Broadly, a property could be owned in two ways – one can be the sole owner of a property or one can own it jointly along with another person. However, the joint ownership of a property can be of many types, a topic we would discuss at length in this article. We will also examine how each category of property ownership impacts the rights and duties of the owners/joint owners.
What is property ownership?
Property ownership, commonly known as a property title, is a legal concept that defines the rights of an individual or entity to use, possess and transfer land or buildings. It represents the official recognition of who holds ownership of a property. A property title is usually documented through a deed, which includes the owner’s name and specific details about the property. This title provides various rights to the owner, such as leasing the property, transferring ownership or benefiting from its use. Ensuring that property titles are clear and undisputed is crucial in real estate transactions and when securing home loans.
Types of property ownership
There are three kinds of ownership:
- Individual ownership/sole ownership
- Joint-ownership/ Co-ownership
- Property ownership by nomination
Read on to learn about all three types of property ownership in detail.
Individual ownership/ sole ownership of property
When a property is bought and registered in the name of one individual, s/he alone holds the ownership title of the property. This type of ownership is known as sole ownership or individual ownership of property. It is pertinent to note that even if other parties have helped the owner to arrange funds for the property purchase, they do not have any right in the property, if the sale deed is registered only in the name of the principal buyer. The same is explained below with an example.
Suppose a buyer has taken help from his wife, while arranging for the down payment for a home purchase. Suppose that he also makes his wife a co-applicant in the home loan application. However, the property is ultimately registered in the name of the husband. In such a scenario, the property would be held individually by the husband. While it is correct that the wife will have a legal right over the property, because of the prevalent inheritance laws in the country, it will not have any impact on the fact that the property is owned solely by the husband.
Benefits of sole property ownership
Individual ownership is beneficial for the title holder in many ways. They hold the sole right to decide if and when they want to sell the property, legally speaking.
In the example we spoke of earlier, if the husband were to sell his house, he is not legally bound to take his wife on board. He can single-handedly decide what to do with his property. While the wife can claim her share in the sale proceeds, whether or not she gives her consent for the sale is immaterial as far as the legal formalities are concerned.
No permission from any other party would be required for the same. The division of such a property is also easier, because of the limited number of owners. When the owner dies, his property would be transferred under the provisions made in his will. If there is no will (this is known as the owner dying intestate in legal parlance), specific inheritance laws would apply and the property would be transferred accordingly among the legal heirs of the late owner.
Joint ownership/ co-ownership of property
When a property is registered in the name of more than one individual, the immovable asset is deemed to be under joint ownership. Those holding the title to the property in such ownership, are known as joint owners or co-owners of the immovable asset. It is pertinent to note that there is no difference between joint ownership and co-ownership of property under any law and the two terms can be treated as synonymous. There are several ways to own a property jointly. These include:
Joint tenancy
When the title deed of the property works on the concept of unity and provides each joint owner equal share in the property, the ownership is known as joint tenancy.
See also: What is undivided share of land
Tenancy in entirety
This form of joint ownership is nothing but joint tenancy between married people. In this system, married couples jointly hold the title of their property. In case any of the two wants to make any changes with respect to their share, they would have to obtain the consent of the other. In this case, the surviving partner will have complete ownership of the property in case of the demise of one partner.
Tenancy in common
When two or more people jointly hold a property without holding equal rights, the joint ownership would be known as tenancy in common.
Coparcenary
As the Hindu law does not provide for different types of joint ownership, the Hindu Succession Act, 1956, establishes the coparcenary form of ownership among members of Hindu Undivided Families (HUFs). In a coparcenary property, every coparcener acquires an interest by birth. This concept, which is somewhat similar to joint tenancy, allows an unborn child to have an equal share in an HUF property.
If a property is jointly held, each owner will have a say in the manner in which the property is disposed or distributed in future. Consequently, its sale and distribution would become a complicated process, if difference of opinions arise among the joint owners.
See also: Types of joint ownership of property
Fractional ownership
Fractional ownership of commercial properties is becoming increasingly popular. This model divides the cost of a property into several shares, which are then distributed among the fractional owners. It is typically a long-term investment with a defined lock-in period. Unlike Real Estate Investment Trusts (REITs), fractional owners have the option to select specific properties and retain full control over their investments.
Property ownership by nomination
Nomination is a process under which a property owner can give someone the right over his immovable property and other assets, in the event of his death. Property nomination has also become a common practice among owners, because by way of this, the landlord can ensure that the property does not remain unclaimed or become subject to litigation after his demise.
This form of property ownership is often seen in cooperative housing societies, which make it mandatory for members to nominate a person at the time of getting membership. In the event of the death of the owner, the property title is then transferred by the cooperative housing society to the nominee.
See also: How does nomination affect property inheritance
However, a nominee does not become the legal owner of the said property, because it has been transferred in his name and he has the possession. According to a Supreme Court verdict of 1983, a nominee is a ’trustee of the property‘ and is liable to hand it over to the late owner’s legal heirs.
