4. Should I enter into a sale and purchase agreement or execute a deed of gift if I want to give my property to my husband/wife?

4. Should I enter into a sale and purchase agreement or execute a deed of gift if I want to give my property to my husband/wife?

A deed of gift may create a potential defect in title. Under section 49 of the Bankruptcy Ordinance (Cap. 6), the Court make an order to set aside a transaction made by a bankrupt within a period of 5 years before he was adjudicated bankrupt if the transaction is regarded as an undervalue transaction.  A deed of gift is regarded as an undervalue transaction under section 49(3) of the Bankruptcy Ordinance (Cap. 6).  Hence if a person transfers his/her property to his/her spouse by way of a deed of gift and then the transferee wants to sell the property to a purchaser within the 5 years period of the deed of gift, the purchaser can challenge that the title is defective as the deed of gift may be set aside by the Court under section 49(2) of the Bankruptcy Ordinance (Cap. 6).