April 12, 2024

Types of joint ownership of property

When the ownership rights and responsibilities of a property are collectively held by two or more individuals by a legal arrangement, it is called joint ownership. In this arrangement, each co-owner holds a predetermined share or interest in the property, with equal participation in all kinds of decision-making, financial commitments and potential benefits/losses linked with the co-owned asset. This is essentially a cooperative approach to investing in real estate.

There are primarily four different modes of joint ownership of a property:

# Joint tenancy

In this arrangement, the property’s title deed is based on the principle of unit, providing each owner equal share in the property. The moot factors of unity in this format of co-ownership are unity of title, time, interest and possession. This agreement works on the law of survivorship and in the event of death of one joint owner, his/her share automatically passes on to the surviving owners. Joint tenancy can be created through a will or deed, even if not by intestacy. Also, joint tenancy can be seamlessly transferred, vesting in the new owner the same legal right in the property, according to Section 44 of the Transfer of Property Act, 1882.

# Tenancy in entirety

A variation of the joint tenancy model, this type of joint ownership is exclusive to married couples recognized in some jurisdictions with unique benefits for spouses. Like joint tenancy, tenancy by entirety includes the right of survivorship, which means in case of death of one spouse, the other spouse inherits the entire property. Joint ownership in this model can stand altered in the event the spouses mutually agree to alter the arrangement or file for divorce. Spouses holding tenancy in entirety are not allowed to sell the property or transfer their share to a third party, unless mutually agreed.

# Tenancy in common

This denotes an arrangement when two or more people jointly hold a property, bound only by unity of title, but not by unity of possession, time and interest. Also, tenancy in common does not function on the concept of survivorship, and each common tenant can transfer his/her interest in the property. Interestingly, if a joint ownership agreement doesn’t mention any specific mode of ownership in the document, the ownership model is by default considered tenancy in common. In this format, co-owners can hold unequal sections of the property, thus allowing a more customized holding pattern. Tenancy in common doesn’t include the right of survivorship and in the event of a co-owner’s demise, his/her share doesn’t automatically transfer to the surviving co-owners. It can be passed on to heirs or designated beneficiaries.

# Coparcenary This form of ownership of property among members of Hindu Undivided Families (HUFs) was established by the Hindu Succession Act, 1956, wherein an unborn child can have an equal share in an HUF property, akin to joint tenancy. After the child is born, a coparcener automatically becomes a shareholder of the property jointly held by the HUF. The coparcenary format doesn’t function on the model of survivorship, and the member’s undivided share in the property is passed on to his/her heirs after death, but not to the other coparceners. This model also allows a coparcener of an HUF to sell his/her share in the joint family property.

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