According to a Bombay High Court ruling in 2009, this nominee would only represent the legal heirs of the late owner in the form of a trustee and have no ownership rights over the property.
This means a nominee would have no say in the sale and distribution of the property. Buyers of property must, hence, ensure that the seller is not a nominee but an actual owner, before entering into transactions in order to avoid any legal complications in future.
Property ownership: Rules and regulations
Understanding property ownership and its associated rules is crucial, as these regulations define legal ownership and protect individual rights. Here are some key aspects of the legal framework that illustrate the importance of these rules:
Property registration
Property registration is essential in India, serving as official proof of ownership and ensuring a clear title. Registering a property helps prevent legal disputes and complications. For instance, if two individuals purchase adjacent land and only one registers their property, the registered owner will have a stronger claim in case of boundary disputes due to their clear title.
Transfer of property
Transferring property ownership involves legal processes, including documentation, contracts, titles and deeds. These procedures ensure a smooth transfer and often involve fees, taxes and formalities like notary services and witnesses. A well-defined legal structure helps safeguard the interests of both buyers and sellers, reducing the risk of fraud.
Land use regulations
Land use regulations are implemented by governments to ensure organised development and protect property owners’ interests. These regulations outline acceptable building structures, permissible land uses and usage limitations, helping to maintain property values and create a balanced environment for both residents and businesses.
Environmental regulations
Environmental regulations are crucial in property ownership to promote sustainability, prevent pollution and protect natural resources. These rules may impose restrictions on property use and development to safeguard the ecosystem and ensure environmental stewardship.
Eminent domain
Eminent domain allows public authorities to acquire private property for public use, such as infrastructure projects, with fair compensation to the owner. Legal frameworks ensure that property owners receive appropriate compensation and their rights are protected during such acquisitions.
Laws governing property ownership in India
The following laws govern the different types of property ownership in India:
- Indian Contract Act, 1872: This act governs the formulation and execution of contracts, including those involving land. It outlines the rights and remedies available in case of a breach of contract.
- Transfer of Property Act, 1882: This act regulates the processes of selling, leasing, exchanging, mortgaging, and gifting both immovable and movable property, establishing the legal framework for property transactions.
- Indian Stamp Act, 1899: This act stipulates the payment of stamp duty and the registration processes required for various legal documents related to property transactions.
- Indian Registration Act, 1908: This act mandates the registration of all property transactions exceeding Rs 100 to confirm ownership and prevent fraud.
- Real Estate Regulation & Development Act (RERA Act), 2016: RERA aims to protect consumers by overseeing the real estate industry’s marketing and development activities, and it requires the registration of real estate projects to ensure transparency and accountability.
- Foreign Exchange Management Act, 1999 (FEMA): FEMA regulates the purchase and sale of property by non-Indian residents, protecting foreign investments and managing currency exchange related to property transactions.
Housing.com POV
Understanding the different types of property ownership in India is essential for navigating the real estate landscape. Property ownership can be primarily categorised into three forms, including individual ownership, joint ownership, and ownership by nomination, each with its own implications for rights and responsibilities.
Individual ownership provides sole control over the property, allowing the owner to make independent decisions regarding its use and transfer. Joint ownership, on the other hand, involves multiple individuals, each holding rights to the property, which can complicate decisions and transactions. Property ownership by nomination allows the owner to designate a successor, although the nominee does not hold legal ownership but rather acts as a trustee.
Familiarity with relevant laws, such as the Indian Contract Act, Transfer of Property Act, and Real Estate Regulation & Development Act (RERA), is crucial for ensuring clear and undisputed ownership. These regulations help manage property transactions, protect owners’ rights, and address environmental and land use concerns. Understanding these ownership types and legal frameworks will guide property buyers, sellers, and investors in making informed decisions and safeguarding their investments.
FAQs
What are the different types of property ownership?
The three types of property ownership are individual ownership, joint ownership and ownership by way of nomination.
What is joint tenancy?
When the title deed of the property works on the concept of unity and provides each joint owner equal share in the property, the ownership is known as joint tenancy.
What is the difference between sole ownership and joint ownership of property?
Sole ownership means the property is registered in the name of one individual who holds complete control over it. In joint ownership, the property is owned by two or more individuals, with each owner having rights to the property. Joint ownership can be further classified into types like joint tenancy, tenancy in common, tenancy by entirety and fractional ownership, each with different implications for how the property is managed and inherited.
Which documents are required as proof of property ownership?
To prove property ownership, you primarily need the title deed and property registry. Additionally, having records of rights, tax receipts and survey documents can strengthen your evidence of ownership.
How many properties can I own or register in my name?
In India, there are no restrictions on the number of properties one can own. You can own as many properties as you are financially capable of purchasing and registering.
