The Supreme Court ruled in a recent case that the co-owner of an undivided property cannot transfer the entire property without first demarcating their share.
Salik Ram and Sita Ram jointly owned a property. Salik allegedly gifted his share to Sita, making him the sole owner. After Sita’s death, his son Brij Mohan claimed sole ownership, following his sisters’ alleged relinquishment of rights. He sold the property to SK Golam Lalchand. However, Salik’s son, Nandu Lal Shaw, challenged the sale, arguing the property couldn’t be sold without being partitioned. The Supreme Court ruled in his favour, stating that the gift and relinquishment were unproven.
“This decision clarifies that a single co-owner cannot affect others’ rights by transferring the whole property,” says Payal Parikh, partner, ANB Legal.
Seller’s mistakes
In carrying out the sale, the co-owner erred on several counts. One, he failed to provide evidence for the alleged gift. He also sold the joint family property without consent from other co-owners and without including them in the sale deed.
Two, he lacked proof of a family settlement giving him exclusive rights. “Selling without a relinquishment or release deed from other family members was detrimental,” says Sanjay Sethiya, partner, Law Square.
Register a partition deed
Include all co-owners in the partition to avoid disputes. Verbal agreements are not legally binding and can cause disputes, so co-owners must create a partition deed or agreement.
“A comprehensive written agreement outlining property division terms, shares, and compensation in case of unequal division, is crucial,” says Shimpy Arman Sharma, partner, Anand Sharma and Associates.
To make the division legally binding, the partition deed must be registered with the relevant authority. This creates a public record and also helps notify third parties.
Once divided, ownership is confirmed by updating land records. “Ensure that all property-related documents are up-to-date. Relying on outdated documents can create legal complications and hinder the sale process,” says Sharma.
Parikh suggests that property should be divided not only in terms of ownership but also physically to clearly demarcate each owner’s rights.
If a disagreement occurs, a partition suit can be filed. “A partition suit determines each co-owner’s share, allowing them to dispose of their portion as they wish,” says Akshat Pande, managing partner, Alpha Partners.
If an undivided property is being sold, then the written consent of all the co-owners should be obtained.
Do title search
Before selling their share, a co-owner must conduct a title search to verify they have a clear title. “Before affecting the sale of any jointly owned property, the seller must have documentary proof to prove his title to the portion of the property being sold. If a person can’t do so, the sale would be invalid,” says Saurav Agrawal, advocate, Delhi High Court.
Don’t overstep your rights
Experts say this case highlights the importance of adhering to legal procedures in property transfers, especially those involving multiple owners. “Co-owners must be cautious not to overstep their rights by attempting to transfer more than their rightful share. Proper partition, clear documentation, and mutual agreement among all co-owners are essential prerequisites for a legally sound property transfer,” says Purvi Mathur, managing partner, KP Associates, Advocates & Consultants.
· Obtain separate property tax receipts: Pay property tax for each share separately; this serves as proof of ownership
·Update land records: Submit the partition deed and identification to update records to reflect the new ownership
·Physical demarcation: Mark boundaries, if feasible, to prevent disputes and provide additional proof of ownership
Source: Anand Sharma and Associates
First Published: Sep 18 2024 | 5:11 PM IST
