“We have finally decided to buy a flat. Staying in a rented flat and moving on to a different one every eleven months is hugely unsettling. Buying a flat also gives a lot of social prestige,” said Moonmoon to her father.
“Are you looking for a suitable one?” asked her father.
“We are. In fact, Raja and I have already shortlisted a couple of suitable flats within our budget,” said Moonmoon.
On a Sunday afternoon, Moonmoon and her husband Raja were having tea with her parents. Her father is a lawyer and Moonmoon always looks forward to her father’s advice on any financial or legal issues.
Although Moonmoon and Raja live in Salt Lake now, while her parents live in Jodhpur Park, it is a habit of them to visit them once or twice every month. It is partly to meet them and spend time with them, and partly to receive advice on various matters.
After one thing or the other, the issue of property ownership became the subject of conversation.
“There are several types of property ownership in India that you must know,” said Moonmoon’s father.
You should know these before buying any property in India.
Sole/Individual Property Ownership
When a property is purchased and registered in the name of one individual, he/she alone holds the ownership title of the property. This is known as sole ownership or individual ownership of property.
Even if any other party helps in jointly finance the purchase of the property, only the registered title-holder will have the sole right to ownership of the property.
“Let us consider a situation where a man has taken financial help from his wife while arranging for the down payment for a home purchase. Let us suppose that he makes his wife a co-applicant in the home loan application. Nevertheless, if the property is registered in the name of the husband, the property would be held individually by the husband. While it is correct that the wife will have a legal right over the property, because of the prevalent inheritance laws in the country, it will not have any impact on the fact that the property is owned solely by the husband,” said Moonmoon’s father.
The title-holder has many advantages in the case of individual ownership, especially if he/she decides to sell the property. In the example given above, the husband can sell the property even without taking the consent of his wife. However, the wife can claim her share of the sale proceeds irrespective of whether she had given her consent or not.
The division of such a property is also easier, because of the limited number of owners. When the owner dies, his property would be transferred under the provisions made in his will. If there is no will (this is known as the owner dying intestate in legal parlance), specific inheritance laws would apply and the property would be transferred accordingly among the legal heirs of the late owner.
Joint Property Ownership
When a property is registered in the name of more than one individual, the property is considered to be under joint ownership. Those holding the title to the property in such form of property ownership, are known as joint owners or co-owners of the immovable asset.
“There are four types of joint ownership of property. Let us discuss them one after the other,” Moonmoon’s father took a sip of the tea and started to explain.
In the case of joint tenancy, the title deed of the property works on the concept of unity by way of providing them equal share in one property. The key determinants of unity in this form of co-ownership are unity of title, unity of time, unity of interest, and unity of possession. Since this arrangement works on the law of survivorship, upon the death of one joint owner, his share automatically passes to the surviving owners.
For example, let us suppose Ravi, Suresh, Amar, and Shyam purchased a house last year and got it registered jointly in their names. Each of them owns a 25% share and they all live in the same house. By virtue of joint tenancy, the share of a deceased member would pass on to the survivors and not to the late joint owner’s legal heirs.
Tenancy in entirety
This form of joint ownership is actually a variation of joint tenancy, i.e., application between co-owners of property also joined by way of marriage. This sort of co-ownership works on the four models of unity and survivorship but between spouses only. The spouses bound by tenancy in entirety, cannot sell the property or transfer their share in the property to a third party unless both agree to such an arrangement.
In the case of the demise of any one of them, the survivor would get the deceased party’s share in the property and not the late joint owner’s legal heirs.
Tenancy in common
When two or more people jointly hold a property without holding equal rights, the joint ownership would be known as a tenancy in common.
As an example, three brothers named Sujay, Ajay, and Vijay purchased a property together but Vijay paid 50% of the total price. His share is 50% while the other two brothers have a share of 25% each. Vijay planned to give his share to their sister’s son Rahul, in the event of his demise.
As the Hindu law does not provide for different types of joint ownership, the Hindu Succession Act, 1956, establishes the coparcenary form of ownership among members of Hindu Undivided Families (HUFs). In a coparcenary property, every coparcener acquires an interest by birth. This concept, which is similar to joint tenancy, allows an unborn child to have an equal share in a HUF property. After his birth, a coparcener becomes a shareholder of the property jointly held by the HUF.
For example, Anupam was born 2 months after the death of his father. However, he would inherit his father’s undivided share in his ancestral property governed under the HUF laws.
The Significance of Nomination
A property owner can nominate a person to the right of ownership to his property in the event of his/her death. Property nomination has also become a common practice among owners because, by way of this, the property owner can ensure that the property does not remain unclaimed or become subject to litigation after his demise.
This form of property ownership is often seen in cooperative housing societies, which generally make it mandatory for members to nominate a person at the time of getting a membership. A nominee, if he/she is a family member of the deceased, is entitled to the ownership by transfer, who made the nomination in her name, according to the record of the cooperative society. And the co-operative society cannot challenge the right of nominees in West Bengal.
This means a nominee would have no say in the sale and distribution of the property. Buyers of property must, hence, ensure that the seller is not a nominee but an actual owner. Otherwise, there can be legal complications in the future.
“Now that you have understood the nuances of the different forms of property ownership in India, let’s go ahead and decide which property you should buy among the ones you have shortlisted. What do you say Moonmoon, Raja?” asked Moonmoon’s father. And they immersed themselves in the pros and cons of the shortlisted properties.