An agreement in which two or more persons agree to jointly own property is called a ‘joint ownership agreement’. This may be done for a variety of reasons such as convenience in transactions, succession preferences, taxation benefits, etc. There are different kinds of joint ownership agreements which state and govern the terms of co-ownership in each.
Tenancy in Common
Tenancy in Common is a form of joint ownership of property wherein each owner has a separate and distinct share in the property.
The ownership interest may be differential amongst the members of the Tenancy in Common and is specified in the Ownership Agreement beforehand. Click To Tweet
An important feature that distinguishes Tenancy in Common is that there is no concept of ‘Survivorship’ as in Joint Tenancy. This means that when one of the co-owners dies, the property does not automatically pass on to the remaining survivors. Rather, it is passed on to the heirs or successors of the deceased. It is important to note that title to the property need not be obtained by all the co-owners at the same point of time.
For example, A and B may be tenants-in-common with an equal share for two years after which, they agree to add C to the ownership. Now A and B may decide to own 25% of the property whereas C may own 50% of the property. Each co owner’s share is, therefore, distinct. Section 44 of the Transfer of Property Act, 1882 provides for the transfer of his share of property by a co-owner and the rights therein.
Joint Tenancy
Joint Tenancy on the other hand, is distinguished by the features of ‘Unity of Title’, ‘Unity of Time’, “Unity of Interest’ and ‘Unity of Possession’, which mean that the owners procure the same and equal title of the property at the same point of time, by virtue of the same title deed.
The rule of survivorship is a distinguishing feature of this type of ownership, according to which, upon the death of one of the co-owners, his share is passed on to the remaining surviving co-owners and not his legal heirs.
A special form of Joint Tenancy is ‘Tenancy in Entirety’ wherein a husband and wife agree to hold a property with equal share each. Neither can sell the property without the other’s consent. The rule of survivorship applies here. Therefore, a Tenancy in Entirety comes to an end only upon divorce, death or by way of mutual agreement between the couple.
It is important to note that unless the joint ownership agreement specifies that the form of ownership is a ‘Joint Tenancy’, the assumption is that it is a Tenancy in Common.
Succession laws under different religions are a very important consideration for joint ownership of property in India. For example, the Hindu Succession Act, 1956 provides for a co-parcenary form of ownership between the members of the family. In such scenarios, the terms of the jointly owned property will be read in accordance with the religious laws of succession.
While purchasing any jointly owned property, it is very 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.
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