{"id":31681,"date":"2021-08-07T14:38:52","date_gmt":"2021-08-07T09:08:52","guid":{"rendered":"https:\/\/www.squareyards.com\/blog\/?p=31681"},"modified":"2023-08-31T15:39:33","modified_gmt":"2023-08-31T10:09:33","slug":"property-ownership-propamc","status":"publish","type":"post","link":"https:\/\/www.squareyards.com\/blog\/property-ownership-propamc","title":{"rendered":"Property ownership"},"content":{"rendered":"

Property ownership\u00a0is the exclusive rights and control over property, which can be land or real estate, intellectual property etc. Ownership of land is also known as <\/span>freehold ownership.<\/p>\r\n

1. Ownership of Property After a Death<\/h2>\r\n

Ownership of property after death can be tricky because it depends on the circumstances. Contrary to popular belief, the surviving spouse does not automatically inherit the property. It depends on the terms of the will. If there is no will, it becomes a part of the deceased owner\u2019s estate. \u00a0This often results in a family dispute resulting in decades-long legal battles.<\/span><\/p>\r\n

Single ownership<\/h3>\r\n

In cases of single ownership, if the deceased has left a will, then the person mentioned inherits the property. Otherwise, the laws of the country (Laws of succession) apply<\/span>.\u00a0Usually, the property is divided between the spouse, the children, and the living parents.<\/span><\/p>\r\n

Joint property ownership<\/h3>\r\n

Ownership of a property after the death of a joint owner depends on-<\/span><\/p>\r\n

Tenants in common<\/h3>\r\n

Suppose two or more people purchase a property, but each person\u2019s share is not specifically mentioned. In that case, it is assumed to be an equal share or a \u2018tenancy-in-common.’ All the co-owners can use the entire property.\u00a0<\/span><\/p>\r\n

If one of the <\/span>house owners dies, the share in the property does not pass to the other co-owners. Instead, it passes to the legal heir or the person mentioned in the will of the deceased. The heir becomes a co-owner along with the other surviving co-owners. This usually happens when siblings buy property together.<\/span><\/p>\r\n

Joint tenancy<\/h3>\r\n

\u00a0It is similar to tenants-in-common. However, in joint tenancy, it is required for all the <\/span>house owners\u00a0or\u00a0co-owners to take possession of the property at the same time in the same deed and with equal share. Also, when one joint tenant dies in joint tenancy, the share automatically passes on to the surviving joint tenants.\u00a0<\/span><\/p>\r\n

Tenancy by entirety<\/h3>\r\n

\u00a0This special form of <\/span>joint ownership by a married couple, each owning 50% of the property. Neither spouse can sell the property without the consent of the other. Similar to joint tenancy, the <\/span>house owners must acquire the property simultaneously and in the same deed, and the two co-owners must also be married. On the death of the co-owner, the share automatically passes on to the surviving co-owner. \u00a0This type of <\/span>joint ownership can be terminated by divorce or mutual agreement of both spouses. However, such a termination will change the type of ownership to ‘tenancy-in-common.’<\/span><\/p>\r\n

The best way to avoid legal hassles is to ensure that the <\/span>owner of a property makes a will noting who owns what and who the designated beneficiary will be.<\/span><\/p>\r\n

2. Types of Property Ownership with Pros & Cons<\/h2>\r\n

There are different types of property ownership. Each type has its advantages and disadvantages. \u00a0There are different tax and liability treatments, so it is important to understand which type is most beneficial.\u00a0<\/span><\/p>\r\n

a) Sole Ownership<\/h3>\r\n

Sole ownership is when only one person owns full <\/span>title to property. The sole <\/span>owner of a property has the full decision making power for the property, such as how to use, rent, renovate or sell.\u00a0<\/span><\/p>\r\n

Pros-<\/strong><\/p>\r\n

In case the owner wants to sell\/renovate the property, they can do so without requiring any approval. \u00a0In <\/span>joint ownership, property decisions can take a long time because approval is required from co-owners.\u00a0<\/span><\/p>\r\n

