What is love and affection transfers?
Love and affection transfers are the transfers of properties among family members. When we say family members we are referring to spouses and parents and children but no further. So let’s see what the law has to offer if you have a property and would like to transfer to your spouse or your children as a gift.
Is natural love and affection a consideration?
Generally contract law requires an element called “consideration”, which means if there is a contract to give you something, the contract must also include a reference to something given in return or the contract is void. So if you were to gift a property to another person, the transfer would be void in the absence of a consideration from the recipient. However, such transfer would be valid if the recipient is your parent, or your spouse or your child as the law recognises natural love and affection – Section 26(a) Contracts Act 1950 illustrated that an agreement without consideration is void unless it is expressed in writing and registered under the law (if any) for the time being in force for the registration of such documents, and is made on account of natural love and affection between parties standing in a near relation to each other.
How do we effect a love and affection transfer?
Even though natural love and affection is recognised by law and may validate a contract without consideration, a formal written and registered document is still required as evidence that a contract has been agreed by both parties. This is done through the use of a Deed of Assignment (DOA) or Memorandum of Transfer (MOT), and the consideration indicated in the DOA or MOT is “love and affection” (Pindah Milik Kasih Sayang). You do not need a Sales and Purchase Agreement (SPA) in order to transfer a property which are love and affection in nature but it is good to have a Deed of Gift and you may ask me why.
Is there any stamp duty exemption for love and affection transfer?
If you were worried about paying out big for love and affection, stamp duty exemptions does exist for love and affection transfers of property. For instance, Stamp Duty (Exemption) (No. 10) Order 2007 [P.U.(A) 420/2007] provides for full exemption of stamp duty chargeable on any instrument of transfer of immovable property between spouses.
Stamp Duty (Remission) (No. 2) Order 2019 [P.U.(A) 369/2019] on the other hand provides for the remission of fifty per centum (50%) of stamp duty chargeable on any instrument of transfer of immovable property between parent and child. However it is important to note that in order to enjoy fifty per centum (50%) remission of stamp duty, ‘child’ means a legitimate child, a step child or child adopted in accordance with any law and the recipient must be a Malaysian citizen.
Disclaimer:
The contents of this article is provided for general information and shall not constitute legal or other professional advice. Please contact us for further enquiry.
