Deed of gift

It is not unusual for persons who are in possession of land to give portions to their friends and family during their life time. Any gift given during one’s life time is an inter vivos gift and it takes effect almost instantly; whereas a gift made in a will takes effect after the death of the person who gives it.

A gift of land is different to a gift of items such as cameras, computers, radio and other chattels. While a gift of land must be registered in the Deed Registry there is no such requirement for the other items mentioned. A deed of gift must be registered in the same way that a deed of conveyance by sale is registered. {{more}}In a deed of conveyance by sale the vendor and purchaser must each pay five percent of the market value of the land in taxes to the government at the time of registration. With a deed of gift the tax is only $30 if a person falls into a category prescribed by law.

The law provides for certain categories of relatives to be exempted from stamp duties. These categories are parents and children including, grand children, great-grand children, great-great grand children and great-great-great grand children; brothers and sisters of the whole or half blood; spouses up to three years after a decree absolute is obtained whether voluntarily or by the court. The privilege is not extended to nephew, niece and cousin.

Exemption from stamp duties is also extended to include voluntary disposition of real or personal property in a company to the categories named above. Fifty one percent of the shares must be beneficially owned by the transferor/donor.

The law requires the lawyer who prepares the deed to make a declaration as to the relationship between the donor and donee. There is a penalty for non-compliance with the act. The penalty is imposed if there is a false declaration by the lawyer as to the relationship of the donor and the recipient of the benefit.

Where land is transferred to a friend as a gift, there is no exemption from stamp duty. Hence the land must be valued by a competent valuator and the market value determined. Stamp duty has to be paid in accordance with the law similar to conveyance by sale.

In all contracts, there must be consideration that is “something for something” given by the two parties. In conveyance transactions, money and land usually form the basis of the consideration. In a deed of gift, land is exchanged for love and affection. This is specifically stated in the deed.

A deed of gift permanently disposes of land. If a person voluntarily transfers land by way of deed of gift that person cannot retrieve the land from the recipient. However, if the donor gives the land under circumstances involving duress or if undue influence to force the donor to transfer land is used, then the court could order the return. There are two types of undue influence – presumed or actual. Undue influence will be presumed by the court in relationship of trust for example in a doctor/patient relationship or lawyer/client relationship. Actual undue influence must be proved. There is no necessity to show a relation between the parties but it must be shown that there was some unfair and improper conduct on the part of the party alleged to have exercised the undue influence.

• Ada Johnson is a solicitor and barrister-at-law.

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