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Can a Private Trust Sell its Property in India?


Rules and Procedures for a Private Trust to Sell Property in India

Private trusts are essential legal entities in India, often established for various purposes, including wealth management, asset protection, and charitable endeavours. These trusts can hold significant assets, including real estate properties. However, the question of whether a private trust can sell its property in India is complex and involves several legal and procedural aspects. This comprehensive article will explore the legal framework surrounding the sale of trust property in India, the conditions and requirements involved, and the steps a private trust must follow to execute such a sale.

What are Private Trusts in India?

Private trusts in India are legally established entities created for various purposes, including wealth management, asset protection, and philanthropy. These trusts are governed by the Indian Trusts Act 1882. In a private trust, a settlor transfers assets, including cash, securities, and movable and immovable properties, into a trust to benefit specific beneficiaries. The trust is managed by one or more trustees who hold legal title to the assets but are obligated to manage them for the beneficiaries’ benefit according to the trust’s terms and objectives.

Private trusts offer a mechanism for individuals and families to safeguard and manage their assets, ensure their orderly distribution, or engage in charitable activities. The trust deed, a crucial document, outlines the trust’s objectives, beneficiaries, and the powers and responsibilities of the trustees. These trusts play a significant role in estate planning, financial planning, and philanthropy in India, allowing individuals to allocate their resources according to their wishes and goals while adhering to legal and regulatory frameworks.

Can a Private Trust Sell its Property?

Yes, a private trust in India can sell its property under certain conditions and within the framework of the law. The ability of a private trust to sell its property hinges primarily on the provisions laid out in its trust deed. The trust deed is a critical legal document that sets forth the rules, objectives, and powers granted to the trustees. For a private trust to sell its property, the trust deed must expressly grant the trustees the authority to engage in such transactions.

In cases where the trust deed is silent on property sale, or if it does not explicitly bestow this power upon the trustees, they may need court approval to proceed with the sale. This can be a complex and time-consuming process, involving legal proceedings and judicial oversight to ensure that the sale aligns with the best interests of the trust and its beneficiaries.

Furthermore, any sale of trust property must adhere to applicable laws, including property laws, taxation regulations, and local ordinances. It should also involve a transparent and diligent process, including the valuation of the property to determine its fair market value and obtaining the consent of beneficiaries if required by the trust deed or applicable law. Ultimately, the sale of trust property in India is possible. Still, it must be conducted by the trust’s governing documents and prevailing legal requirements to ensure legitimacy and fairness. 

Key Legal Requirements for Selling Trust Property

  1. Trust Deed Provisions: As previously mentioned, the trust deed should contain explicit provisions that grant the trustees the authority to sell trust property. If the trust deed does not include such provisions, the trustees may need to seek court approval for the sale, which can be lengthy and complicated.
  2. Beneficiary Consent: In most cases, the beneficiaries’ consent is required before selling trust property. This is especially true if the trust deed is silent on the matter. Obtaining beneficiary consent is a crucial step in ensuring transparency and fairness in the sale process.
  3. Trustee’s Duties and Liabilities: Trustees must act in good faith and in the best interests of the trust and its beneficiaries. They must exercise due diligence and prudence when selling trust property. Failure to do so can result in legal liabilities.
  4. Compliance with Applicable Laws: The sale of trust property must comply with all relevant laws and regulations, including property laws, taxation laws, and local regulations. Additionally, if the property is subject to encumbrances or mortgages, those must be addressed during the sale process.
  5. Valuation of Property: Trustees should obtain a proper valuation of the trust property to ensure that it is sold at a fair market value. This helps in preventing any potential disputes or allegations of mismanagement.
  6. Trustee’s Authority: The trustees must confirm their legal status and authority to represent the trust in property transactions. This is typically done by providing the potential buyer with a copy of the trust deed and other relevant documents.

