Settlement deed

T. Kalaiselvan, Advocate (Expert) 25 August 2024
Thanks for the information but why do you write this here in this forum?

C.J.Sriram (Querist) 26 August 2024 This query is : Resolved
A father executes and register a Settlement Deed, in respect of an Independent House owned by him eariler Purchased by him, out of his own earning, in favour of his Wife, Two Sons and One daughter. He registers the said Settlement Deed with 25% ownership for each and also hands over the possession of the Property.
Subsequently the Joint Patta is also obtained in the name of all the 4 settlees.

In the Settlement Deed he gave them the right of alienation mentioning it clearly in the Deed.

He also mention that he and his Wife, (One of the Settlees) retain their right to stay in the house.
The settlement Deed mentions that the Settlement made is irrevocable.
QUERY:
1. By virtue of the Settlement Deed and the right of alienation given, can all the Settlees jointly identify a Buyer for selling the property. Is their Title obtained through the Settlement makes them joint owners to exercise their right to alienate, i.e, Sell the Property.

2. Is mentioning of Right to Stay in the property by the Settlor along with his Wife, disrupts the right of alienation given to the Settlees.

3. Can the New Buyer ,who wants to purchase the Property, rely on the Settlement Deed and the Right of alienation clearly mentioned and given to the Settlees go ahead to purchase the property.
4. Is the New Sale Deed, if executed by all the 4 Settlees convey full title and ownership to the New buyer.
5 Is the right to Stay retained in the Settlement Deed vanish or liquifies once All the 4 owners i.e., Settlees decide to sell the Property and receive consideration,

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Quick Summary

This discussion revolves around a settlement deed where a father transferred ownership of his house to his wife and three children, granting them the right to sell the property. However, the deed also states the father and his wife retain the right to live in the house. The core questions are whether the settlees can jointly sell the property, if the retained right to stay impedes alienation, and if a buyer can rely on the deed's alienation clause. Expert opinions suggest that the retained right to stay might act as a life interest, potentially preventing sale until the settlors' lifetime, and advise seeking legal counsel due to apparent ambiguities in the deed.

T. Kalaiselvan, Advocate (Expert) 26 August 2024
1. If the settlement deed is with the condition that the settler having life interest then the settlees may not be eligible to alienate or sell the property during the lifetime of the settler.
2. The meaning of the condition confirms.
3. If the settlees have not acquired absolute rights to sell the property then the purchase of the property by a buyer may not confer him a proper and marketable title.
4. read the above answer.
5. May be not during the lifetime of the settler

kavksatyanarayana (Expert) 26 August 2024
Yes. (1) The father has a life interest in the settlement property and till his life, the property cannot be sold or transferred. (2)No. There is a condition in the deed. (3) The buyer will not have a title if the settlers sold the property. (4) The buyer cannot get a title. (5) As no.1.

C.J.Sriram (Querist) 27 August 2024
Thanks Mr.Kalaiselvan and Mr.Satyanarayana. The settlement deed gives possession with full and absolute right, title and ownership along with Right of Alienation. The Settlor along with his wife retain their right to stay till their lifetime.
But then, the decision of the Settlees to alienate which is independently enjoyed and given to them , when exercised will bring the life interest to an end.
There is no condition explicitly specifying in the Settlement Deed that the Right to alienate can be exercised only after the life time of the Settlor and his wife.
The Settlees intentions were to stay in the Property till such time the Settlees decide to alientate.

Even as it may be so, Will an Affidavit duly Notarised-- from the Settlor-Father- agreeing to the decision to alienate by the Settlees along with his no objection to end his right to stay give the comfort required to the New buyer.

Would it be correct and legal to say that the Settlees cannot pass on the Title to the Property through a Sale Deed till such time their Parents are alive??
The intention of the Settlor was not to put a lock for the sale of the property but only to stay in the Property till such time it is sold through the Settlees.

SIVARAMAPRASAD KAPPAGANTU (Expert) 27 August 2024
There appear to be confusion and contradiction in the settlement deed. Please approach a local Lawyer dealing with matters of immovable properties and related matters, with the copies of document/s and seek guidance. That would be better.

T. Kalaiselvan, Advocate (Expert) 27 August 2024
It is automatically implied that the condition of the settlor with life interest will prevent the settlees from alienating the property at least till lifetime of the settlor otherwise the purpose of settlement deed with recital of life interest in favor of the donor will be defeated.
The intention of the settlor was to transfer the property in favor of the settlee at the same with abundant caution about their own interest in the property which they have clearly mentioned in the deed stating that they would enjoy the property till their lifetime, therefore until and unless the donor and his wife/beneficiary relinquish their rights by executing a registered release deed the title cannot be transferred in favor of the prospective buyer by the settlee.

SIVARAMAPRASAD KAPPAGANTU (Expert) 28 August 2024
Such kind of language and conditions in Settlement Deeds or Wills for that matter in any matters relating to property are open for litigation at a later date. When a settlement deed is written and the property is segregated between/among the interested parties, it should be clear and without ambiguity and contradicting clauses should be avoided, which are open for interpretation at a later date to suit one's convenience. That is why, my advice is to ensure that the document is shown to a Lawyer in your area and get guidance. A proper correction settlement deed should be prepared and registered so that the prospective buyer shall not feel apprehensive of possible litigation at a later date and back off on reading the ambiguous and contradictory clauses in the original settlement deed.

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