the land can remain in the friend's name, with profit-sharing adjusted accordingly. If the land is transferred to the firm, it becomes a partnership asset, requiring proper documentation and potentially stamp duty, with equal distribution upon dissolution.

Isaac Gabriel (Expert) 06 June 2020
It is better if the land also be brought into the partnership or else, a higher portion of profit could e allowed to the land owner..

Raj Kumar Makkad (Expert) 06 June 2020
You shall not become owner of the said land to the extent of 50% as you anticipate.

There are two ways to deal with the situation. One is that the land shall remain in the name of your friend and you shall insert capital and the profit and loss shall be distributed equally. Neither you shall demand interest over your capital poured into business nor shall your friend shall demand any rent from the firm. In case of dissolution, you shall take back your capital amount free of interest apart from profits and loss and your friend shall get back his vacant land from the firm.

Second is that you bring Rs. 10 Lakh and your friend transfers the said land in the name of the partnership firm and then the profit and loss shall be distributed equally. In this case, entire property (cash plus land) shall be the property of the firm and in case of dissolution of the firm, you both can distribute everything equally. In this case, Stamp duty shall be required to be affixed while transferring the land in the name of the firm by your friend.

Message likes : 1 times

Bharat Kashyap (Querist) 07 June 2020
Mr RK Makkad sir, In your second situation you said " YOUR FRIEND TRANSFER THE LAND IN THE NAME OF PARTNERSHIP FIRM"

This will be done by executing sale deed/conveyence deed and paying stamp duty.
RIGHT?

Rajendra K Goyal (Expert) 07 June 2020
If the property is to be transferred to partnership, sale deed need to be executed.

If property is as capital, property would remain under the ownership of friend.

Message likes : 1 times

Sudhir Kumar, Advocate (Expert) 08 June 2020
The suggestion given by Mr Makkar may be followed as it will have least legal consequences on dissolution of firm (which seems in any case to happen) and you do not face much loss except loss of friendship (which most likely happen when you ask him to transfer land into firm name)

Message likes : 1 times

Dr J C Vashista (Expert) 08 June 2020
Memorendum of Association and Articles of Association of the firm must contain title of the land to be transferred in the name of Partnership Firm. Similarly amount of investment and share in profit and loss has to be specified in the Partnership Deed.

For transfer of title of the land a gift deed can also be registered in favour of the partnership firm, other than sale deed / conveyance deed. However, it shall also require stamp duty and registeration charges to be paid, which differs from State to State.

Message likes : 1 times

Raj Kumar Makkad (Expert) 08 June 2020
Registration of the sale-deed of the said land by your friend in the name of the firm shall definitely require stamp duty as per law of the particular State.

Rajendra K Goyal (Expert) 08 June 2020
If the property need to be transferred in the name of partnership, stamp duty would be needed.

Please discuss all aspects with your CA or local lawyer.

Previous

Next

You need to be the querist or approved LAWyersclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

Ask Query
Unanswered Queries