The ownership of an immovableproperty may be broadly classified into six types. The property may be owned by
an individual or a company. Apart from this, the property may also be owned by
two or more persons, jointly called co-owners. Co-ownership is of three types
(1) Joint tenants (2) tenants-in-common
(3) Co-parceners. The other type of ownership, are Benami Ownership,
dual ownership, trustee and beneficiary, legal and equitable, ownership. We
shall discuss each type:
(A) Joint ownership or Joint
Tenancy
When a property is purchased by
more than one person jointly and the deed does specify that each purchaser has
no separate interest in the property, the ownership is called joint tenancy.
Joint tenancy has four characteristics. Unity in title, unity in interest,
unity in possession, and unity of time. Each owner has common interest in the
property as a whole, the interest of each of the owners is similar in extent,
nature and duration.
Similarly when the property is
bequeathed jointly to more than one person, without specifying each
beneficiary’s share, the owner-ship is joint tenancy and interest of each is
similar in extent, nature, duration.
No single owner has priority of
title interest, right over others or separate interest right or title.
In case of joint tenancy or joint
ownership, the property goes to the other co-owners by survivorship and not to
the legal heirs of deceased. This concept of joint tenancy is basically a British
Concept, but unknown in India except in cases of joint family property of
undivided family governed by Mithakshara law where the ownership passes by
survivorship. It is to be noted that transfer of property act does not provide
for formation of joint tenancy. However Section 45 of the act states that when
a property is purchased for consideration by more than one person and when the
consideration is paid out of a common fund, belonging to all, and when the
terms of contract do not provide, how the property is to be shared, right,
title and interest of all the purchasers is that which they are entitled to in
the common fund and in the absence of evidence of share of each in common fund
all are presumed to have equal interest. The joint tenancy in our country is an
outcome of contract and not a matter of law. As such if in case of joint
purchasers, if the purchasers wants to hold the property as joint tenants,
where the succession is by survivorship, a specific clause to that effect needs
to be added in the document. In the absence of such clause the courts may
consider the title of tenancy in common. We may also refer to section 106 of
succession act 1925, which recognises the joint tenancy. The section states
that if an asset is given to two more persons, jointly and if one of the
beneficiaries dies before the testator (one who makes the will), the other
beneficiary takes the entire property. This section is applicable to Hindus
also. Though this section refers to only two beneficiaries, it has been held that
reference to more than one person jointly means and includes not just two
persons.
This mode of joint tenancy is of
only temporary nature and ceases when one of the owner assigns his undivided
share to a third party or when one of the owner contracts to sell his share, by
mutual agreement of all the owners, by severence of possession or partition, by
notice by one or more owners to others or when the entire property vests with
last surviving co-owner.
(B) Tenancy in common
This is different from joint
tenancy or joint ownership. If joint ownership has four deciding parameters
unity in interest, title, possession and time the tenancy is common and has two
characters, unity of possession and time. Unlike in joint tenancy where the
owners do not have distinct share and own the property as a whole in tenancy in
common, each owner has some specific undivided share in the property. This
right, is passed to their legal heirs or beneficiaries under will and not to
other tenants in common. Their share in the property is as per the terms of
contract, or linked to their investment in property. In the absence of any
evidence of terms to share in investments, all the owners have equal shares in
the property.
(C) Hindu co-parcenary
Hindu co-parcenary is joint body
of persons of Hindu undivided joint family. Each of the members are related to
the head of the family within four degrees. The ownership of the property is
like that of joint tenancy / ownership, where each co-parcener does not have
specific, distinct separate share in the property, until partition is effected.
On death of any co-parcener, the surviving co-parcener who is within four
degrees to the head of the family succeeds to the property as a member of
co-parcenary. Every member born in joint family, acquires the right in the
family by birth.
(D) Benami Ownership
In Benami transaction, the person
who invests is different, and the person to whom property is transferred is
different. The substance of the Benami transaction is that the consideration
for transfer must flow from one person and transfer is taken in the name of
another person and the consideration so paid for transfer of the property is
not a gift to the person to whose name the property is transferred. The Benami
Transaction Prohibition Act, 1988 completely prohibits the Benami transaction.
The act has come into effect from 18th May 1988. Section 3(1) of the Act
provides that no person shall enter into a benami transaction, and subsections
(3) and (4) makes benami transaction, a criminal offence. The only exception is
the purchase of property, in the name of wife or unmarried daughter. However
acquisition of the property in the name of the wife of co-parcener is benami
transaction.
Section 4 of the Act does not
allow any legal action by the real owner to enforce his right against benamidar
with some exceptions. When a person in whose name the property is held as a
co-parcener in Hindu Undivided family which is held for the benefit of such
family, and when a person who is holding the property is trustee. Section 5 is
more interesting. It provides that properties held in benami are subject to
acquisition without compensation.
However, benami transactions made
prior to the enactment of the Act are not illegal, but cannot be enforced as
such by courts.
(E) Dual Ownership
In dual ownership the land
belongs to one person and the structure on the land belongs to the other
person. Thus the property has two owners, one for the land and another for the
structure. This type of dual ownership is very common where the owner of the
land leases the land to another with right to construct structures on the land
and enjoy the fruits of such structures. The lease will be for certain specific
period. The terms of the lease provide for as to how the ownership of the
structure is to be determined after the expiry of the lease period. The
ownership of structure may pass on the owner of the land or he may have to pay
certain amount to the lessee of the land to acquire the ownership of the
building. Generally in most cases the lease will be renewed.
(F) Trustee and beneficiary
The trust in fact is another mode
of dual ownership. There are two owners to the property in trust, trustee and
beneficiary. The trustee is the legal owner and the beneficiary is the
beneficial owner. The ownership of trustee is of special type. In a way he is
not the absolute owner, and he has to abide by the terms and conditions of
trust deed, and the author of the trust. He cannot exercise his rights for his
benefit but for the benefit of the beneficiary.
(G) Legal and Equitable Ownership
In English law the ownership may
be of two types, legal ownership and equitable ownership. Legal ownership has
originated from common law and equitable ownership from principles of equity.
But Indian law does not recognise the ownership by equity though certain
equitable principles are recognised at India.
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