Cons-<\/strong><\/p>\r\n

Only one person has to pay the money (while purchasing) in a sole ownership, which can be financially challenging. Also, a sole ownership may cause future legal disputes on <\/span>property ownership\u00a0if the owner dies without a will.<\/span><\/p>\r\n

Joint Ownership<\/h4>\r\n

There are various types of <\/span>joint property ownership. The co-owners are entitled to equal rights, income, and use of the property.<\/span><\/p>\r\n

b) Joint Tenancy<\/h3>\r\n

Joint tenancy is when two or more persons share equal interests in the property. This type of tenancy is very common between spouses though not limited to married couples only. Joint tenancy agreements give the right of survivorship to <\/span>house owners.\u00a0<\/span><\/p>\r\n

Pros-<\/strong><\/p>\r\n

If one of the co-owners dies, the ownership passes on to the surviving co-owners. This allows <\/span>property ownership to be passed on easily. The property deed must clearly state that it is a joint tenancy and mention the rights of survivorship are applicable.<\/span><\/p>\r\n

Also, the co-owners are protected from any unauthorised sale by any of the co-owners.<\/span><\/p>\r\n

Cons-<\/strong><\/p>\r\n

If one of the co-owners has any debts, then a creditor is legally allowed to collect the dues by forcing the asset to be sold. In a sale, each co-owner has to consent to the sale, which becomes time-consuming.<\/span><\/p>\r\n

c) Tenancy in Common<\/h3>\r\n

This happens when a property is owned by two or more persons at the same time. But the <\/span>joint property ownership may be divided into different ratios. Therefore, the share of use, rights, or income may vary.<\/span><\/p>\r\n

The rights of survivorship are not included here. If one of the co-owners dies, the deceased\u2019s share passes to the legal heir. The legal heir enters into a tenancy-in-common agreement with the other co-owners.\u00a0<\/span><\/p>\r\n

This is commonly found in commercial property and land ownership.<\/span><\/p>\r\n

Pros-<\/strong><\/p>\r\n

The co-owners are protected from any unauthorised sale\/changes by any co-owners as everyone has to approve.<\/span><\/p>\r\n

Cons-<\/strong><\/p>\r\n

In any sale\/renovation, each co-owner has to approve, which becomes time-consuming.<\/span><\/p>\r\n

d) Property ownership by Corporation\/Trusts<\/h3>\r\n

Companies have separate legal entities and can hold <\/span>title to property.<\/p>\r\n

In the case of a trust, a designated trustee manages the <\/span>property ownership under the instruction of a trustor. If the trustor dies, then their interest is passed on to the designated beneficiaries.<\/span><\/p>\r\n

Pros-<\/strong><\/p>\r\n

The company can earn rental income or use it in the business. Income earned from such properties ultimately goes to the shareholders.\u00a0<\/span><\/p>\r\n

Cons-<\/strong><\/p>\r\n

The property is an asset of the company, and it can be forced sold by creditors to collect debts. Also, if anyone suffers an injury on the premises, the company can be sued.<\/span><\/p>\r\n

e) Freehold and leasehold property ownership<\/h3>\r\n

Freehold ownership\u00a0means any property which is “free from hold” of anyone other than the owner. The owner has absolute rights over the building and the land.<\/span><\/p>\r\n

In a leasehold property, the house belongs to the owner but not<\/span>\u00a0the land. After the term is over, the property goes back to the <\/span>freehold owner. Practically, such terms are usually for 99 years and are renewed similarly.\u00a0<\/span><\/p>\r\n

Pros-<\/strong><\/p>\r\n

The leasehold property owner does not have to pay upfront for the land, which is a huge saving.<\/span><\/p>\r\n

Cons-<\/strong><\/p>\r\n

If the <\/span>freehold owner of the land does not plan to continue the lease, it may result in a legal dispute.<\/span><\/p>\r\n

3. Transfer of property ownership in India with regulations<\/h2>\r\n

There are 2 main ways of <\/span>transferring ownership of property in India-<\/span><\/p>\r\n