Joint Property ownership is very common in India, especially with a spouse. Personally, I don’t suggest joint property ownership with parents because of inheritance and other hassles/issues. With the increasing marital and family disputes, sometimes joint property ownership becomes a major pain point. During happy times, we don’t think of future repercussions. If the potential buyer comes to know about a dispute between joint owners then it might be difficult to dispose of the property. Such sales are distress as i shared in my post, Beware of Heavily Discounted Property.
In the case of joint property ownership between husband and wife, the issue remains unresolved in most of the cases. The major bone of contention is a home loan. Though i tried to address this issue in my post, Mortgaged Property – How to Resolve Husband and Wife Dispute. Here i am not desisting the readers to buy joint property but to share some of the common pitfalls. Still, i feel that family and marital disputes can be resolved in such cases. But what about joint property ownership with a non-relative. Let’s check it out.
Joint Property Ownership with a Non-Relative
Another most common query from readers is whether the joint property ownership is feasible with a non-relative. The answer is YES. This is very common among friends/business partners for investment purpose. Normally, the joint home loan is not possible with a non-relative. Therefore, i mentioned such arrangement is very common for investment purpose. I do receive queries on the same. I will share some of the most common disputes in joint property ownership with non-relative in my next post. I will also share how to handle these disputes.
Now you must be wondering what this post is all about. This post is dedicated to biggest dispute i.e. if one of the co-owners or joint owners dies. In recent past, i received few queries in this regard. In my opinion, it is very critical to mention the type of joint property ownership in case the co-owners are non-relative. Here i would like to clarify that by non-relative i mean non-beneficiary (Not a Legal Heir).
For example, if i buy a joint property with my brother in law then also technically he will be treated as a non-relative because he is not a direct beneficiary of my wealth under Hindu Succession Act. In such scenarios, the type of joint property ownership may supersede the WILL of the deceased. Assuming i die and left a WILL that my share in the joint property will be inherited by my wife. At the same time assuming the type of joint property ownership mentioned in the sale deed is Joint Tenants (I will explain it later what it means). In this scenario, my share in the property will be passed to my brother in law (surviving joint owner) instead of my wife.
To share a real life example of Ms. Naina. Her husband invested in a property in Gurgaon along with his 2 friends. In June’16 he died in an accident. Ms. Naina approached the friends of her husband to transfer her husband’s share in her name. She was shocked to know that it cannot be transferred. The reason being the type of joint property ownership was specifically mentioned as Joint Tenants in conveyance deed. Now it is apparent that it is critical to record the type of joint property ownership in the sale agreement/sale deed.
Types of Joint Property Ownership
I have observed that in a professionally drafted sale deed or sale agreement, the type of joint property ownership is mentioned. Also to add that this clause is more crucial in case of death of one of the joint owners. There are following 2 types of joint property ownership
Joint Tenants: In this type, the interest is automatically passed to the surviving joint owner. As i shared in above-mentioned examples that property share is passed to the surviving joint owner.
Tenants in Common: The interest of deceased tenant or joint owner is passed to the legal heirs and not to the surviving tenant or joint owner.
Joint Property Ownership – Other Important Points
1. Now the biggest question is if the joint property ownership is not mentioned in the sale agreement or sale deed then what will happen. As i understand by default the type of joint property ownership is Tenants in Common. In other words, the share in the property will be passed to the legal heirs or beneficiary of the WILL.
2. It is not necessary to record Joint Tenants or Tenants in Common only in case of joint property ownership with non-relative. You can mention the same in the case of relatives also. For example, in one of the query the reader asked me that in the case of any unfortunate event, he would like to pass his share in the joint property only to his wife not to his children and surviving mother. His wife was co-owner of the property. I suggested him to make the type of joint property ownership as Joint Tenants. As i explained, in this case, the interest in the property will be passed to the surviving joint owner.
3. In the case of more than 2 joint owners as Joint Tenants, the surviving joint owner gets a share in the proportion of ownership in the property. For example, Five people bought a property as Joint Tenants. In this one of the joint owner died. His share of 20% will be distributed among surviving joint owners. Each surviving joint owner will receive 5% share. Therefore, revised ownership pattern of the property will be 25% share each for rest four surviving joint owners.
4. In the case of tenants in common, assuming there are 2 joint owners (non-relatives). One of them die and there are 2 legal heirs of the deceased. In this case, the share of surviving joint owner will remain 50% even after the death of the joint owner. The legal heirs will get a share of 25% each. Here i am assuming that everyone has an equal share in the property.
Words of Wisdom:
There is no right or wrong answer whether i should mention Joint Tenants or Tenants in Common in sale deed or sale agreement. It is situational in nature. It depends on how i would like to inherit my share in joint property ownership. The laws in India are a bit complex in nature. Even a mention of the type of joint property ownership can be contested by the aggrieved party. For example, in the case of Tenants in Common, the surviving joint owner may contest the transfer to legal heirs citing the source of funds.
Last but the not the least, it is advisable to read sale deed or sale agreement thoroughly. In case, any legal term or legal clause is not clear then it is better to seek a legal help. It’s a fact that mere mention of Joint Tenants or Tenants in Common in the sale agreement will not raise any suspicion at the time of execution. At the same time, a study of its implication will make you think twice before you sign.
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