Property ownership advances beyond just acquiring a property in one’s name. It involves a spectrum of structures, distinctive practicals, and legal considerations. Based on the chosen ownership type, property owners may confront diverse challenges and tax liabilities. Thus, it becomes imperative for property owners to understand the intricacies of property ownership as these can substantially influence property inheritance and taxation. In this guide, we unravel the different layers of property ownership, providing you insights and guidance for property purchase:
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What Is Property ownership or Property title?
A property title is a document that authorises an individual to be the legal owner of a property or piece of land. Titles outline the possession and ownership of both real and private property. Personal property can be anything, such as a car, artwork, vehicle, etc., whereas real property can be real estate and other properties that give an individual utilisation and ownership rights. In the case of selling a real estate property, the property should be transferred in the name of the new owner and should get clearance for any transfer to happen. There are different types of property ownership with its own set of pros and cons. And, the transfer of property depends on the situation as to how the property ownership needs to be transferred in the case of divorce, sale, death, or any other circumstances.
Types of property ownership
When it comes to acquiring a property, people usually are unaware of the types of ownership that prevail in the country and have their own legal implications. This usually results in making wrong purchase decisions that ultimately result in unintended consequences. However, here, we will discuss the different types of ownership to clear the air.
There are three kinds of ownership:
- Individual ownership/sole ownership
- Joint-ownership/ Co-ownership
- Property ownership by nomination
Now, let us understand all the above-mentioned ownership in detail:
Individual Ownership/ Sole Ownership
As the name suggests, this kind of ownership exists when an individual alone has the sole right of being the rightful owner of a property. Irrespective of whether any other party has helped the owner with the arrangement of funds, the property solely belongs to the owner. No one else can claim any right over that particular property if that property is registered in the name of the buyer.
Let’s take, for example, if Mr. XYZ has taken help from his dad to arrange funds for buying a home but has the house registered in his name, the property stands to be under the ownership of Mr. XYZ. His father, who had helped him to buy the house, cannot claim the property in such a case as the property is individually registered in the name of Mr. XYZ.
Individual ownership proves to be beneficial for the property owner in many ways, and they hold the legal rights to decide if they wish to sell or not to sell the property. When private land properties are owned by individual ownership, they are not legally bound to seek permission from anyone if they wish to sell the property and consent from no other party will be registered for the same.
However, if the owner dies, then the property is transferred to the person as mentioned in their legal will. If no will exists, the property will be transferred to the legal heir as per the applicable ownership in property law of the country where the person lives.
Joint ownership/ Co-ownership
Co-ownership is the case when a property is owned by more than one individual. Such properties that are held jointly by multiple individuals are acknowledged as being under joint possession. The people who jointly own a property are known as co-owners or joint owners. However, joint ownership can exist in several ways. Here, we mention the types of co-ownership of a property:
- Joint Tenancy
Joint tenancy is the case when the property belongs to the co-owners equally. Such owners hold an equal share of the property.
- Tenancy in entirety
Such joint-ownerships exist between couples who are married, and each person is officially entitled to the property held in co-ownership. In such a case, if any one of them wishes to make any changes in their share of property, they can do the same after seeking consent from their partner. In other cases, if one partner dies, then the surviving partner automatically gets complete ownership of the property after the death of the partner.
- Tenancy in common
Tenancy in common is the co-ownership of property owners when two people jointly hold ownership of a property but do not hold equal rights over the property.
- Coparcenary
This kind of joint ownership of a property stands eligible for Hindu undivided families. The Hindu law lacks provision for multiple arrangements of collective land ownership in India, and hence, the coparcener form of ownership stands applicable in such cases wherein each coparcener attains a share of the property as a birthright. Though this seems somewhat similar to joint tenancy, in such cases, an unborn child has the right to own an equal share of the property owned by a Hindu undivided family. Every owner of the property can have their own call as to how the property needs to be divided amongst all the property owners in the future. This can be a complicated process if there arises a conflict and difference in the opinions of all the joint owners.
Property ownership by nomination
Legal ownership of property by nomination is a common scenario these days and is practised by most property owners so that they can pass on their possessions to someone whom they wish. This also ensures that their property does not go unclaimed or become a legal battleground after the death of the property owner. Through the nomination process, a property owner can confer someone to inherit their property and other belongings in the event of the demise of the property owner.
Usually, such ownership is commonplace in housing societies where it is imperative for the members to add a nominee during the very initial phase of seeking membership. Further, in any unprecedented situation, if the owner dies, the property is transferred to the nominee as nominated by the owner. However, it is important to know that the nominee does not attain legal ownership of the property title and instead becomes the trustee of the property as per the Supreme Court verdict 1983.
