Sri Lanka moves to secure deeds of gift — what changed in March 2024

In March 2024 the government announced legislation to protect donees and lending institutions after a court ruling let donors revoke deeds of gift without warning. That ruling shook up how banks and buyers treat gifted property, so lawmakers are stepping in to reduce uncertainty. If you own, lend against, or accept property via a deed of gift, this affects you.

What the proposed law aims to do

The draft law is focused on two simple goals: stop surprise revocations and keep lenders’ security intact. From reports, the bill will limit a donor’s ability to take back gifts that were given outright, and give priority to mortgages or loans taken against such property. Lawmakers want clear rules on registration and notice so third parties aren’t blindsided.

Why does this matter? Imagine a bank accepts land as loan security, only to find the donor later cancels the gift. That leaves the bank with weak recourse and the donee without the property. The proposed changes aim to make those outcomes rare by clarifying when a deed can be revoked and how lenders can protect themselves.

Practical steps for donees, donors and lenders

If you accepted a deed of gift recently, check whether it was registered and whether any loans are outstanding. Registration will likely become even more important under the new rules. If you’re a lender, ask borrowers for proof of clear title and consider getting legal opinions or additional covenants in loan agreements to cover deed-of-gift risks.

Donors should get advice before trying to revoke a gift. The law may limit revocation and could require compensation or court approval. That’s not just paperwork — it could change what you can legally do with property you once thought you could reclaim freely.

For lawyers and property professionals: expect updated forms and new registration checks. Conveyancers will need to confirm whether a deed was given as a gift and if any lender interests exist. Banks might tighten due diligence, add life-event clauses, or require deeds to be notarized and recorded in a specific way.

Keep an eye on the parliamentary process. Draft bills can change quickly, and the exact wording will matter for how broad protections are and how fast they take effect. If you’re directly involved in property transactions, ask your lawyer to flag any urgent steps you should take now rather than waiting.

Questions? If you want, I can suggest a short checklist you or your lender can use to review existing deeds of gift, or a simple email template to request documentation from a borrower or donee.