Let’s admit it! Indians love real estate. It is the ultimate dream for most, and many parents want to buy property in their children’s names to secure their future.

Can a Minor sign the Registration Agreement?

However, it is not as straightforward, and you must know the rules before you plan it. It is important to note that, as per the Indian Contract Act, of 1872, an individual can purchase a property in their name only after attaining the age of 18. Until then, a minor can only purchase a property in their own name with the help of Parents/immediate guardians who will be their signing authority. It is also important to note that as per the Registration Act, of 1908, minors are prohibited from signing any property registration papers of legal documents.

Ways in which a Minor can Acquire a Property

1. By way of inheritance, that is through a WILL, OR
2. By way of a Gift.
3. Acquire the property using their own funds.

1. Legal Ownership vs. Guardianship

         Minors can legally hold property titles under certain circumstances—commonly through inheritance, gifts, or investments made by guardians on their                 behalf. However, due to age restrictions, minors do not have the same contractual rights as adults and cannot independently manage or make binding               legal decisions regarding their property. This is where guardianship becomes critical.

• Guardianship Responsibilities: A designated guardian, typically a parent or court-appointed individual, manages the property until the minor reaches adulthood (usually 18) after which, the property records and title deed must be amended in the minor’s name by submitting essential legal documents and registering with the appropriate authorities. This ensures that the property is safeguarded and decisions are made in the minor’s best interest.
• Court Intervention for Transactions: If there’s a need to sell or transfer the property, a guardian must obtain approval from the court to ensure any transactions are fair and in the minor’s favour.

 2. Financial and Tax Implications

          Rental income generated by a minor-owned property is often clubbed with the parents and in the case where both parents are working, it is clubbed with             the parent whose income is greater. In the case of a Guardian managing the property, a separate income tax return is filed and is NOT clubbed with the               Guardian. The Guardian must provide the necessary documentation to verify themselves as the “representative assessee of the minor”.

 3. Advantages of purchasing property in a Minor’s name

• Financial security of the child. When the child becomes a major, this property can potentially give substantial returns.
• Income generation: Putting this property on rent can provide a regular security and stable source of income every year
• Substantial expense: Once the child grows up and requires a substantial amount to fund the education or a business venture, they can either sell this property or get a loan against this property.

4. Disadvantages of purchasing property in a Minor’s name

• You cannot sell the minor’s property without obtaining permission from the court
• In the event of the sudden death of the parents, the guardianship of the child automatically goes to the nearest relative who may not have the best interest of the child at heart. So, it is important to transfer any such rights to a trustworthy person.

Conclusion: A minor can legally own property in India however there are several laws around it and the tax implications need to be understood as well. Hence, it is important to hire legal professionals who are knowledgeable about property laws and guardianship matters to ensure compliance and protect the minor’s interests.