Impact of divorce on joint property in India

Impact of divorce on joint property in India

At the time of divorce, couples are often confused and uncertain about the division of property held jointly by them. The problem arises because eventuality of separation is not contemplated while purchasing jointly and there is no proper documentation.

Matrimonial responsibilities are no longer a domain of any single spouse. Both have to participate equally. Joint ownership of husband and wife, in property purchased after marriage, is a common feature. There are various reasons for preferring joint ownership in property.

  • Rebate in stamp duty for women investors
  • Tax benefits associated with joint ownership
  • Loan eligibility increases and repayment process become easy

When couples decide to part away, there are many issues to be addressed and the most important being the division of joint property. 

Many times, estranged couples have approached us to find a solution to their problem of division of property. We generally advise them to decide the same with mutual consent because litigation in this regard can be quite toiling.

Division of property at the time of divorce:

1.    Division by mutual consent: Division of property held jointly, can be smooth if there is a mutual understanding among the two for:

  • Ownership
  • Equity
  • Contribution

The partners get their share as per the equity/contribution.

2.    Proof of Contributions made for the purchase of property: The person who holds the title is the owner even if the other partner has contributed the purchase money in total. The other partner has to prove the financial contributions made by him to get the due share.

3.    Self-acquired property or inherited property: The self-acquired property is not part of any settlement at the time of divorce. The property to be inherited in the future does not become part of the settlement.  If the ancestral property has been partitioned or has devolved as per succession law and husband or wife have got their shares, then such property becomes self-acquired property qua the spouses and is not subject to settlement at the time of divorce.

4.    Joint loan: If the joint property has been bought on loan payable by both, then the parties have to split their liabilities accordingly, or one partner can bear the loan amount and be compensated by other.

5.    Disposal of joint property as per Section 27 of Hindu Marriage Act: The Hindu Marriage Act, 1955 contains a provision u/s 27 of the Act, for disposal of property presented jointly to the spouses, at or about the time of marriage. Joint property purchased after marriage is outside the purview of this section. However, if the parties have reached a compromise regarding such properties, Court may record the same at the time of passing the decree.

6.    Maintenance: Right to maintenance includes right to residence also after divorce. However, the right depends upon the terms of the decree of divorce. In Hindu law, any party can apply for the grant of permanent alimony and maintenance pendent lite. 

The amount of maintenance if not paid as directed, can be recovered from the property of the person liable to pay the same.

Smooth Sailing:

  • It is always advisable to engage a lawyer and prepare the documents relating to purchase of the property taking care of all reasonably expected eventualities. Proper documentation defining the claims based on equity makes division an easy affair later.
  • Selling the property and sharing the proceeds is also an option.
  • In case the joint property is a dwelling house, one can retain the house, and other can be compensated monetarily.

How to get divorce without mutual consent in India

How to get divorce without mutual consent in India

Some people fulfil their vows and stay together till death does them part, many don’t. A harsh truth about India is that parents are eager to marry off their daughters to NRIs, assuming these to be better, but not many to these marriages stand the test of time and end up in divorce, and the spouses going their separate ways. NRIs can either file a divorce in India or they can file it in the country that they reside in.

How to get Divorce in India

All the grounds prescribed in the personal laws are available to NRIs and citizens residing within the territory of India alike. Common grounds for Divorce found in Hindu Law and Special Marriage Act, 1954 alike are Adultery, Desertion, Cruelty, unsoundness of mind, etc.

Usually, it is not necessary for NRIs to stay in India till the divorce is finalized, they can execute a Special Power of Attorney (PoA) in favour of another person once the presentation of the plaint has been done. But, in order to give evidence, it is important that the person be present during the proceedings.

How to get a divorce in a foreign country where you reside?

The Indian Legal system does not recognize an Ex Parte divorce, thus, it has to be a divorce by mutual consent.

One can file for a divorce as per the foreign marriage laws prevailing in the country one resides in. After that, a declaration has to be sought in accordance with the Family Courts Act to make the judgement which has been passed by the foreign court valid in India. This declaration can only be sought which has the jurisdiction to try that particular case.

Don’t Worry Honey, Divorcees Get Money

DIVORCEES GET MONEY

Under the Indian law, alimony is the monetary compensation granted to the spouse who is unable to support himself/herself, by the other spouse, during or after the divorce proceedings. When this sum is given during the court proceedings, it is the maintenance amount, and the same term is used in the various statutes such as the Hindu Marriage Act, 1955. After separation the alimony may be taken as a lump-sump or a fixed payment which maybe given monthly, quarterly etc. Civil law such as The Special Marriage Act 1954 and Section 125 Code of Criminal Procedure are the common laws for all, however, The Indian Christian Marriage Act, 1872 and the Indian Divorce Act are applicable to Christians; Shariat Law and Dissolution of Muslim Marriages Act, 1939 and the Muslim Women (Protection of Rights of Divorce) Act, 1986 apply to Muslims and for Parsis, there is a separate marriage and divorce act.

Maintenance is granted only if an application is filed before it, by a man or a woman, and further the discretion lies with it to investigate and decide whether alimony is to be awarded or not. There are various factors that affect the amount of alimony, such as:

  1. The income of the wife if she is earning, will cause a reduction or increase in the maintenance granted by the court.
  2. The living standard of the wife/husband if they are not earning.
  3. If the wife remarries, the husband need not pay any maintenance after that.
  4. If husband is disabled and cannot earn, wife is asked to pay alimony.
  5. The longer the marriage, or the greater number of children and emotional investment, the larger the sum is expected to be.
  6. A spouses’ actions during marriage, such as, adultery, harassment of the other spouse etc affect the amount as well.

