Under common law, a deed has been understood as an instrument written on a paper or parchment, executed by a person or corporation making, confirming, concurring in or consenting to some assurance (otherwise than by way of testamentary disposition), of some interest in property or of some legal or equitable right, title or claim, or undertaking in some act affecting legal relations or position of a party to the instrument or of some other act affecting other person or corporation. A deed may be defined as a formal writing of a non-testamentary character, which purports or operates to create, declare, confirm, assign, limit or extinguish some right, title or interest.
Validity of deed
Historically, for an instrument to be a valid deed, following things were necessary:
(i) It must indicate that the instrument itself conveys some privilege or thing to someone.
(ii) The grantor must have the legal ability to grant the thing or privilege.
(iii) The person receiving the thing or privilege must have the legal capacity to receive it.
(iv) The instrument must be sealed. Although this requirement has been eliminated by most jurisdictions and replaced with signature of the grantor, however for conveyance of real estate and executed for Government, most jurisdictions require the deed to be acknowledged before a notary public or a civil law notary and some may additionally require witness(es).
(v) It must be delivered to and accepted by the recipient.
(vi) There must be witness(es) that also signs the deed under their name(s) and address(es).
Parts of a deed
The parts of a deed are as under:
(i) Name of the deed: The name given at the commencement of the document is not the controlling factor, it is the substance of the document and not the form which is to be considered.
(ii) Place and date: The place of execution is stated after the name of the deed. It is then followed by the date of execution of the deed. The date of execution is necessary under the Registration Act, 1908 and the Limitation Act.
If the deed is executed by different parties on different dates, the date on which the deed was last executed is taken as the date of the deed.
(iii) Parties and their description: After the place and date, names and description of the necessary parties to the deed are mentioned. The nature of the deed determines the necessary parties. The parties in a deed should be mentioned properly. Their full description should be given for the purposes of identification.
(a) Juridical persons: On many occasions, a party to a deed may not be a living person but may be a juridical person, for example, a company, corporation or an association.
(b) Minors: As per Section 10 of the Contract Act, 1872, a minor is not competent to contract. Under the Hindu law, the natural guardian of a minor can transfer his or her undivided interest in joint family property, for legal necessity or for benefit of estate. But the property other than his undivided interest cannot be disposed of without the permission of the court. In case the guardian is transferring the minor’s property with the court’s permission, such permission should be mentioned in the recital.
(c) Persons of unsound mind: As per Section 12 of the Contract Act, a person of unsound mind is not competent to contract. However, his manager can transfer his property with the permission of the court. The description of the lunatic and recital regarding court’s permission to transfer the property is written in same form as that of the minor.
(d) Trusts: Particulars of the trust deed by which trustees have been appointed should be referred in the recital. In case of any contract entered into by trustees on behalf of beneficiaries, the particulars of the trust deed by which trustees have been appointed as well as their act on behalf of the beneficiaries should be referred to in the recital.
(iv) Reference label of parties: Reference label of parties are put in parenthesis against the name and description of each party to avoid repetition of their full names and description at every place. If there are more than two parties, the expressions “of the first part”, “of the second part”, “of the third part”, etc. are used.
(v) Reference of heirs, executors, assigns, etc.: After the labels of parties, reference of heirs, executors, assigns are also made, so that they may also take the benefit of the deed.
As held in Shyam Singh v. Daryao Singh, merely because there is only a mention of heirs of the contracting parties but not their assignees or transferees, the legal right of assignment available to the benefit of the original contracting party under Section 15(b) of the Specific Relief Act, 1963 cannot be denied to it.
(vi) Recitals: They are used to explain those matters of fact, that are necessary to make the transaction clear. A recital is evidence as against the parties to the instrument and those claiming under them and in an action on the instrument itself the recitals operate as an estoppel though it would not be so on a collateral matter.
(vii) Testatum: After the recitals, the operative part of the deed commences with the testatum.
