It is difficult to define
the word 'Trust' in the legal sense. The Indian Trusts Act 1882, defines Trust
as an obligation connected to property ownership, and arising out of a
confidence reposed in. and accepted by the owner, or declared and accepted by
him, for the benefit of another, or of another and the owner. Even this
definition does not fully capture the essence of the term. However, it is
easier to describe what a Trust is.
An operational Trust has at
least four ingredients. One is the 'Author of the Trust' who creates the Trust.
He reposes confidence or trust in one or more persons to execute the objects of
the Trust. The persons in whom the confidence is reposed are the 'Trustees.'
The person for whose benefit the Trust is created is the 'Beneficiary.' The
initial money raised for the trust is its 'Corpus.' The Trust mayor may not have
immovable properties. If you are dealing with a Trust property or planning to
purchase property from a Trust, you have to first check out whether it is a Private
or a Public Trust, or whether it is a Religious Trust. Depending on the type of
Trust, the approach will vary.
One of the ways of finding
out whether a Trust is a Private or a Public Trust is to see what its objects are,
and who the beneficiaries are by checking out the Trust Deed. If the beneficiaries
are identifiable, then most probably it is a Private Trust. If specific
beneficiaries are not identifiable and the beneficiaries are the general public
or sections of the public, then it is a Public Trust.
This is very critical in
dealing with the properties of a Trust. The next thing is to see as to how the property
was acquired by the Trust. The Trust can acquire properties by bequests, that
is, testamentary dispositions made by persons through a will. It can acquire
properties by outright purchase or by other modes.Frequently, properties are
also endowed or orally transferred to the Trust. Separate declarations are made
confirming the transfer. Though there may not be any registered document,
giving property to a Trust by a valid endowment or oral transfer is valid. This
has to be ascertained from the documents.
A distinction has to be
made on how the property is brought in, and on the constitution of the Trust. As
per the Indian Trusts Act 1882, a Trust connected with an immovable property
has to be constituted by a non-testamentary instrument in writing signed by the
Author of the Trust or the Trustee and registered. The Will of the Author of
the Trust or the Trustee can also constitute it. As far as movable properties
are concerned, a Declaration of Trust has to be made and ownership of the
property transferred to the Trust. A Trust cannot be constituted in a fraudulent
manner or to defeat the rights of persons claiming interest in the property.
You also have to check
whether there is a complete divestment of right, title and interest of the
Author of the Trust or the Donor in the property. The documents to be checked could
include declarations, tax records, and other documents evidencing dealings of
the Trust. As far as sale of Trust property is concerned, especially a Public
Trust, it is the deed, which governs the same.
There should be a clear provision
in the Sale Deed enabling the Trustees to sell property. If this provision is
not clearly found in the Trust Deed, then court permission is required for the
sale. This permission has to be obtained depending on whether the Trust is a
Private or a Public Trust. Any direction contained in the relevant Trust Deed for effecting the sale has to be strictly met. In the case of
Public Trust or Charities, permission from the Income Tax Department may be
required.
The Trust must be able to
give you the title deeds and deliver vacant possession of the property, unless otherwise
agreed. The persons signing on behalf of the Trust should be empowered under
the Trust Deed or as per directions of court. The Sale Deed or Conveyance has to
be stamped and registered as usual. Any litigation pending against the Trust should
not affect the transfer of property.
The sale of the Trust
property should have been made during the term of the Trust. A Public or a
Charitable Trust is, however, irrevocable and is designed to have perpetual existence,
unless terminated by an order of court. In certain Public and Charitable Trusts,
the competent court can frame a scheme and the property has to be dealt with in
accordance with the directions or provisions of the said scheme. If
authorisation is required from the Board of Trustees or any other formality has
to be fulfilled, then the same has to be complied with.
For More..........: