People often get confused between these two terms. I have heard people who use the terms partnership and co ownership synonymously. But did you know the difference between partnership and co ownership exists. In this answer we will understand the difference between the two terms and the basis on which they differ.


There are a few factors which establish the distinction between partnership and co ownership. These factors are:
Factors | Partnership | Co ownership |
Creation |
Partnership arises out of contract |
Co ownership can arise via contract or operation of law |
Nature of Interest |
Partnership arises out of a common interest |
Co ownership may not necessarily arise out of common interest |
Transfers |
A partner doesn’t hold rights to transfer his/her part of share without prior consent of all the partners |
A co-owner doesn’t seek permission to transfer his/her share |
Claim of Partition |
A partner cannot claim partition of the property or shares |
A co owner can claim partition for the part of property owned by them |
Profit and Loss Sharing |
The profit and loss sharing in a partnership is likely but based on a contract |
A co ownership may not arise out of profitability |
Now that we have ascertained factors of difference between partnership and co ownership, let us look at what is the actual meaning of partnership and co ownership.
Partnership is understood as an association between two or more people which arises out of a common interest to earn profit. Co ownership, however is a joint ownership of a property which may arise out of no business motive.
I hope the difference between partnership and co ownership is clear now.
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Co-ownership and partnership are both defined by the Indian Partnership Act of 1932, however they differ significantly. The main difference between partnership and co ownership is that a co-ownership is a method of jointly owning an asset, whereas a partnership is a business arrangement between individuals.
Co Ownership Vs Partnership
You can refer the below given table to understand the differences in detail,
Partnership |
Co-Ownership |
A partnership arises out of a contract between two or more individuals who agree to share profits and losses from a business venture. |
Co-ownership can arise either through a contract or by operation of law. |
Partnerships are governed by the Indian Partnership Act, 1932. |
Co-ownership typically involves joint ownership of property or assets. |
Partners are personally liable for the debts and obligations of the partnership. |
Each co-owner is personally liable for their share of the property and any associated debts. |
Partners collectively manage the business and make decisions together. |
Co-owners have equal rights and responsibilities regarding the property. |
Profits and losses are shared according to the partnership agreement. |
Profits from the property are shared according to each co-owner's share. |
Partnerships are not separate legal entities; they do not have a distinct legal identity apart from the partners. |
Co-ownership does not create a separate legal entity; the property is jointly owned by the individuals. |
I hope this helps you understand the differences.
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The difference between co ownership and partnership

is as follows:
Partnership:
A partnership is primarily a business relationship where two or more individuals or entities come together to carry on a business.
Partnerships can be registered or unregistered. While registration is not mandatory.
In a partnership, partners have unlimited personal liability.
Partnerships are typically managed by the partners themselves.
Partnerships are not separate legal entities for tax purposes.
It
can be dissolved by mutual agreement, bankruptcy of a partner, or as specified in the partnership agreement.
:
Co-ownership refers to the joint ownership of property, by two or more individuals or entities.
Co-ownership may or may not involve registration, depending on the nature of the property.
Co-owners are typically not personally liable for each other's actions or debts related to the co-owned property.
Co-owners can make decisions collectively or as outlined in the co-ownership agreement.
Co-ownership may not have a direct tax implication.
Co-owners can sell or transfer their share of ownership in the property.
This is the difference between co ownership and partnership
.
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Co-ownership and a partnership are two separate terms. Co-ownership is the term used to describe when more than one individual owns an area of property. In a partnership, two or more people work together to run a single enterprise for profit. Shreya Singha has explained the difference based on 5 factors. Scroll down to get more information on Co ownership vs Partnership.
Partnership vs Co ownership
Check out the difference between partnership and ownership below:
Aspects | Partnership | Co ownership |
Objective |
The aim is to start a business and earn money. |
Co-ownership is not intended for business use. |
Number of Partners |
Maximum: a) 20 for organisation b) 10 for banking |
No limit |
Agency Relations |
A partner acts as the other partners' agent. He is able to hold them accountable for his regular course of business actions. |
A co-owner is not the other co-owner's agent. Every co-owner is entirely accountable for his own actions. |
Investment Rights |
A partner has the right to seek remuneration for whatever expenses he makes for the company. |
If a co-owner invests money in the property's development, he has no legal right to ask for the refund. |
Minor |
A minor is unable to get themselves into a contract and, as a result, cannot join an enterprise as a regular partner. |
A minor can share ownership of a property. |
I hope you got an understanding of partnership and co ownership difference. If you have more queries, you can mention them in the comment section below.
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What is the difference between partnership and co ownership?
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2021-07-28T17:45:19+00:00 2023-07-07T20:30:14+00:00Comment
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