(viii) Consideration: It is an inducement, price or motive that cause a party to enter into an agreement or a contract. The consideration should be mentioned in the deed. Section 27 of the Stamp Act provides that the consideration should be truly and fully mentioned in the deed, omission of which is subject to fine up to Rs 5000. However, the validity of the deed is not affected by not mentioning the consideration.
(ix) Receipt: The receipt of consideration is made within parenthesis in the deed. If part consideration has been paid and the balance is being paid at the time of execution of deed, the fact should be stated in the receipt clause.
(x) Operative words: After the testatum, operative words follow, which express the nature of the transaction. Such words should be clear.
(xi) Parcels: After the operative words, description of the property being transferred is given for easy identification of the property.
(xii) Schedule of the property: As the description of the property is generally lengthy, it is given in a schedule appended to the deed and the words “and more particularly described in the schedule hereunder written” is written in the parcel of the deed.
In case of any conflict between parcels incorporated in the deed and description of the subject-matter in the schedule, the former shall prevail unless it is made clear in the deed that description as given in the subject-matter will be preferred.
(xiii) Map: In the deed of transfer, the map of the property to be transferred is annexed, to identify the property. If a map is annexed to the deed, it is treated as part of the deed.
(xiv) All estate clause: This clause expresses that the transferor conveyed all his estate, interest title, claim, rights and demands whatsoever into or in the said property or any part thereof. It is incorporated to make clear that all rights, interest, title, etc. of the transferor in the property shall be transferred to the transferee after execution of deed of transfer.
(xv) Exceptions and reservations: An exception is a part of the thing granted, which is in existence, and a reservation is a thing not in existence but created or reserved out of land granted. If the transferor wants to retain some part of the estate transferred, it should be specifically mentioned after description of the property.
(xvi) Habendum: It limits the granted estate and it mentions the liabilities or incidents subject to which the property is transferred. The clause is written into deeds and mortgages to define transfer of the subject property.
(xvii) Reddendum: It is a clause in a deed by which some new thing is reserved out of what has been granted before. In this cause, the rent payable by the lessee is specified, along with time and mode of payment.
(xviii) Covenants: Covenant is an agreement by which the parties or some of them agree to do or not to do a specified thing or act. The covenant may be positive or negative. For making the covenant in the deed, no particular form is necessary. The words used to provide covenant must be clear. A covenant may even be absolute or qualified, and may be made by several persons jointly and severally.
(xix) Delivery of title deeds: After the covenant clause, clause regarding delivery of title deeds by the transferor to the transferee is incorporated. When the transferor transfers the property, he is required to deliver all the title deeds in his possession to the transferee. However, if a part of the property is transferred or where the property is transferred to several persons, the transferor or the transferee of the lot or the greatest value, as the case may be, is entitled to retain the title deeds. But he should produce all or any of them at the request of the purchaser and at the cost of the latter to furnish copies, extracts or abstracts therefrom as the purchaser may require and, in the meantime, keep them safe.
(xx) Testimonium: It is the concluding part of the deed. It states that the parties have signed the deed in witness of what is written therein.
(xxi) Execution: After testimonium, the deed is executed by the parties to the deed in presence of witnesses.
Execution does not mean merely signing it, it should accompany the intention of the executant to give effect and operation to the document signed. Section 67 of the Evidence Act, 1872 provides that no particular proof is required for the purpose of establishing the fact of execution. Further, when the execution of a document is denied, no presumption of its execution can be raised, and the same needs to be proved.
(xxii) Registration: In case, the duly executed instrument is required to be registered (Registration may be compulsory or optional; refer Sections 17 and 18 of the Registration Act, 1908), the same should be so got done after payment of appropriate stamp duty as per law, so as to make the same enforceable in law.
†Achal Gupta is an Advocate and a qualified Chartered Accountant, presently practising at Supreme Court and Delhi High Court.