How to exit joint property

Joseph Martin and his brother-in-law jointly bought a property in Mumbai in the early 80’s. After Martin’s death, his share was passed on to his daughters. Bought at Rs 3.5 lakh back then, the property’s value has appreciated over the years. Today, it can easily fetch over a crore. While the sisters want to unlock the value of their share by selling the property, their uncle, the other owner, still occupies the flat and is unwilling to exit the property.

Legal experts say the only recourse for a co-owner wanting to get out of the joint-ownership is to file a partition suit. According to Lakshmii Murali, advocate at Lakshmii Murali Associates, the focus has now shifted to properties jointly purchased by a parent and the son/daughter, husband and wife, or, in some instances, by friends or business associates as an investment.

Once the co-owners approach the courts, the preliminary hearings revolve around determining the share held by each party and the ownership right. Unless the agreement explicitly mentions the percentage-wise holding of each co-owner, all of them are considered as having equal rights. This is, however, easier said than done. As Sanjay Gupta, managing partner, S N Gupta & Co, says, “Maximum cases, if contested, get stuck at this stage, with each party disputing the share pattern ascertained by the court. Pending this decision, the case can drag on for decades.”

Determining the ownership status can be even more complicated if the property falls under the Hindu Undivided Family (HUF) rules. For instance, say a property is registered under an elder brother’s name. Claiming ancestral funds were used to buy it, the younger brother makes an ownership claim. The case could go on till the ownership is determined.

Like Martin’s daughters, you may not have the original property papers and worry about proving the ownership. But, as lawyer, Dhiraj Jain says, “Simply because you don’t have the original documents does not mean you don’t have a right over the property. The court understands there is just one set of original documents.” Therefore, in such cases, the onus to furnish the original documents lies with the other party. If the co-owners accept the same, the court proceeds to appoint a commissioner. He, then, surveys the property under dispute and gives a report about how the property may be divided. Usually, ‘the principle of metes and bounds’ is followed after taking the owner’s consent. This implies physical division of the property.

Such division is simpler for, say, a plot of land. But, it may not be as easy in case of a residential or commercial property. Here, the court would turn to the last resort of selling off the property. If one of the co-owners wants to exit the property, the court may allow the other party to monetarily compensate them and claim full ownership of the property. If the other party fails to do so, the court may auction off the property in open market and divide the sale proceeds between the co-owners, depending on their shares.

Waiting for the final decision could take years. Hence, legal experts advise the arbitration route. “Ninety per cent of partition cases get resolved through mutual settlement, saving time and money,” says Gupta.

One can either appoint an arbitrator independently or approach a court-appointed practising lawyer or a retired judge as an arbitrator. Any objections to the arbitrator’s solution need to be filed within 90 days, failing which, the decision will be final and binding. But, remember, should an objection be filed, it would mean being back to square one.