Various forms of property ownership in India

Deciding the name of any person for the ownership of any property may prove to be a daunting task. In the following text, we will have a deep insight into the rules and guidelines regarding the inheritance of a property in India.

Individual Ownership

The term individual ownership simply stands for that a single person has the authority to sell, rent out or lease a property. Generally, no possibility of any kind of conflict or dispute generates in cases of individual property ownership but problem can arise when the owner is not staying in the premises of the same property. Under this type of condition, the owner can give power of attorney to someone who is very close to him and reliable beyond any doubts.

Joint Ownership

Joint ownership means that a particular property has more than one owner. In the cases of joint ownership, there is generally no need for a power of attorney, as each owner can act in respect of the property. To sell or rent out a jointly owned property, the signatures of all the owners are usually necessary, and it is almost impossible to change the decision once the deed is signed by all of them. In the case of a husband and wife, if a permanent split such as divorce takes place, the property is divided according to each spouse’s actual share and contribution; it is not automatically split equally unless the law or the deed so provides.

A common and important misconception must be cleared here. Joint ownership comes in two distinct legal forms - “joint tenancy” and “tenancy-in-common” - and they behave very differently when an owner dies:

• Joint tenancy carries a “right of survivorship”. When one joint tenant dies, his or her interest automatically passes to the surviving joint tenant(s), and not through a will or the laws of succession. This is the rule many people wrongly assume applies to every jointly held property.
• Tenancy-in-common has no right of survivorship. Each co-owner holds a defined (notional) share, and on death that share devolves on the owner’s legal heirs under a will or the applicable succession law - the surviving co-owner does NOT automatically become the sole owner.

Crucially, Indian law does not presume survivorship for property held by ordinary co-owners. Unless a deed clearly creates a joint tenancy with an express right of survivorship, courts in India presume a tenancy-in-common. That means, as a default, the share of a deceased joint owner passes by will or succession to that person’s heirs, and a will most certainly does make a difference - it determines who inherits that share. The major exception is the interest of a coparcener in a Hindu Undivided Family (HUF) governed by the Mitakshara system, where survivorship principles can operate (subject to statutory modifications, including the equal coparcenary rights now given to daughters). Because survivorship is the exception and not the rule, anyone buying property jointly should record in the deed exactly how the property is held and what is to happen on the death of an owner, and should make a will rather than assume the survivor will automatically take everything.

Co-ownership

The concept of co-ownership is highly recommendable if two people are making an investment in the same property. In practice, ordinary co-ownership in India usually takes the form of a tenancy-in-common, so each owner holds a definite share that he or she can sell, gift, or leave by will. Co-ownership ensures the relevant share of property as per the investments made by each owner, and the share may depend upon the magnitude of investment. In case no percentage of investment or ownership is specified in the deed, each owner is presumed to have an equal share in the concerned property. To avoid legal complications, the co-owners should execute a written co-ownership agreement that specifies each person’s share and makes clear that, on the death of an owner, that owner’s share passes to the heirs or beneficiaries named in his or her will (and not automatically to the other co-owners).

Nomination

The term Nomination is legally meant for the apartments in different kinds of co-operative societies. The nominee of a particular property cannot be proclaimed as an owner. Even after the death of original owner of the property, the concerned nominee cannot claim to be an owner until it gets found that the original owner has mentioned the nominee as his successor. The nominated person can become only a member of the society and a nominal owner after the death of original owner, but to be a legal beneficial owner, it is necessary for him or her to be named in the will.