Steps to Sell Trust Property

If a private trust wishes to sell its property, the following steps should be followed:

  • Review Trust Deed: The trustees should carefully review the deed to ensure that it authorizes the sale of trust property. If the trust deed does not grant this authority, seeking a modification through legal procedures may be necessary.
  • Obtain Beneficiary Consent: If required by the trust deed or if the trustees deem it necessary, they should seek the beneficiaries’ consent for the sale of the property. This can be done through a formal resolution or consent letter.
  • Valuation of Property: Engage a certified valuer to assess the fair market value of the property. This valuation will serve as a basis for negotiations and pricing during the sale process.
  • Legal Documentation: Draft a sale agreement or conveyance deed which outlines the terms and conditions of the sale. This document should be legally vetted to ensure compliance with all relevant laws.
  • Compliance and Due Diligence: Ensure that all necessary compliances, such as obtaining a no-objection certificate from the municipal authority or addressing any existing encumbrances, are completed. Conduct due diligence on the buyer to verify their legitimacy and financial capability.
  • Execute the Sale: Once all the legal and procedural requirements are met, the trustees can proceed with the sale of the property. The sale should be conducted in accordance with the terms outlined in the sale agreement or conveyance deed.
  • Transfer of Title: After receiving the consideration, the trustees must execute the transfer of title in favour of the buyer. This typically involves executing and registering the sale deed with the relevant authorities.
  • Distribution of Proceeds: The proceeds from the sale should be distributed by the trust deed’s provisions. Beneficiaries should receive their respective shares as per the trust’s objectives.

Challenges and Considerations

While selling trust property in India is legally possible, several challenges and considerations must be kept in mind:

  • Beneficiary Disputes: Disputes among beneficiaries regarding the sale of trust property can complicate the process. Obtaining consensus or seeking court intervention may be necessary in such cases.
  • Taxation: The sale of trust property may have tax implications, including capital gains tax. Trustees should consult with tax experts to understand and address these issues.
  • Court Approval: If the trust deed does not authorize the sale of property, obtaining court approval can be time-consuming and costly.
  • Market Conditions: Economic and market conditions can affect the sale of property. Trustees should assess whether it is an opportune time to sell or if waiting might yield better results.


In conclusion, the ability of a private trust in India to sell its property is contingent upon several critical factors, with the trust deed playing a central role. If the trust deed explicitly grants the trustees the authority to engage in property transactions, the trust can sell its property. However, if the trust deed is silent on this matter or lacks such provisions, the trustees may be required to seek court approval, which can be arduous and time-consuming.

Furthermore, the sale of trust property must adhere to comprehensive legal requirements and procedures. These include obtaining beneficiary consent when necessary, complying with all relevant laws and regulations, conducting proper property valuations, and ensuring transparent and diligent processes.

While the sale of trust property is possible, it is a complex undertaking that demands careful consideration and adherence to legal and regulatory frameworks. Trustees must act in the best interests of the trust and its beneficiaries, and the sale must align with the trust’s objectives. Seeking legal counsel and expert advice is often advisable to navigate this intricate process successfully. Ultimately, a well-executed sale can provide a private trust with the means to achieve its goals, whether they involve wealth management, asset protection, or philanthropic endeavours while upholding the principles of legality and fairness.

Kanakkupillai, a trusted provider of legal and financial services in India, can be a valuable partner in facilitating the sale of your trust’s property. Our expertise in legal matters, compliance, and property transactions ensures a smooth and efficient process for you.

Here’s how Kanakkupillai can aid your trust:

  • Legal Expertise: Our experienced legal professionals will review your trust deed and ensure that it grants the necessary authority for property sales. If not, we can guide you through seeking court approval.
  • Compliance Assistance: We ensure that your property sale complies with all applicable laws, including property regulations, taxation, and local ordinances.
  • Valuation Services: Our team can arrange for property valuation by certified experts to determine fair market value.
  • Documentation Support: We assist in drafting legally sound sale agreements and other necessary documents and executing the sale deed.
  • Beneficiary Consent: If required, we can help you obtain beneficiary consent and ensure transparency.

Don’t let complexities and legal intricacies hinder your trust from selling its property. Contact Kanakkupillai today for expert guidance and a seamless property sale experience in India. Let us help you achieve your trust’s objectives while ensuring compliance and transparency. 

Reach out to us on 7305 345 345 now to get started. Your trust’s property sale success is just a call away!

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