Can NRIs buy property jointly with resident Indian?

Joint Property - Can NRIs buy property jointly with resident Indian

Some things in this world are still going fine jointly! Take property ownership in India, for instance – especially when we live in a country where the property is still one of the most coveted ways to connect with your roots.

For NRIs, purchasing a property in India is much more than an investment opportunity. It is a way of seeking connections to the native place – and also to find a ‘home’ for oneself. 

It helps if the property ownership is joint with a known relative or friend who is a resident Indian. 

Read: Saving yourself from fraud while buying or selling a property

What do you keep in mind while buying property jointly?

  • As with other things, the purchase of property by NRIs in India is also governed by guidelines issued by RBI. 
  • While the RBI has issued General guidelines for purchase of property by NRIs also, in some cases, special permission from RBI or approval from Government is required before making an investment in the immovable property by NRI.
  • RBI allows NRIs to jointly own a property with another NRI or a resident Indian. 
  • However, in cases where the resident Indian is otherwise ineligible to buy property, then the NRI will also not be allowed to buy the property with that resident Indian (irrespective of the financial contribution of the other person). 

Remember:

  • Residences or commercial property can be bought by NRIs freely. 
  • There is no restriction on the number of properties that can be purchased. 
  • There is no requirement of obtaining any specific permission in such cases and also no need to send any information to RBI for this purchase. 
  • There is no need to file any document with RBI in this regard. 
  • In case the interested NRI is unable to come to India for completing the property purchase, the same process can be carried out by giving a special POA (Power of Attorney) to another person. 

But,

  • For the purchase of any agricultural property or a farmhouse or plantation, NRIs need to apply for specific permission from RBI. 
  • However, NRIs can inherit the same from any resident Indian.

Read: Transfer of Property on the basis of Registered or Unregistered Will

What does the FEMA say?

  • There are no specific guidelines under FEMA for purchase of property by NRI jointly with resident Indians.  
  • An NRI is allowed to sell or gift any immovable property to any resident Indian. 
  • Any property can be gifted to NRI by an NRI other than agricultural property, plantation or a farmhouse.
  • The restrictions which apply to NRIs for purchase of agricultural property, farmhouse or plantation continue even if it is a joint purchase.  
  • The transactions have to be routed through proper banking channels under FEMA and RBI guidelines.
  • For all purposes of investment in real estate, NRIs are treated at par with the PIOs.

Read: How to obtain probate of a Will

What if a person becomes an NRI after buying property in India?

  • In case an individual has bought property in India and acquires an NRI status after that, he can continue holding the property
  • All taxes will apply to the property as per the laws of the country

So Yes! Relax NRIs – You CAN buy property jointly with resident Indians or other NRIs. Make sure you adhere to RBI and FEMA rules regarding the same. 

Property rights of a wife after husband’s death

Property rights of a wife after husband's death

Many women are not clear about their rights in the property of their husbands. The rights of a wife in her husband’s property after his death depend upon:

  • The kind of joint ownership of husband and wife
  • nature of property of the husband – self-acquired or ancestral

Joint ownership

In case of property jointly acquired by both husband and wife during marriage, the nature of ownership determines the rights of a wife in the property after the death of the husband. The joint ownership can be: 

Tenancy in common

There is no right of survivorship. When one co-owner dies, his share goes to the legal heirs.

Joint Tenancy

When one co-owner dies, his share passes on to the surviving co-owners. 

Tenancy by entirety

Tenancy by entirety is a special kind of joint tenancy which takes place only between husband and wife. In this kind of ownership, both the spouses cannot pass their share in the property to a third person without the consent of others. This tenancy can be terminated either by mutual agreement, legal separation or by the death of one of the spouse.

Presumption of ownership:

Unless specifically stated in the document of property, the law presumes tenancy in common between the co-owners. However, in case of a married couple, the presumption is for the tenancy by entirety unless otherwise specified in the deed.

It is always advisable to disclose the nature of the ownership in the title document to avoid legal hassles later.

Read: Do grandchildren have a right to their grandfather’s property?

Distribution of property to wife and other legal heirs:

A. If the joint ownership is –

  • Tenancy by entirety or joint tenancy with survivorship-then after the death of the husband the property goes to the wife.
  • Tenancy in common – the legal heirs of the deceased husband will become co-owners and the share in the property will devolve as per provisions of Hindu Succession Act or personal laws or India Succession Act as applicable.

