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.

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.