Problems between the shared ownership of property, such as the divorce of a couple, have several consequences on the possession of the property.

Buying a home includes several legal and financial obligations. To divide the burden of buying a home, people usually opt for shared ownership of property, with relatives, particularly the spouse. Generally, it is always a good idea to buy a home in co-ownership. Though, each person can enjoy the tax benefits, only if they have separate as well as genuine sources of income. Furthermore, if any legal dispute arises over the property, then, all the co-owners will be involved in the case. Thus, home buyers should evaluate all such possibilities, before making a final decision.

For a house which is under the shared ownership of property between a husband and wife, difficulties may arise if the couple opts for a divorce. In such situations, it becomes essential to determine who will get what portion and how the loan responsibility will be distributed.

Opportunity of home loan repayment for a shared ownership of property in India

All co-borrowers have a joint responsibility, for timely payment of monthly instalments of the mutual home loan.

• Failure in the joint home loan, due to unforeseen occurrences like divorce, medical condition, death, job loss of the borrower etc. which makes the other co-borrowers responsible for ensuring the servicing of the loan on time.
• For the financial business, it does not matter who makes the contribution and how much one is contributing to the repayment, as long as the loan continues maintained on time.
• In case of a dispute or death of a co-owner or insolvency or divorce which may commence to default on the home loan repayment, the lending institution can proceed with the recovery process against all borrowers.

To safeguard against such probable occurrences and to avoid disputes, the co-borrowers should outline the payment terms of the joint loan (such as the percentage of contribution, payment type, account type, i.e. whether single or joint and the period), with the lending institution.

Family Settlement of shared ownership of property during divorce

In a situation, when a married couple decides to separate and the house has taken jointly and which is mortgaged to a financial system, has to be amicably dealt with. There are many procedures to settle this and the outstanding expense:

• Sell the property and clear the home loan. The remaining amount could be divided mutually.
• One person can take over the property ownership, by settling the contribution of the other person. The land and property can then be refinanced, based on his/her financing capability.
• Clear one party’s name from the lending institution’s loan account record. The institution shall assess the probability of doing so and the loan amount outstanding, by exploring the other party’s repayment capacity.

For a lending organization, all the applicants are equally liable for the outstanding amount, without disparity. Consequently, although nobody thinks of a divorce-like situation in advance, it is vital for couples to take help of the legal experts, before purchasing a home in joint names.