Joint Owners: Don’t Miss These 5 Clauses in Sale Deed

In one of our older posts, we wrote about joint ownership agreement and explained different kinds of agreements which state and govern the terms of co-ownership. While purchasing any jointly owned property, it is important to make sure that the exact form of ownership and terms between them is known to avoid any property claim disputes in the future.

In this post, we present you five most important clauses that you must include in your Sale Deed.  

Percentage of ownership

Case: Abhishek Kedia, a Bangalore based IT professional, invested in a property with his brother in 2015. He contributed 40%, while his brother paid the remaining 60% amount. Abhishek was under the impression that he has the rights over the property as he had paid about 40% of the total cost. Unfortunately, his brother betrayed him. The result? Never-ending case in the court.

Percentage of ownership is often missed in the Sale Deed. If the ownership is on an equal basis (50% each), then there is no scope for dispute. If the percentage ownership is not recorded, it becomes equal by default. Thus, in case you have pooled in 60% and the other party has contributed 40% of the total value, your Sale Deed should mention percentage ownership as 60:40.

In case of divorce/split

Case: Raj and Asha bought a property in Delhi soon after their marriage in 2014. To avail stamp duty benefits, they registered the property in Asha’s name. After three years, they decided to part ways.

During the good days, couples do not often bother to keep an account of contributions towards down payments or EMIs. Matters get complicated in those cases where the couple cannot decide their shares amicably, or they do not have documents to prove their share of ownership.

As mentioned in the first clause, clearly specifying the percentage of ownership is the easiest way to avoid such disputes.

Calling it a quit

Case: One of our followers on Quora asked, “I am a joint owner of a property, and now I want to take my profit and exit the property. Is it possible?”

It is advisable to lay down the exit route in case property is bought for investment purpose. There are ways in which one of the owners can transfer his/her share to another owner.

Home loan responsibility

Case: In 2018, when Ramanathan Rao retired, he decided to buy a property with his son from his retirement funds. They finalised a property in Mysore worth Rs 50 Lakh. Ramanathan pooled in Rs 25 Lakh, while his son took a home loan for the remaining amount. Bank include Ramanathan as the co-applicant. After three months of paying EMIs, his son lost his job, and the responsibility of paying EMIs came upon Ramanathan. This is despite him paying his contributions in advance.

Thus, it is advisable to include a clause in Sale Deed about the home loan default. If the property is sold off, then the sale proceeds can be used to clear the loan and the remaining amount can be divided equally between both the parties.

Self-occupation of the property

Case: Avinash bought a joint property with his brother in Chennai for rental income. At the time of buying property, Avinash and his brother were settled in Bangalore. So, they decided to split the rent equally. After some time, Avinash’s brother moved to Chennai and started staying in that property without paying him the rent.

Always include a clause in Sale Deed to address the scenario if one of the joint owners want to use the property for self-use. In Avinash’s case, his brother should pay him 50% rent.

Last words…

Being a joint owner, you should not shy away from discussing problems that may cause a dispute in future. It is better to list down such points and mutually agreed upon solutions in the Sale Deed.