Like most people, Ashutosh and Kaberi decided to buy a house after tying the knot. They joined forces and finances to pick a property in Kolkata that they could call their new home. Also, buying a home in joint ownership seemed like a wise decision because of the tax benefits both of them would enjoy. IT consultant Ashutosh and interior designer, Kaberi — each had a steady source of income so tax benefit was a huge plus.
The couple assembled their personal savings for the down payment, and to get the balance amount financed, they approached different banks, which were eager to make their dream come true.
Ashutosh and Kaberi had barely spent 3 years in their new home when things started going downhill for them and they were headed towards a legal separation. What followed next was the awful phase of listing everything the couple had worked hard for years to own. And, caught in this marital discord was their dream home that they had purchased during happy times. Who would get the house that they were co-owners of after their divorce? How would the property be divided? How would the loan responsibility be distributed?
Thousands of couples going through a divorce in India have the same questions. We have the answers.
How Would You Establish Your Claim?
In the case of joint ownership, if there is documentation to support the claim and the equity that you have in the asset, then the process of dividing the property becomes an easy affair.
To claim, you will have to furnish documents, establishing the equity you had at the time of investment. You will, however, require payment receipts to prove your contribution and share of the property.
In some cases, to take advantage of lower stamp duty, husbands register properties in the name of their spouse. This often backfires at the time of divorce, as the Indian law recognizes the title holder as the owner of the property.
If the wife has sweetened the kitty by contributing to the purchase, but the property title is held by the husband, then the wife will have to present payment receipts, bank loan documents, or other related papers to prove her contribution.
The property division process becomes difficult when the wife contributes a significant amount towards the upfront payment, but the husband pays the home loan EMIs. In this case, while staking a claim, the husband will have to return the entire amount paid by his wife with an interest agreed by both the parties.
Under any circumstances, inherited properties cannot be divided, and the possession of such properties will remain with the husband or wife who received the asset in the form of inheritance.
According to Indian laws, if the wife seeks a divorce, and the property title is held by the husband, then the wife will not have a right to the property. The wife, however, can claim alimony if the husband seeks a divorce, and this alimony might include the residential property or any other form of asset.
How Does the Law Divide a Residential Property?
A couple, after their divorce, can divide the residential real estate in three ways.
First, they can vacate the home they are residing in, and give the property to rent. The couple can then decide to divide the rental income according to the contributions made by each of them. Renting the property is a great option if the real estate value is appreciating.
The second option is open to both the husband and wife.
Here, one can buy the property by paying an agreed amount to the other. In this case, the share of the contribution made by each of them will come to play. The contribution, in fact, will help determine the property price. The buyer, in case of an outright purchase, might have to pay a premium because of the sentiments attached to the property.
If one of the spouses decides to move out of the real estate, then the other can pay rent to them. If the husband pays a rent, then the court can treat the amount as an alimony payment that the husband needs to make.
The third option is the easiest, and the best way to divide a residential property after a divorce.
Here, the husband and wife can decide to sell out the property. This is a popular practice if there is an existing long-tenure home loan. To pay half the amount of the EMI for the current home, while residing at separate accommodations, might be a burdensome affair for both the parties. Selling out the property will settle the division process once and for all.
Real estate experts recommend couples to give a careful thought while buying a residential property, because, at times, the journey of marriage takes an abrupt turn with the road ending in front. If you’re stuck in legal separation and would like to understand its implications on a jointly-owned property, the things we have discussed above is a good place to start.