B. In case of joint property of husband and wife : If the fact is established that

  • the property is acquired by the husband but held in joint names- the entire property devolves among legal heirs including wife as per the applicable law.
  • the property is purchased by the wife with her earnings alone and held in joint names -the entire property belongs to wife.

the property is acquired by the husband and wife together with both having contributed towards the purchase, the property is divided as per the contributions made and then from the share of the husband, the wife will get her share as a legal heir as per applicable law.

Read: Can a father give his property to one son?

Self-acquired and ancestral property:

  • Under Hindu Law:  the wife has a right to inherit the property of her husband only after his death if he dies intestate. Hindu Succession Act, 1956 describes legal heirs of a male dying intestate and the wife is included in the Class I heirs, and she inherits equally with other legal heirs.

           If the property is:

Self-acquired-    If husband dies intestate, wife inherits as Class I heir

Ancestral –     Wife is entitled to get a share out of the share of her husband’s property, but she has no right to claim partition. She gets her share as class I legal heir when the partition of the ancestral property is affected.

Read: Division of property between brother and sister after father’s death

For people of faiths other than Hindus– the succession to property is governed by personal laws or The Indian Succession Act.

  • In the case of Christians, the property is considered as self-acquired despite the mode of acquisition and wife has a right to the property of deceased husband along with other legal heirs.
  • Muslim law also recognises the right of the wife in the property of the deceased husband – generally one-fourth of the property if no children and one eighth if children are there.

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.

Filing partition of property with joint owners in your absence can become a nightmare, Beware!

Filing partition of property with joint owners in your absence can become a nightmare Beware

Life is very hard for some people. When a person goes through a lot of financial hardships, getting a property worth crore of rupees is nothing less than bliss.

Can we imagine cases, where people are not even aware that they are being duped by their own siblings or close relatives ?

We were approached by a person who had gone abroad many years ago. After the demise of his father, he and his mother had faced a lot of hardships in life. Their relatives informed them they have some property in India and they are filing the partition of the same to give them their share. They were happy to hear the news and gave the power of attorneys to do all the partitions on their behalf.

Since they never been to India from a long time so they had no idea about the actual value of the land and property. They were shown a rosy picture by their relatives and they fell into the trap. Anyhow somebody told them about our firm and they came for a free legal consultation just to check on whatever they are being told by their relatives is correct or not.

Our team did all the appropriate research work. We carried massive search to inquire if any joint ownership existed in the client’s father’s name. We ultimately got the success. The property was found. Partition was done among the co-owners and shares were transferred to legal heirs but to our shock the whole partition was biased. Their relatives took all the expensive chunks to themselves and gave them the least valued portions.

We immediately took the actions and devolved all the partition their relatives had done. It was a massive work that our team did by making several applications and explaining the ill intentions their relatives had. After that, we filed the new partition where everybody got the fair share of the land and property.  The family received their rightful share worth crores of rupees.

How do you approach partition of joint property?

Immovable Property is generally owned jointly. Joint property means a property where more than one party is the owner of the property.

Arising of disputes is inevitable in such properties. Partition is a solution. It is a division of property as per the share of each co-owner. Partition of joint property can take place by:

  • mutual understanding among co-owners
  • demanding one’s share

For partition, we need to know our share in the joint property. Share can exist due to inheritance or through some title document (sale deed, will etc). In the absence of clear title, other documents like land records, tax receipts, survey documents, help to prove a title.

What about certified copies of the documents related to property?

If a party has no document available with him, he can file for inspection of documents in the Registration Office where the property is located and get the certified copies of certain documents.

  • Shares in joint property:

Till the time property is joint, shares of co-owners are undivided. After partition, each co-owner gets a share in the joint property as per his entitlement according to the law.  Law of inheritance is also applicable when partition takes place. Each co-owner becomes the absolute owner of his property (share). He is free to dispose of the property.

  • Partition deed for smooth partition:

A partition deed, drawn in a clear and unambiguous manner, executed on a stamp paper is required to be registered at a place where the property is situated.  Names of the parties and their respective shares need to be clearly mentioned. It must carry the date from which the partition will be effective

  • Partition by Family Settlement Agreement:

The partition can take place through a family settlement agreement. It is drawn on the same lines as a partition deed but does not require any registration or stamp duty. It need not necessarily be a written document, can be oral based on mutual understanding.

  • Partition by filing suit in court:

Here, the court determines the share of each person and property is divided accordingly. It is filed in the court which has the jurisdiction in the area where the property is located.

Why do you need expert guidance?

Generally, the partition is not very easy as the shares in the property are not well defined.  A partition deed executed under expert guidance and legal advice helps to sail through such problems.