Sri Lanka Enhances Property Rights Security with New Legislation on Deeds of Gift

Sri Lanka Enhances Property Rights Security with New Legislation on Deeds of Gift

In a significant move bound to reshape the landscape of property rights and financial lending in Sri Lanka, the government has announced plans to bring new legislation into effect, specifically targeting the revocation of deeds of gift. This development, spearheaded by Health Minister Rajitha Senaratne and supported by Minister Wijayadasa Rajapaksa, emerges as a response to growing concerns over the vulnerability of donees and the adverse effects on lending institutions prompted by a recent Court of Appeal decision.

The contentious ruling in question allowed for donors to unilaterally cancel an irrevocable deed of gift through a mere deed of revocation, without needing to seek court intervention. This legal leeway not only threatened the stability and predictability of property rights but also posed significant risks to financial institutions that rely on such deeds as collateral for loans. The potential for such deeds to be revoked at the donor's discretion meant that the collateral could vanish, leaving lenders in precarious positions.

Addressing the issue, Health Minister Rajitha Senaratne voiced concern over the rights of donees — individuals who receive property through deeds of gift — and highlighted the detrimental impact of the court's ruling on lending institutions. These institutions, which include banks and other financial entities, play a pivotal role in Sri Lanka's economy, offering loans and credit options that fuel business ventures, home purchases, and various other economic activities. The uncertainty introduced by the possibility of deed revocation without judicial oversight had cast a shadow over the security of lending practices, potentially stifligng economic growth.

In an effort to curb these adverse effects and restore confidence in the legal framework surrounding property transactions, Minister Wijayadasa Rajapaksa proposed the drafting of new legislations. The proposal, which received the Cabinet of Ministers' approval, seeks to ensure that the revocation of irrevocable deeds of gifts can only be carried out through an order from a competent court. This move is designed to reintroduce a level of scrutiny and deliberation into the process, thereby protecting the interests of both donees and lenders.

The Law Commission of Sri Lanka has thrown its support behind this initiative, recognizing the need for clearer, more protective legislation in this area. The proposal aligns with broader efforts to strengthen the rule of law and property rights in the country, ensuring that the legal system offers adequate protections for individuals and institutions alike.

As Sri Lanka prepares to enact this new legislation, the implications for property rights and the financial sector are extensive. For donees, the proposed changes promise greater security and stability in their property holdings, safeguarding their rights against unilateral actions by donors. For lending institutions, the move offers a firmer foundation for the acceptance of property as collateral, enhancing the reliability of such securities and supporting the health of the financial ecosystem.

In essence, the government's initiative represents a significant step towards balancing the interests of individual property holders and the broader economic framework. By tightening the conditions under which deeds of gift can be revoked, Sri Lanka is not only protecting the rights of donees but also strengthening the pillars of financial trust and stability. As the country continues to navigate the complexities of property law and economic development, this legislation marks a pivotal moment in its legal and governance evolution.

Kenton Fairweather
Kenton Fairweather

My name is Kenton Fairweather, and I am a pharmaceutical expert with years of experience in the industry. I have a passion for researching and developing new medications, as well as studying the intricacies of various diseases. My knowledge and expertise allow me to write extensively about medication, disease prevention, and overall health. I enjoy sharing my knowledge with others to help them make informed decisions about their health and well-being. In my free time, I continue to explore the ever-evolving world of pharmaceuticals, always staying up-to-date with the latest advancements in the field.

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