Settlement Deed Handbook

A Settlement Deed is an instrument by which a person settles property or an interest in property in favour of another person, subject to the terms contained in the instrument and the applicable law.

Settlement arrangements are commonly used in family and other relationships where the owner intends to provide property or an interest in property to another person.

The exact legal effect of a Settlement Deed depends upon the facts, the title of the property, the terms of the instrument and the applicable law.

A Settlement Deed should accurately reflect the actual intention of the parties and should not be confused with a Sale Deed, Gift Deed, Partition Deed or Release Deed merely because the property or parties may be similar.

A Settlement Deed may be used to record the intention of the person making the settlement and the rights intended to be created in favour of the recipient.

It may also contain provisions concerning conditions, reserved rights, possession arrangements and other terms agreed between the parties.

The document should clearly identify the parties, the property and the nature and terms of the settlement.

The terms should be examined carefully because the legal effect of a particular clause depends upon its wording and the applicable law.

Settlor

The person making the settlement is generally described as the Settlor.

Settlee / Beneficiary

The person in whose favour the property or interest is settled may be described as the Settlee or Beneficiary, depending upon the document and circumstances.

The identity and complete particulars of all parties should be stated accurately.

• Full name
• Age
• Relationship, where relevant
• Occupation, where relevant
• Complete address
• Other identification particulars where required

Many settlement arrangements arise within families. The relationship between the parties may therefore be relevant to the background and purpose of the settlement.

The relationship should be described accurately and should not be assumed merely because the parties have a particular family connection.

Where necessary, supporting records should be independently verified.

A family relationship by itself should not be treated as proof of ownership, title or any particular legal entitlement.

The property must be described with sufficient clarity to identify it without uncertainty.

• District
• Taluk
• Village
• Local body
• Locality / Desam
• Survey Number
• Re-Survey Number
• Block Number
• Extent
• Property description
• East boundary
• West boundary
• North boundary
• South boundary

The property description should be compared with the previous title deed and relevant land records before the document is finalized.

If a building, structure or other identifiable component forms part of the settlement, it should be appropriately described where relevant.

The source of the Settlor's title or interest should be properly identified.

Relevant particulars may include:

• Document number
• Year
• Date
• Sub-Registrar Office
• Nature of acquisition
• Other relevant title particulars

The title document should be examined to ensure that the person making the settlement has the required interest and authority in the property.

The Settlement Deed should clearly record the nature and intention of the settlement.

The document should identify the property or interest being settled, the person in whose favour it is settled and the principal terms governing the arrangement.

The parties should ensure that the description of the transaction accurately reflects the actual arrangement intended by them.

Where the transaction contains special conditions, reserved rights or restrictions, those provisions should be carefully examined before execution.

The financial arrangement, if any, should be stated accurately.

A settlement arrangement may contain terms that differ from an ordinary sale transaction. The actual arrangement between the parties should therefore be recorded rather than inserting assumed details.

Any payment, adjustment, equalisation or non-monetary arrangement should be independently reviewed for its legal and financial implications.

• Nature of financial arrangement
• Amount, where applicable
• Amount in words, where applicable
• Payment details
• Adjustment details
• Other financial terms

The rights intended to be created in favour of the beneficiary should be clearly understood before execution.

Depending upon the transaction, the document may contain provisions concerning possession, enjoyment, management or other rights.

The parties should carefully examine whether the beneficiary is intended to receive immediate rights, possession, enjoyment or another form of interest under the settlement.

The legal effect of a particular clause depends upon the wording of the document and applicable law.

A Settlement Deed may contain conditions or special terms governing the arrangement.

Any such condition should be clearly stated and should reflect the actual agreement and intention of the parties.

Conditions should not be inserted simply by copying language from another settlement document.

The Settlor may seek to retain certain rights or interests under the terms of a settlement, depending upon the nature of the transaction.

Examples may include arrangements concerning residence, enjoyment, management, income or other rights, where legally appropriate.

Any reserved right should be described clearly and should accurately reflect the intended arrangement.

