Common Issues of Property Inheritance after the Owner’s Death

The death of Delhi-based businessman Bhuwanlal Singla, presented his four surviving sons with a moral and legal dilemma, involving their father’s multi-crore real estate holdings. In the wake of this family tragedy, the sons faced the most challenging situation related to property inheritance, as Bhuwanlal did not leave a will. Though there was no chance of a family feud, Bhuwanlal’s sons were, certain that the inheritance process would turn out as complicated and stressful.

Property inheritance, for many, is a helpful gift, but it also frames a frustrating scenario, considering the complex formalities it involves.

The Hindu Succession Act, 1956, which includes Sikhs, Jains, and Buddhists, provides insights into who the legal heirs are, and what their rights and liabilities are. The Indian Succession Act, 1925, covers the rest of India’s population. Both succession laws, however, depend heavily on whether the deceased person executed a will.

Let’s look at the different aspects of property inheritance from a legal perspective.

Claiming the Ownership of a Property

To inherit a property, beneficiaries need to ensure that the property gets transferred and mutated in their name in the revenue records of the relevant state government. The transfer of property can, however, take place only if there is significant proof to claim the inheritance.

In the case of people owning flats in residential complexes, the property inheritance process starts with the identification of the successor assuming the property had undergone mutation.

For people living in flats in cooperative societies, cooperative laws apply which grants the nomination of the property in case of the owner’s death. However, it is to be noted that these laws vary from state to state. For instance, in West Bengal, a nominee who is a family member becomes part or full owner of the property after the death of the original owner. However, in Maharashtra, a nomination does not make the nominee an owner of the property. He/she becomes only the caretaker and he must transfer the property to legal heirs of the deceased.

If the departed individual had an insurance cover, the insurance company is liable to pay the death benefit amount to the nominee, but it is the duty of the nominee to transfer the sum to the legal heirs of the deceased.

What Happens in Case of a Will?

Of course, the process is less complicated when the deceased person leaves behind a will. In such a case, the beneficiaries can acquire the property as per the last wishes laid down in the will, provided the testament complies with the state’s laws. The will can be in anyone’s name, but if they are not relatives of the deceased, then it is mandatory for the executor of the will to get probate from the court.

What Happens When There Isn’t a Will?

The problem arises in the absence of a will. Then, the succession law comes into force. For example, as per the Hindu Succession Law, when a departed Hindu man leaves property behind without executing a will, the property gets distributed in equal proportion to Class I heirs, such as the widow, children, and mother.

If there is no Class I heir, then Class II heirs, such as the father, brother, sister, grandchildren, or other relatives can claim the inheritance of the property. The heirs can mutually decide on the property distribution or can settle the issue in court.

The house of a deceased female Hindu goes to her children and husband. Everyone gets an equal share of the property. In the case of their absence, the property first goes to the heirs of her husband. If no one is available, it goes to her father or mother. Failing that, the property goes to the heirs of her father, and last, to the heirs of her mother.

The Case of the Inherited Property

It is important to remember that one cannot make a will for inherited property. One can only pass on a self-acquired property as per will. If inherited, then the succession law will take its own course, depending on the religious faith of the departed person.

Documents and Legal Formalities for Transfer of Ownership

Beneficiaries can go ahead with transferring the property ownership upon determination of their rights, shares, and liabilities. For transfer of property ownership, beneficiaries have to apply at the sub-registrar’s office. Legal heirs have to furnish the will, but even if there is a will, they need to obtain a succession certificate. Beneficiaries can get the succession certificate by applying to a magistrate of the high court. The succession certificate not only serves as a legal document for property inheritance, but it also allows the heirs to claim any dues payable in the name of the deceased person.

In case there is no will, beneficiaries will have to present an affidavit, with no-objection certificates from other heirs, wherever applicable. If a claimant has paid the consideration money to acquire the share of any heir, then it requires a mention in property transfer documents.

After the transfer, the next big task is to apply for the mutation of the property title. The mutation registers the transfer of a property title in the records of the land and revenue department. It is a must for property tax payments, and for transferring or applying for utility connections in the new owner’s name.

The mutation certificate also serves as evidence with respect to the ownership title of the property. Beneficiaries can get the mutation done at a municipal authority office, under whose jurisdiction the inherited property falls. Read about the detailed process of property mutation.

Liabilities of Property Inheritance

When someone inherits a high-value asset like a house, they do so with its current liabilities. Financial obligations can come in the form of ongoing disputes, outstanding property tax payments, or an unsettled home loan. Keep in mind that if there is a home loan, beneficiaries cannot transfer the title of the property to their name, without the consent of the lender.

For a house that has a home loan on it, the payment liability of the loan automatically gets transferred to the inheritors. This means the spouse or children of the deceased, or any other heir inheriting the property, has to clear the debt. However, if the borrower took an insurance cover on the home loan, then the insurer will pay the outstanding loan amount to the lender.

Also, for properties that are put on rent, beneficiaries have to adhere to the agreement signed between the deceased owner and the tenant. Likewise, if there is any litigation involving the property, then parties inheriting the property will also become a part of the dispute. With civil litigation, the court might ask the beneficiaries to represent the deceased.

Beneficiaries must be careful about taking into account every detail to ensure everything is in place. Not all of us are legal experts, so while inheriting a property, it would be wise to take the help of a professional.