Implications of purchasing property in Joint Names by Adv. R. P. Rathod.
More often than not a flat is acquired in joint names of two or more persons and the agreement for purchase is silent in respect of proportions of their Co-ownership rights. In such circumstances, as per law the proportions of co-ownership rights would be measured with reference to funds contributed to acquire the flat by each of them. It is also possible that the earlier asset was entirely owned by the person and by consequently long-term capital gains have been earned by him and to avail exemption in respect of such long-term capital gains he invests his own funds but in the purchase agreement adds names of his family members.
Despite a contrary tribunal decision it is submitted that such acquisition in joint names will not deprive him of the benefits of full exemption. But legal implications of such joint purchase should be analysed. Take an example in which a person has funded the entire cost of acquisition but has added the name of his family member. At a later date he decides to sell off such a flat. The question arises that even though he is 100% owner of the flat, can he sell the same without signature of another person who did not contribute any funds towards acquisition but whose name appears as the co owner? The sale will not be possible without signature of such another co-owner because what are the co-ownership rights is an internal matter of the co-owners but as far as the purchaser is concerned the title stands in the joint names and the same cannot pass on without the joint signatures.
In a possible situation if such another person refuses to sign the Sale documents then the sale will not be possible without visiting the competent court. When a flat is purchased in joint names, application for membership in the Co-operative society may be made by Co-purchasers and share certificate may also come in their joint names but they will not be joint members in the Co-operative Society. A person whose name appears first in the Share Certificate is the ordinary member whereas the person whose name appears at second or subsequent number in the share certificate is an associate member in the society.