Lifetime Gifts of Property

The lifetime gift of property process step by step

Many families plan to give a home to a child during their lifetime to avoid a dispute after death. The intention is right. Families usually stop short of the final step.

Registration is the step that counts in a lifetime gift of property

For land, ownership follows the register. Signing a gift document changes nothing on the register unless a transfer follows and the land office registers it.

When the giver dies, the property still sits in their name and forms part of the estate, even though the family thought it had changed hands. These are difficult to unwind after a death.

A lifetime gift of property where the property is still charged

If the property remains under charge, the bank has to agree before the land office will register the transfer. Some banks want the loan redeemed in full, which leaves the recipient to arrange their own financing if they cannot settle the balance.

If the recipient takes over the loan, the bank assesses them as it would a new applicant. Approval is not automatic just because they are family.

Settle this before anyone draws up the gift documents, and before you promise anything to the recipient. Preparing the documents first and speaking to the bank afterwards is the sequence that leaves so many gifts unfinished.

The effect of a lifetime gift of property on other family members

A valid, registered lifetime gift takes the property out of the estate. Other family members no longer have a share in it. That is the point of it, and it is also why it becomes sensitive.

For Muslims a gift perfected during the giver’s lifetime stands, but a gift made while the giver was gravely ill invites question. The giver’s state of health at the date of delivery becomes relevant.

Tell the rest of the family sooner rather than later. Gifts known about while the giver is alive rarely end in court. Gifts discovered after death almost always do.

The actual steps for a lifetime gift of property

• Title search for restrictions, charges and caveats
• Authority consent where the title is restricted
• Bank consent where the property is charged
• Preparation and stamping of the transfer documents
• Registration of the transfer at the land office

A gift that was never registered

A hibah document signed and witnessed but never registered does not transfer ownership of land. The title stays in the giver’s name, and when the giver dies the property falls into the estate.

Other family members can then question the gift, and the court will look at whether an actual delivery took place. This is the most common source of family disputes over gifted property.

If you signed a gift document years ago but never registered the transfer, check the title now. Correcting it while the giver is alive is far easier.

What your lawyer handles

• Checking the title for restrictions, charges and caveats
• Advising on the effect of the gift on other family members
• Preparing the transfer and supporting documents
• Obtaining authority consent where a restriction sits on the title
• Dealing with the bank where the property is still charged
• Attending to stamping and registration of the transfer

Documents you need to prepare

• Copies of the giver's and recipient's identity cards
• Copy of the title
• Proof of the family relationship
• Redemption statement where a charge sits over the property
• Current quit rent and assessment receipts

Costs people often overlook

• Legal fees for preparation and registration
• Stamp duty under the treatment that applies to transfers between close family
• Land office registration fees
• Service tax of 8% on legal fees

When to stop and get advice first

Frequently asked questions about lifetime gift of property