Sale of a Property belonging to a Minor

Court’s permission needed to sell minors property

Any property or a share in any joint property owned by a minor, cannot be sold or disposed of by other means, by the natural guardian of the minor, without taking permission from the court.

The disposal of property of a minor or creating a charge on it, by the natural guardian under Hindu law is governed by Section 8 of HMGA and Section 29 of the HMGA.

The natural or legal guardian of the minor will have to file a petition under Guardians and Wards Act in the District Court to seek its permission to sell the share of the minor. The court should give permission to sell or create any charge on the property only when there is necessity or for an evident advantage of the minor.

The act, as per its Section 8(2)(a), restricts the natural guardian from mortgaging, charging, selling, exchanging or gifting any part of the immovable property of the minor, without prior permission of the court.

The natural guardian also has to obtain the permission of the court, for leasing out the property owned by the minor to any person.

Who is a minor as per law?

A minor is a person who has not attained his majority, under the provisions of the Indian Majority Act, 1875. As per section 3(1) of the act every person domiciled in India shall attain the age of majority on completion of 18 years.

A minor, as per HMGA, means a person who has not completed the age of eighteen years.

The GWA specifies that there is a guardian for both a minor and his property.

No guardian needed for minor’s undivided interest

If the minor has an interest in the undivided joint family property and the property is under the management of an adult member of the family, then there is no need for appointing a guardian for the minor’s undivided interest.

A minor is not competent to sell his property

A minor can own a property but he cannot sell it. The reason is that every person who is of the age of majority alone is competent to contract. A minor cannot enter into a valid contract as per Section 11 of the Indian Contract Act, 1872.

Therefore, a minor cannot sell a property which he owns till he attains the age of majority.

Parents can buy property in minor’s name

However, there is no legal impediment to registering a property in the name of a minor by his guardian.

The guardian of the minor can buy property in name of the minor by signing the contract by the natural or legal guardian of the minor. The purchase deed can be executed by the natural or legal guardian and after which it can be registered under the Registration Act, 1908.

Anyone can bequeath property to a minor

Any person can bequeath property to a minor by way of a Will. The law governing the Will is the Indian Succession Act, 1925, which is applicable to all communities except Muslims.

The law of succession determines the manner of devolution of property in case a person dies without making a Will. When a person dies intestate without executing a Will, his legal heirs including minors will be entitled to the share in his/her properties as per the law of succession applicable to the religion of the deceased person.

A person belonging to Hindu religion would be governed by the Hindu Succession Act, 1956, a Muslim would be governed by the Muslim Personal Law and a Christian would be governed by the Indian Succession Act, 1925.

Minor when attains majority can repudiate a sale deed

However, when the minor attains the age of 18 years, he/she can repudiate or validate the sale deed, if the transfer was done without court’s prior permission.

He must exercise such an option within the limitation period of three years from the date on which he attains majority.

A minor cannot accept an onerous gift

A minor cannot accept an immovable property as an onerous gift, which carries some liability.

However, if the minor acquiesces to the onerous gift after becoming competent to contract either expressly or by conduct, he cannot repudiate the gift later on.

Value of the gift will be treated as income

In case a minor receives a property worth more than Rs 50,000/- in the form of gift, the market value of such property has to be treated as his income, in the year in which the property is received.

The income of the minor is to be clubbed with that of the parent, as per Section 64(1A) of the Income Tax Act. The parent in whose income the income of the minor is clubbed is given an exemption of allowance of Rs.1500/- per child u/s 10(32) of the Act.

If the gift is received from some specified relatives like parents, maternal and paternal uncles and aunts, as well as grandparents, the gifts are fully tax-free in the hands of the minor.

Minor can purchase immovable property

A minor can acquire immovable property out of his own funds. Any agreement for the purchase of an immovable property, has to be executed by his natural or legal guardian on behalf of the minor, as the minor is not competent to contract. While acting on behalf of a minor, the guardian has to act in utmost faith, for the benefit of the minor.