The parties should obtain appropriate professional advice where a settlement contains substantial reserved rights or continuing interests.

The possession position should be accurately recorded.

The parties may need to state whether possession is already with the beneficiary, is being delivered under the arrangement, or is being retained by the Settlor.

Any right of residence, enjoyment, management or other retained interest should be clearly considered and independently reviewed.

Possession details should reflect the actual factual position and should not be entered merely for convenience.

Any provision concerning revocation, cancellation, suspension or termination of the settlement requires particular care.

The parties should not assume that a Settlor has an unrestricted unilateral power to cancel a completed settlement merely because the document contains a general cancellation statement.

The legal effect of any revocation or cancellation clause depends upon the terms of the instrument, the circumstances and the applicable law.

Before finalizing the settlement, the parties should consider whether the property is subject to any mortgage, charge, attachment, liability, restriction, tenancy or other encumbrance.

Existing loans, taxes, statutory liabilities and other obligations may also require consideration.

Where particular liabilities are intended to be borne by one or more parties, the arrangement should be clearly recorded and independently reviewed.

Depending upon the property and circumstances, relevant documents may include:

• Previous title deed
• Identity documents of the Settlor and Beneficiary
• Address proof
• Relevant property records
• Survey and land records
• Tax or revenue records
• Encumbrance-related records
• Possession-related records
• Relationship or supporting records, where relevant
• Relevant court orders or other legal documents, where applicable
• Other documents required for the particular transaction

The exact documents required may vary according to the property, parties, nature of settlement and current registration requirements.

Witness particulars should be entered accurately where witnesses are required or included for the particular instrument.

• Name
• Age
• Address
• Other particulars where required

The execution and attestation requirements applicable to the particular Settlement Deed should be independently verified before execution.

A Settlement Deed concerning immovable property may be subject to stamp duty, registration and other statutory requirements.

The applicable requirements can depend upon the nature of the settlement, the property, the relationship between the parties, the terms of the transaction and the law applicable at the relevant time.

The appropriate Sub-Registrar Office and the current procedure should be independently confirmed before execution and registration.

Current stamp duty, registration fees, exemptions, concessions and procedural requirements should be verified with the competent authority.

A Settlement Deed is different from a Sale Deed, Gift Deed, Partition Deed and Release Deed.

The correct instrument should be selected according to the actual transaction and circumstances.

The name of an instrument alone should not be relied upon to determine its legal effect. The substance of the transaction, rights of the parties, consideration or other financial terms, conditions and applicable law are important.

Check the following before generating the Settlement Deed model:

• Settlor's full name is correct.
• Settlee / Beneficiary's full name is correct.
• Age and address details are correct.
• Relationship details are accurate where relevant.
• Settlor's title or interest has been examined.
• Previous title document has been checked.
• Property particulars are complete.
• Survey and re-survey numbers are correct.
• Extent is correct.
• Four boundaries are correctly entered.
• The nature and intention of the settlement are clear.
• Beneficiary rights are properly considered.
• Conditions are clearly stated where applicable.
• Reserved rights of the Settlor are properly considered.
• Possession details reflect the actual position.
• Revocation / cancellation provisions have been reviewed.
• Encumbrances and liabilities have been considered.
• Financial terms, if any, are accurately recorded.
• Witness particulars are correct.
• Current registration requirements have been verified.
• Professional review has been obtained where necessary.

• Incorrect spelling of the Settlor's or Beneficiary's name.
• Incorrect relationship details.
• Failure to examine the Settlor's title.
• Incorrect survey or re-survey number.
• Incorrect extent or boundaries.
• Ignoring mortgages, charges or other encumbrances.
• Leaving beneficiary rights unclear.
• Using vague or inappropriate conditions.
• Failing to clearly record reserved rights.
• Incorrect possession details.
• Inserting an unrestricted cancellation clause without review.
• Using outdated information about stamp duty or registration.
• Assuming that a settlement has the same legal effect as a gift or sale.
• Using the educational model without appropriate professional review.