Tips to Avoid Complications in Property Co-Ownership
Nov 06, 2017 Legal Guidance
Many people opt for co-ownership in property due to several beneficial reasons. Because having a co-applicant in a home makes you eligible for a higher loan amount and both of the applicants can enjoy tax benefits. But then as you know ‘there is no free lunch’; hence for all the benefits, you have to pay something. Such as the responsibility to repay the home is held on both the applicants. If one applicant is unable to repay the loan then it becomes a liability for the other one. Also, the credit history of both the applicants gets affected even if any one of them is a defaulter. The chance of getting another loan of higher amount gets limited even if you are a co-applicant.
If property shares for both the co-owners are not specified clearly in the sale deed, then it is assumed that both the owners have equal shares. In case some problem arises between both the partners then this could be a reason. And if both the co-owners decide to divide the property then the ownership can get more complicated. In case of builder floors, dividing the property in terms of different floors can be done. But in case of flats and apartments of becomes more complicated. Then if you are in a financial crisis and plan to sell the property, it gets difficult without your partner’s approval. The co-owner has the first right to buy your property share if you are selling it. Hence, in order to sell it to an outsider, you will need your partner’s permission that he or she does not want to buy the share.
How to avoid such complications?
In the beginning only, both the co-owners should get into a purchase agreement and include some agreed terms and conditions. In such cases, if there some problem arises in future then both the partners can sort out through some negotiations. This step avoids the complication of getting pulled into court cases.
Also make sure that the co-owner you are choosing is someone whom you trust to avoid any confusion, hassles, miscommunication or problems in future. Be very clear since the beginning of your deal and mentions everything starting from property shares, liabilities, responsibilities related to the property. All these steps will help in avoiding any kind of complication while maintaining a healthy relationship with your co-owner.
If property shares for both the co-owners are not specified clearly in the sale deed, then it is assumed that both the owners have equal shares. In case some problem arises between both the partners then this could be a reason. And if both the co-owners decide to divide the property then the ownership can get more complicated. In case of builder floors, dividing the property in terms of different floors can be done. But in case of flats and apartments of becomes more complicated. Then if you are in a financial crisis and plan to sell the property, it gets difficult without your partner’s approval. The co-owner has the first right to buy your property share if you are selling it. Hence, in order to sell it to an outsider, you will need your partner’s permission that he or she does not want to buy the share.
How to avoid such complications?
In the beginning only, both the co-owners should get into a purchase agreement and include some agreed terms and conditions. In such cases, if there some problem arises in future then both the partners can sort out through some negotiations. This step avoids the complication of getting pulled into court cases.
Also make sure that the co-owner you are choosing is someone whom you trust to avoid any confusion, hassles, miscommunication or problems in future. Be very clear since the beginning of your deal and mentions everything starting from property shares, liabilities, responsibilities related to the property. All these steps will help in avoiding any kind of complication while maintaining a healthy relationship with your co-owner.
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