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Joint Properties between Spouses

Know about the rights of Joint Properties between spouses and joint registration of property benefits and disadvantages of joint property ownership.

The idea of joint ownership became popular among the spouses to safeguard themselves from heavy taxes and stamp duties. It is great for their finances, nevertheless, when there is a possibility of separation or divorce, it may cause a huge problem. Spouses may either come up to a mutual agreement or they have to knock on the doors of the court for an amicable decision.

What is joint property? What is the ‘joint property between spouses?

When two or more people jointly own a property, then it is known as joint property, and when spouses own property together, it is joint property between spouses.

How does the law recognise the ownership when it is jointly held?

  1. Transfer of Property Act:

Section 44 of the Transfer of Property Act specifically mentions about the transfer of the property by one co-owner. Where there are two or more owners of a property, one owner can smoothly transfer his share of the property to the transferee or any interest involved along with all the rights and liabilities that the transferor enjoyed.

Although this section does not entail directly joint ownership among spouses, it surely can be interpreted in a general sense. The right to transfer by the co-owner is the essence of this section, and similarly, joint ownership between spouses covers it too.

Section 44 additionally mentions the rights and liabilities of the transferee in the given condition:

  • To understand the concept in-depth, it is important to understand who is the co-owner?  

Ownership consists of various types and when two or more people jointly own a property, then the people who own it are known as the joint owners or co-owners.

  • How and when can the co-owner transfer without the other co-owner’s consent?

in usual practice, transfer of the property can be done by any co-owner with the knowledge and consent of other co-owners, which means, the decision is simultaneous and can not be taken by one. However, if the other co-owners give that right to one co-owner, then he can easily take the decision solely without the involvement of others.

  1. Income Tax Act:

Section 24 of the act provides that if the husband and wife are co-owners of the property, then they are individually entitled to claim deductions, henceforth, for the same reason, there is wide scope for jointly held property in law.

  1. Hindu Marriage Act, 1955:

Section 27 of the act emphasises the situation when the couple is not able to divide the marital property among themselves after their divorce or say, they are unable to come to an amicable division of the property they jointly own, then it is on a competent judge to decide and come to just and fair distribution of the property.

What are the types of co-ownership?

People enter into these kinds of ownership for various reasons. Sometimes people do it to purchase land, which otherwise they cannot; some people do it for saving their finances, and other reasons. It is pertinent for them to understand the depth of it; to analyse the consequences they may face in case any of the co-owner dies, or file the divorce petition. It is best if these conditions are discussed before the execution of the contract between the co-owners.

Let us first understand various types of co-ownerships:

  • Tenants in common- Tenancy in common generally means purchasing property by two or more people, not necessarily equally contributing to purchase the same. It is considered that all the tenants have their shares and have rights and liabilities in the ratio they contributed to own it, except the right to survivorship. It can either be created by will or as per other laws if someone dies.
  • Joint Tenancy- It is the kind of co-ownership wherein two or more persons can own the property in equal shares. This kind of co-ownership gives the right to the survivor to get the share of the deceased too, meaning, therefore, co-owners have the right to survivorship. Rights, interests, nature, duration, etc, of co-ownership, are similar in the entire property. In this present kind of co-ownership, the deceased’s heir or anyone else does not have any right on the property, only other surviving co-owners have right on the property; all they need to do is to obtain a death certificate of the deceased and record a new deed. Therefore, it is undeniable fact that under the Joint Tenancy, both the co-owners (spouses) shall have equal interest, bear equal time, have equal title and possession of the property. 
  • Tenancy by Entirety- This is the most relevant kind of co-ownership in the present article which entails the existence of co-ownership/joint tenants between the husband and the wife, wherein they are sharing equal shares in the property. Spouses have the right to survivorship, which means if any of the spouses die, another spouse would get the entire property. There are only three ways through which the said co-ownership can be terminated-

  1. Divorce;
  2. Death;
  3. Mutual agreement between both the co-owners (i.e., husband and wife).

This specifies that the share of any co-owner/ spouse cannot be transferred to the third person, however, the interest of one spouse can be transferred to the other one.

What are the rights of the co-owner?

Major rights of the co-owners are:

  • Right to possession- all the co-owners have the right to peaceful possession of the property; they may transfer the right to possession to other co-owners as well. They may choose to possess and enjoy their share of property separately, or each co-owner, with mutual consent, may choose to share the entire property;
  • Right to use- Co-owners have the right to use the property irrespective of their investment/contribution in purchasing the same. They may transfer their rights to other co-owners too.
  • Right to dispose of the property- different tenancy have different ways to dispose of the property. Upon the death of any of the co-owners, Tenancy in common does not have the right to survivorship whereas Joint tenancy and tenancy by the entirety does have this right.

How can unequal shares be mentioned?

We have already discussed tenancy in common. Tenancy in common is also known as unequal shares in the property. To understand the concept of unequal shares, it is important to understand how exactly the property was purchased by the spouses or say what kind of co-ownership they possess.

As mentioned above, when two or more people purchase a property together, they become tenants in common/ co-owners. They all have their respective shares and interests in the property, not necessarily equal. Tenants in common can be relatives/ non-relatives, acquaintances, etc. A major reason for them to enter into the co-ownership is to own a property. Irrelevant is the fact that they may hold the property in any ratio in which the contribution is made. All the co-owners have the right to enjoy the property even if they hold a small share.

The most pertinent point in this arrangement of co-ownership is that they don’t have survivorship rights. Hence, when any of the co-owner dies, his share is transferred through a will/ deed or by the relevant law to another person. The person who gets the share will become a co-owner along with the other tenants in common.

How does the inheritance work when one spouse passes away?

This is a case where Joint tenants agree with the idea of sharing the property life-long. This occurs when both the owners are married to each other while purchasing the property. They own an equal share in the property and enjoy it as they desire to. Little did they think about the day when one of the spouses dies early. Nevertheless, this is how the arrangement in joint tenancy is done. When one spouse dies, the surviving spouse would, by default, get the entire share of the property.

Right to survivorship (of the living spouse) is the most essential feature under this tenancy and not the descendants. Henceforth, no one else but the living spouse would get the entire share of the deceased.

Therefore, the property can be disposed of by the consent of both spouses. One spouse cannot sell out the property without getting any consent from the other spouse.

How is it handled in case of divorce?

When the spouses enter into any kind of permanent agreement, the act demonstrates their intention to maintain their relationship forever. Buying a property jointly is one such act. Modernization has equipped women with a better understanding regarding financial securities, saving finances, etc. Henceforth, buying a property together is an example of one such act. Both the co-owners equally contribute to buying the property.

Questions arise when the spouses decide to annul their marriage. Who gets the property? Does the wife also get their share of the property?

The answer is yes, a wife gets a share in the property. She is the co-owner along with her husband, both before or after divorce. If the wife does not contribute to purchasing it even though her name is registered, she might not get the share in the property. Therefore, contribution in purchasing the property plays an essential role while dealing in such kinds of cases.

After divorce, if they can come to an amicable settlement, they would get the shares of the property as finalised between them. Any co-owner can buy the shares of the other co-owner. Otherwise, doors of the court are always open for a peaceful settlement.

 

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