Sharing father's property with my brother

Question

My father owns a piece of land which he wishes to share between his two sons - me and my brother. I do not wish to own the land and would rather take my share of the money (in other words my brother can "buy me out"), My brother is fine with buying the property in his name. Here is the plan.

1. After evaluating the property's worth (say = V). My father writes a "conditional gift deed" gifting his property to my brother with the following conditions:

2. My father gets an amount ( = F)

3. From the rest ( = V - F) I get my share say 50%

4. My brother takes a Bank loan for F + 0.5 (V - F) and pays us both.

   Question 1: Is this a reasonable approach ? Is there anything that I am missing out ?

   Question 2: After the ownership is transferred to my brother and he decides to construct a multi-storied House, what If I decide to invest some amount in that building (without owning the land or the building) - with the idea that I get to live there, how would it pan out in the long run ? Any suggestions ?

Thanks !

P.S: This is a question from India, although it could be easily be a general question.

Answer 1

Question 1: Is this a reasonable approach ? Is there anything that I am missing out ?

As per Indian TPA act section 122:

Gift” is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee

The terms you have given for completing this transaction have Considerations which doesn't conform to the legal definition of Gift.

TPA Act section 126 stipulates various conditions for revoking the Gift. One of which is,

A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded

It says you can only revoke the gift if it is not due to a "want" or "failure" of a Consideration. The conditions you specified can be treated as consideration and failure of that doesn't make the Gift deed invalid.

You cannot make a Conditional Gift deed with Consideration for the donor and get it revoked due to failure of Consideration. If your brother doesn't pay you as per the plan, you have no legal recourse.

Conditions in Gift should be the happening of any specified event which does not depend on the will of the donor See, section 126 of TPA Act. Which means the revokable conditions specified in the Gift should not be under the control of the donor. Like death of Donee before the death of donor etc.

EDIT: To clear confusion around what constitutes a valid condition: This is an example scenario given.

A gives a field to B, reserving to himself, with B’s assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A’s lifetime. A may take back the field.

You can consider creating a settlement between your brother with these conditions where you can relinquish your share for a certain amount of money.

For question 2, you can consider to include a clause in the settlement which states your wish. If your brother agrees to it, it can be done.

Answer 2

Best consult a lawyer, you would anyway need one to draft the deed.

If you are going through a convoluted process to save sales tax, the understanding is incorrect.

A brother can give away his rights to property in favour of other siblings. There is no sales tax applicable.

If your father is fine get it done till he is alive, it's much easier.

As per gift tax one can transfer unlimited amount of money between close relatives