Mentioned above are only a few dimensions that are looked into and apart from these, the court sets other tests for amount assumption.

This mandate of the court is subject to change, and so, the amount decided need not be fixed per se. For example, if the husband finds a source of income and the wife is still asked to pay alimony to him, it would be unfair for her. Furthermore, the court also takes into consideration a lawful marriage, and no mistress of unlawful second wife can claim alimony, although children from the second marriage can claim child support.

All maintenance paid is taxable amount and so spouses usually, while paying alimony, deduct this tax amount from the sum that is to be paid to the other spouse as per court order. Further, the amount usually never goes beyond 1/5th of the husband’s income, although in a landmark case in April 2017, the Apex Court ordered a Bengal resident to pay 25% of his salary as ‘just and proper’ maintenance, that will ensure that his wife could lead a dignified life after separating from her husband.

Divorced and Confused about Property division?

Divorced and Confused about Property division

Know more about the impact of divorce on Joint Ownership of Property

We have had many NRI cases of one or both spouses seeking our services because there were property issues to be settled. We generally advise people to go about it in an amicable manner.

Joint ownership is an option favoured to reduce the burden of several financial and legal obligations that are required to be met during the purchase of the estate. The ownership may be distributed among friends, relatives and most commonly between spouses. There are numerous pros and cons of such a type of possession.

Benefits of Joint Ownership of Property with spouse

  • Easy Affordability: When ownership is shared between spouses, it becomes much more feasible to get home loans as in that case two sources of income are considered.
  • Easy Transfer of Assets: Joint ownership of property reduces the hassles and complications associated with the transfer of assets after the demise of one of the owners.
  • Taxation: The co-owners enjoy the benefit of tax deduction in case of shared possession of the property if they have valid and separate sources of income.
  • Low Stamp Duty: The rate of stamp duty is much lower for women owning a property solely or jointly.

Problems associated with shared possession of assets

  • Legal Dispute: All the co-owners are liable if a conflict arises even if it is because of one of the owners.
  • Divorce or personal conflicts: It becomes cumbersome to decide how the property will be distributed between spouses post divorce.
  • Home Loan: In the case of any unprecedented event such as divorce, demise, loss of employment or any other severe medical condition, the co-owners become liable to repay the loan on time. The terms of payment of joint loan should be discussed beforehand to avoid such disputes.

How does somebody settle Joint Ownership of Property at the time of divorce?

divorce-fact

When a couple files for divorce, property division can be a major issue. There are many ways to handle this:

  • The mortgaged property can be sold to repay the loan. The excess of the amount can be then distributed mutually.
  • One partner can take over the ownership entirely by settling the share owned by the partner.
  • Remove one of the parties’ names from the loan account by letting the lending institution to assess the situation and the capability of the other party to repay the loan.

Though contingencies like divorce can never be known beforehand and no one would ever intentionally go through these, it is imperative for the couples to seek legal advice from experts before entering any contract of joint ownership.

Divorce Might be More Expensive Than Marriage!

property settlement

With the pain of separation and divorce, comes the harsh reality of sitting across the table and settling asset distribution too. Divorce cases could be resolved with the mutual consent or contested in court – in both the cases; there is a need for clarity about the ownership of assets. It is only with this clarity that division of all assets can be done in a fair manner.

Some specialized legal experts handle the intricacies of divorce. We step in when it comes to evaluation of property and assessment for the purpose of settlement in such cases. Take the story of Ritika Saluja, who approached us after she viewed the history and service details of the company on the internet. She had been living in Sydney, Australia for the past twenty years after her marriage to Sachin Saluja. In addition to struggling with her divorce and other issues of separation, she also found herself in a fix over the property that her husband had in India. As expected, he was not very forthcoming in providing details of the same. She had no clue whatsoever about the value of these properties – neither Indian nor Foreign. Once she contacted our office, an extensive online interaction was done with her to obtain the exact details of her case. Subsequently, follow-up through emails and talks helped her stay in tune with all the efforts being done to pursue her particular case. To save her from the financial crunch that she feared and to help her get her rightful share, the company legal experts diligently resolved the issues without her having to travel to India even once for any query or filing.

For NRIs, it is a humungous task getting an asset evaluated in India – and preparing a report for legal purposes is a greater challenge. They cannot even travel frequently to India to take care of their property matters. While the divorce issues could be taken care of lawyers who specialize in separation cases, expert advice is needed for the asset division settlements. However, frequently during a divorce, the two parties might not be aware of the property of the other. This leads to a loss of direction. In India, the notion of marital property rights has not received as much attention as in some other countries. In the largely patriarchal society that India has, it is accepted that a woman ‘belongs’ to her husband’s family after her marriage. Her right to property has not been recognized in society. In fact, the Indian community still reflects a relatively insecure financial status for women. Usually, they do not have clarity about the level and nature of investments done by their husbands. Hence, over the years, divorce laws have been framed to favour women so that they are protected financially. We could define Property in various ways – share in business, dowry that the woman brought with her, gifts that she received whether in her marriage or later on from friends and relatives and various other assets collected by the couple.

In a divorce case either the man or woman will approach the court to settle matters of division and settlement of property. This division is required either for themselves or, for their children. The only property considered here is of course just the ‘marital property.’ Also, it is vital to reflect income disparity during the division of assets. We could very well ask ourselves – who would want to talk about assets and their details when love & marriage are the only things in mind? But in reality, it does help being aware of each other’s assets during the marriage. It is also important to be alert and aware of the joint/individual assets bought during the marriage. Let not divorce become a mentally and financially more expensive option – stay alert, stay secure!