Buying real property jointly with a family member or business partner is nothing unheard of. From saving taxes to sharing the burden of repayment of loans, or simply because they want a house together, people do it for various reasons. However understanding how a joint agreement works, before closing down any such deal is very important for peaceful enjoyment of the ownership of such property.
When two or more people agree to jointly own a house or a real property, it is termed joint ownership. The relation between the joint owners is not of importance. They could be family, friends or just business partners.
Once the parties enter into an agreement to jointly own a property and close its deal, each of the parties gets a claim on the entirety of the property. Therefore unless otherwise expressly mentioned in the contract, neither of the parties can sell the property on their own. It will require the consent of every joint owner.
A joint ownership agreement explicitly defines the rights and obligations of every party to the property. It clearly states the role of every party in terms of financing, maintaining purchasing and even selling the property if the need ever arises. If the parties want, they can also state the purpose for which the property has been bought and how it shall be used. Therefore unless you are a married couple, drafting a clear joint ownership agreement is very important to define the equity and rights of each party in the property.
The types of joint ownerships and their features are as follows:
In a common tenancy, the share of the ownership is not mentioned. Every co-owner is deemed to maintain a proportionate share and has a separate interest in the property. The tenants in common don’t have the right of survivorship. So in case of death of one party, their rights in the property are transferred to their legal heir.
In Joint tenancy, the owners hold an equal share of the property. In the event of the death of one co-owner, their rights in the property are transferred to the remaining co-owners.
Tenancy by the entirety is an exclusive tenancy for a married couple. Each of them owns half of the property and holds the rights of survivorship. This tenancy can be terminated only upon the death of one spouse, or a divorce. Or in absence of both, it can be terminated upon the mutual consent of both partners.
