Effects of Family Disputes on the Partition of Property in India

Effects of Family Disputes on the Partition of Property in India

Family disputes can lead to a forced partition. Partition of property takes place when there is joint ownership of two or more persons in property, and each of them wants to have a separate share. Partition of property comes with financial and legal implications.

The partition of property in India is governed by Partition Act and Personal laws of inheritance.

Effects of Partition:

  • Once the partition is effected, joint ownership is terminated, and each co-owner becomes the absolute owner of his share and is free to deal with it.
  • When shares of all co-owners are severed, it is partition. When one co-owner is separated, and others continue as joint, it is separation of shares.
  • It involves the transfer and surrender of rights in the property.
  • The property gets divided or is sold, and the proceeds are distributed.

Ancestral or Self Acquired Property:

The property can be ancestral property or self-acquired. Self-acquired property cannot be partitioned during the lifetime of the person who acquired it.

A partition can be effected at the instance of any one of the co-owner and consent of all is not required.

Share of each co-owner:

Share of the co-owners if not defined, needs to be ascertained during partition so that each gets the appropriate share. It is always better to take expert legal assistance to avoid unnecessary disputes.

Family Disputes and Partition:

Family disputes arise more often in case of joint family property. Partition of joint family property can be effected by:

  • Amicable Settlement
  • Forced Settlement – By Arbitration /by court

Amicable Settlement:

Family arrangement – The family arrangement can be done amicably. The members negotiate and settle for their share as per mutually agreed terms and conditions. The family arrangement can be oral or written.

If the family arrangement is only a record of what has been settled, it may be reduced in writing and need not be registered. However, if the document is to be used as an evidence of settlement, then the document is registered.  A partition deed can be executed when the partition takes place with mutual consent.  The partition deed clearly defines the share of each co-owner. The deed is registered, and stamp duty is paid.

Forced Settlement:

Filing a partition suit –If there is a dispute and no amicable solution is there, partition suit is filed, and settlement is arrived at through intervention of the court. The court may physically divide the property, or distribute the sale proceeds of the property.

Court proceedings are time-consuming and at times, a drain on resources. It is better to settle the disputes amicably out of court.

Share of each co-owner is assessed, either with mutual consent or the court appoints a local commissioner for ascertaining the respective shares.

Partition by Arbitration:

An arbitrator is appointed by all the members of the joint family to decide their share and divide the property accordingly.

Partition in case of HUF

Hindu Undivided Family is a concept where all the members are a lineal descendant of a common ancestor. All have equal right in the property. People go for HUF status to avail tax benefits. There is a presumption in case of HUF that assets of HUF are joint property unless the contrary is proved. Only coparceners, i.e. members limited to four generations can seek partition. Daughters married or unmarried can also be coparceners. When partition takes place, all assets are equally divided among all the members.   

Family settlement for property disputes in India

Family settlement for property disputes in India

Introduction to the legal aspects

Wars over wealth/ancestral property have been present forever whether it is low-income households or ultra-rich families. Therefore property disputes are frequent in India. The most normal solution to such conflicts is to drag the matter to courts instead of opting for a simple family settlement. People rarely realise that court cases are a tedious and expensive process and satisfactory resolutions courts rarely guarantee a satisfactory resolution. Therefore it is advisable to always opt for a family settlement on the property.

What is a family settlement?

  • It refers to the adjustment that family members make in order avoid court disputes and amicably divide the family property with shared understanding.
  • The parties must be related to each other and have a right to a share of the said property.
  • The latter is not just limited to real estate, but can also claim his/her right on the movable assets like jewellery or money in bank accounts.

What does partition through family settlement connote?

  • A family settlement agreement is made in the same format of a partition deed.
  • It does not need registration and stamping.
  • It must be signed by all the members of the family voluntarily, without any fraud, coercion or pressure from any family member.
  • It does not necessarily have to be drafted in a written document.
  • It can be executed either by a compromise or by a mutual understanding between the family members.

Why is family settlement better than court settlement?

  • It is better because one can avoid protracted, public and messy court battles.
  • It is also quicker and a more harmonious way to resolve disputes.

What is the Procedure?

  • A family settlement is a peaceful process where a third person, mostly a lawyer or an older family member, helps the family arrive at a jointly peaceful solution to the property dispute.
  • A family settlement can also be a series of documents spelling out the property rights of each of the family members.

What about self-acquired property?

  • A person cannot execute self-acquired property during the lifetime of a person who had acquired it.
  • However, the self-acquired property automatically becomes a part of the ancestral estate on the death of such person. Hence the person can distribute the self-acquired property through his/ her will to any person he wants.

These are the basics of issues related to Family Settlement for Property Disputes – more about this in another article in the coming days.

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!