Publication:

The Times of India_Times Property, Pg 3_Ahmedabad edition

Date:

17th November 2019

Headline:

JOINT OWNERSHIP OF PROPERTIES

E paper link:

https://epaper.timesgroup.com/olive/apa/timesofindia/?href=TOIA%2F2019%2F11%

2F17&page=35&entityId=Ar03504#panel=document

JOINT OWNERSHIP OF PROPERTIES

Joint ownership of property is quite common in a Hindu Undivided Family. Such an ownership

has both plus as well as minus points

JADAV.KAKOTI@TIMESGROUP.COM

Joint ownership of properties is a key element in a Hindu society. If any particular property is

owned by more than one person, it is called joint ownership. Joint ownership of property is

quite common in a Hindu Undivided Family (HUF). It is a composite question of fact and law.

Such a joint ownership of property can be between husband and wife or between brother and

sister. In case of coparcenary, the male members and daughters have a common and an equal

interest in ancestral property.

Mukesh Jain, lawyer and founder, Mukesh Jain & Associates, outlines some basic advantages

and disadvantages of joint ownership of properties.

Jain says, “In case of inherited property, it has to be necessarily held jointly by all legatees.

Likewise, for a property is purchased by two or more persons by pooling resources for purchase

thereto. In case of HUF property, it has to necessarily inure to all members of the HUF jointly.

Nowadays, even if the pooling of funds is by family members or close relatives, it is better that

the ownership of the property is in same ratio as the investment to avoid hassles with the

Income Tax authorities.”

However, in some cases, the name of a family member, particularly spouse or child, is added as

a mark of affection or respect or for sake of convenience. It may have some

JOINT OWNERSHIP SIMPLIFIED

It is difficult for one of the owners to transfer the undivided share in the property As the

undivided share of the property is purchased by buyer at highly discounted rate, the sale value

of the property is significantly diminished A husband and wife may find joint ownership of

property useful with a clause that if one of them passes away, the surviving spouse becomes

the absolute owner, for which a Will/ Trust backed with nomination in relevant records can be

done.

Parents generally buy a property jointly for children in the hope that they will not sell it without

mutual consent and will have a roof over their head.

If the jointly owned property goes under dispute in a court of law, the litigation may pull for

ages and the real estate asset may become a liability.

Amit Goenka, MD & CEO at Nisus Finance also outlines advantages and disadvantages of Joint

Ownership.

Income tax benefit: Income can be split between the owners on rent and sale of property hence

lowered incidence of tax.

Representation: In case of joint owners, agreements can be executed by either/any of them

and all operations regarding bank accounts, society, statutory and regulatory matters can be

handled by either/ any of the owners Legal Continuity: In case of demise or physical/ mental

unavailability of the any of the owners, the others can make appropriate decisions, maintain,

monetise and continue enjoyment of

ADVANTAGES

In case of a self-occupied jointly owned family dwelling house, no co-owner shall be able to sell

his share of the property outside the family. Even if the sale materialises, the buyer shall be

barred by law from possessing the property as a coowner jointly with the other co-owners who

comprise a family, as provided in the Transfer of Property Act, 1882. Hence, the sanctity of a

family house is preserved.

If a property is owned jointly, each coowner is entitled to loss in lieu of interest, etc thereon

under Income Tax Act, 1953 (present ceiling is ₹2,00,000/-) separately for his respective share.

The eligibility of loan amount is also enhanced by pooling the income streams of both of the

coowners. However, generally it is resorted to in case of close family members.

A jointly-held property may be easy to administer in case of temporary absence, disability or

even death of the other coowner.

In case of a property held as a business entity, say a partnership firm or a company (as distinct

from co-ownership), even if the beneficial interest changes hands with admission or retirement

of partners or sale or purchase of shares of the company, it is not regarded as a transfer of the

property in the eyes of law as the firm/company continues to own the property.

Disadvantages

A major disadvantage of co-ownership is that we should be wary of adding non-family members

as coowners, lest it should attract the rigours of the amended and strengthened Benami

Transactions (Prohibition) Act, 1988 amended in 2016.

Adding family members as co-owners without their having real economic interest in the

property may create complications in Income Tax assessments.

A jointly-owned property may be hard to sell except with the consent of all co-owners. Quite

often, the coowners of such properties provide for right of first refusal (ROFR) for the other co-

owners in the event that any co-owner wants to sell his share.

In these circumstances, it is difficult for any co-owner wanting to sell his/ her undivided share

to get remunerative price for his share in the property.

At the time of succession, even if a co-owner does not have any beneficial interest, he/she may

claim the same thus complicating the process of succession.

Transfer of any property to another person cannot be achieved simply by adding his or her

name as a co-owner.

In case of HUF property, theoretically, the Karta (manager of the HUF) has the authority to sell

an immovable property of the HUF for the necessities of the HUF and its members. However, in

practice, the buyer insists upon the consent of all major co-parceners, before purchase of the

property, to avoid any legal hassles in future.

Dispute: Any dispute between the owners can impair the rent-ability, title, use and value of the

property Maintenance: If any of the owners are delinquent in meeting their financial

obligations towards the property; the maintenance and upkeep, statutory dues and

consequently the value of the property can impair.

Succession: If any of the owners do not have clear successors or there is a dispute in succession,

then the entire property is encumbered legally. So, to avoid any complications, the flow of title,

respective share of each co-owner, proper linkage between each coowner’s share and his

respective contribution to the cost of acquisition and maintenance of the property must be

maintained.