Further, the nominee has to hand over the property to the legal heir of the demised property owner. This indicates that the nominee cannot indulge in the sale or any kind of division of the assets. Thus, it is essential for any potential property buyer to confirm that they are buying the property from the real owner and not the nominee to prevent legal disputes and complexities.
Property Ownership: Rules and Regulations
Acquiring knowledge about property ownership and the rules associated with it is crucial, as these laws play a vital role in determining who is deemed to be the legal owner of a property. These ownership laws provide clear titles to the ownership of the property and also protect the rights of an individual. Below mentioned are a few aspects of the legal framework that explain why the rules and regulations are indispensable:
Property registration
Property registration is one of the key factors of property ownership, and in multiple countries, it is essential for the property owners to register their property with relevant government regulations. Registration acts as evidence of ownership and also lets the owner have a clear title. Failure to do the property registration can result in unnecessary legal disputes and complications.
Let’s take, for example, two people purchase a piece of adjacent land in the same area. Suppose one of them registers their property and the other doesn’t, if there arises a conflict over the shared boundaries in the future, the individual who has registered his property will stand strong in such a case owing to the clear title they hold.
Land use regulations
Governments routinely introduce land use regulations to facilitate systematic development to protect the interests of property owners. Such regulations specify the authorised land uses, acceptable building structures, and any limitations in concern with property usage. The different rules and regulations help preserve the value of property and foster a harmonious setting for residents and businesses alike.
Transfer of Property
When one wishes to transfer or pass on their property to someone else, then there are legal processes involved. There are various elements involved, such as contracts, documentation, titles, and deeds, to ensure a smooth and steady transfer of property ownership. Additionally, there are certain taxes and fees levied on the property and associated formalities such as notary and witnesses that stand as proof for the validation of property transfer. Having a clearly outlined legal structure that protects the interests of both property sellers and buyers can help mitigate the risk of fraudulent activities and cheating.
Eminent domain
Eminent domain is the authority granted to public authorities to acquire private property for public benefit or use against fair compensation offered to the property owner. Usually, private properties are procured by the government for the construction of highways and similar infrastructural development which can raise concern amongst property owners. Thus, proper legal frameworks are in place to protect the owner’s public interest and property rights, ensuring that they receive fair compensation against the property.
Environmental Regulations
Environmental concerns are also an important consideration in the case of property ownership, as there are certain rules and regulations implemented by the government to prevent pollution, promote a sustainable environment, and preserve natural resources. Such regulations, as imposed by the government, may limit the use of property and forbid certain activities such as construction and other types of development for the protection of the ecosystem.
All the factors mentioned above encourage property owners to be responsible for their property and develop a necessary structure for property ownership. Gaining knowledge about the same and taking appropriate steps to adhere to the legal implications help individuals to be confident while investing in property besides considering the wellbeing of the society.
We hope that this guide helps you steer through the complexities of property ownership and the various types of property ownership that exists. Inheriting a property, transferring the title, claiming ownership can be complicated and thus requires extensive insight for competent handling of such a task. But worry no more, you can always seek help from No Broker professionals because they are well-versed with all the property laws that prevail in the country and can help you make the right decisions.
They offer a comprehensive set of services to simplify the experience of property owners with a personalised touch to empower their clients with tailored solutions. Their experts help the clients navigate through the complexities of legal implications with ease and also provide financial support owing to the partnership that exists between No Broker and other financial institutions.
So what are you waiting for? Contact them now and schedule a consultation to transform your real estate goals into reality!
Frequently Asked Questions
Q1. What documents are required as proof of ownership of property?
A1. Basically, the registry and title plan of the ownership of the property are required to prove your ownership. However, you should also have handy the tax receipts, record of rights, and survey documents to have strong evidence of ownership.
Q2. Which is the most important document required while buying a property in India?
A2. The Title deed, commonly known as a sale deed is a mandatory document that one needs to possess to hold authority of a property.
Q3. How many properties can I own or register under my name?
A3. There are no limitations to owning a property in India. One can own as many properties as they want based on their property purchase ability.
Q4. What is the significance of checking the Latest Tax Receipt before purchasing a property in India?
A4. Checking the Latest Tax Receipt is crucial to confirm that the property owner has cleared all relevant property taxes. It ensures that the buyer is not inheriting any outstanding tax obligations related to the property.
Q5. Is it mandatory to do property registration?
A5. Yes, under the Registration Act 1908, every time a property is sold or transferred to another owner, it is mandatory to register the property under the name of the new owner. It mandates every immovable property to be registered each time there is a change in ownership.
