Release Deed is technical, needs advice
It would be good to understand what is meant by a ‘Release’ and the nature of transaction covered by a Release Deed
There are many types of documents. Of late, one would frequently come across documents such as Release Deeds. This is because of the fact that the stamp duty has been considerably reduced for certain types of Release Deeds. Release Deeds are also interchangeably executed where certain types of settlements can be made. As such, it would be good to understand what is meant by a ‘Release’ and the nature of transaction covered by a Release Deed.
The word “Release” is basically used in the context of setting something free from restraint or a condition or a confinement. It is also used in the sense that the transaction is in the nature of giving up a claim or right or title by one or more persons in favour of another or others. It can amount to giving up or abandoning a claim or a right to the person against whom the claim or right exists or can be enforced or can be exercised. This can be in respect of properties as well.
There may be several options for a person to transfer property. A Release is however, always an interest or a share and normally the entire property cannot be released. In other words, the whole of property can be sold, mortgaged, settled, gifted or otherwise dealt with. However, in the case of Release, the person in whose favour the release is made usually has a pre-existing interest in the property and qualifies for release on that basis.
Therefore, one has to consider the nature of transaction, the property that is involved and the intention of the parties to determine whether Release would be an appropriate mode of transfer. Part of property can, however, still be transferred by way of sale, settlement, gift, etc. A share or interest in the property can also be transferred as such. Therefore, transferability of a part or a share alone is not the determinant factor and the totality of circumstances has to be considered.
Release itself can be of different modes. It could be a renouncement of a claim by a person in favour of another in respect of a property. This is a simple transaction. There could be a release of a benami right by one person in favour of another. Several rules relating to benami holdings will apply and this is a totally different type of transaction. Further, depending on the degree of relationship between the parties and the location of the property, stamp duty and registration charges may vary.
There can also be a release of right in favour of one or more co-owners. The stamp duty and registration charges will differ on the basis of whether the parties are members of a family or otherwise. Further, within these types of release, the location of the property is also important and may affect the stamp duty and registration charges.
The world “Family” for the purposes of stamp duty and registration charges would cover father, mother, husband, wife, son, daughter and grandchild. In certain cases, it can include adopted father or mother and adopted son or daughter as well.
A Release can also pertain to a release of right by a partner or partners in favour of other partners relinquishing his, her or their rights over immovable property. Here also, there is a difference in implications of stamp duty and registration charges depending on whether the partners are family members or otherwise. Further, the location of the property in the event the partners are not family members, will also have an impact on the stamp duty and registration charges.
Typically, a Release is used in cases where there is no requirement of a conveyance or a transfer of property, but the transaction involves relinquishment of a right or a claim. It is more in the nature of an admission of an existing right and a surrender or abandoning of real or potential claim or right.
At times, based on a Will or a Codicil, Release Deeds are executed, confirming that a particular person who may otherwise have a right in the estate of a deceased, as a legal heir or otherwise. This may be in the nature of confirmation or validity of a Will or Codicil.
In certain documents, when conditions are imposed and the enjoyment of the property is subject to such conditions and the conditions are also valid, a Release Deed can be executed to release the conditions or free the property or the person concerned from such conditions. When the conditions have been complied with also, a Release Deed can be executed.
A life interest holder can execute a Release Deed in favour of the ultimate beneficiary or holder.
A Release is different from other documents such as Receipt, which merely evidences payment. A Release, on the other hand, signifies the satisfaction or termination of a condition or a right. An Agreement to release in future is also valid as any other contract, if it otherwise satisfies legal requirements. Such an agreement does not operate immediately, but will entail a further document such as Release Deed and can also be made enforceable.
A Release can be made for consideration, that is, ‘payment’ or a ‘price’. It can also be made without receiving any payment or consideration. The stamp duty and registration charges may differ based on whether price or consideration is received or the Deed is executed without receiving any payment or consideration.
The person who executes or makes the Release Deed is known as “Releasor” and the person in whose favour it is executed is known as “Releasee”. These terminologies can be changed and other substitutes are also available. If relating to an immovable property, it has to be properly stamped and registered. There are certain other types of documents such as disclaimers, deeds of abandonment and deeds of relinquishment which may not require registration and the whole of the document has to be read and construed for proper meaning and intent and decided as to what is the stamp duty that is leviable and whether the document requires to be registered or otherwise.
These are general guidelines and a Release Deed is a very technical document. It is best to get professional advice while deciding on options of release and the type of deed to be made.
The author is partner, RANK Associates, Advocatesm Chennai.
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