Property ownership matters often require legal clarification, especially in cases of joint property ownership. Property owners may come across the terms partition deed or settlement deed when selling or transferring a joint property. However, sometimes, issues may arise during a property sale, transfer or division. In this case, a settlement deed is necessary to resolve the dispute. Overall, both partition deeds and settlement deeds are necessary for property owners. However, people tend to interchange the two terms, creating confusion between the two terms. Partition deed and Settlement deed may seem similar, but both terms differ. So, let us look at the implications of both terms and what are the differences between them.
What is a Partition Deed?
As the name suggests, a partition deed is a legal document used in cases where joint property owners want to divide the property between themselves. It is commonly used when the co-owners of the property are in a state of dispute and wish to divide the property fairly and amicably.
Key features of a Partition Deed
- A partition deed is a legal document that formally defines the division of the property among co-owners.
- The partition deed is a binding document and is legally enforceable.
- It defines the shares and rights of each co-owner concerning the property being partitioned.
- Two or more witnesses should sign the partition deed.
- A partition deed is typically registered with the Sub-Registrar of Assurances and attracts stamp duty.
What is a Settlement Deed?
A settlement deed, or family settlement deed, is used to settle family property disputes. It is a legal document that defines the terms of the settlement between family members and is included to avoid future disputes over the same. A settlement deed is used when there is a disagreement between family members and they wish to reach an agreement on the division of property.
Key Features of a Settlement Deed
- A settlement deed marks the resolution of family disputes and defines the agreed-upon terms.
- It is mutually agreed upon between the parties without any external intervention.
- A settlement deed must follow any law governing the property in question.
- A settlement deed is not created to divide property but rather to settle disputes.
- A settlement deed is typically registered with the Sub-Registrar of Assurances and attracts stamp duty.
Differences between a Partition Deed and a Settlement Deed
Though both partition deeds and settlement deeds involve property division, they have significant differences. Here are some of the primary differences between the two:
1. Purpose
A partition deed divides property among co-owners, while a settlement deed is used to settle disputes between family members. A settlement deed may include terms for the property division, but that is not its primary focus. A settlement deed can be used for any family dispute, not limited to property disputes. On the other hand, a partition deed formalises the division of properties between the co-owners—for example, co-owned properties by family members or business partners.
2. Legal Implications
A partition deed is a binding document that is legally enforceable, while a settlement deed is not enforceable in court unless the court makes it a decree.
3. External Intervention
A partition deed is executed between co-owners without any external intervention, while a settlement deed may involve external mediation or intervention to reach an agreement.
4. Stamp Duty
A partition deed is a legal document which property owners must register with a Sub-Registrar and pay stamp duty. However, in the case of a settlement deed, it may not require registration or paying a stamp duty.
It is important to note that while a partition deed is used solely for dividing property among co-owners, a settlement deed is a broader legal document that can address a wide range of family disputes. In addition to the split of property, other terms, including financial settlements or agreements for subsequent encounters, may also be included in this. Because of this, it's critical to comprehend how these legal documents differ from one another and select the best one for the situation at hand.
