What is the procedure for adding a co-owner to a property?
The legal process that an owner must follow to add a co-owner to his or her property is described below.
At any time during their lifetimes, property owners have the option of granting joint ownership of their homes, flats, apartments, and land parcels. This is generally done to minimize any problems during the property’s distribution following the owner’s death. A simple verbal agreement, on the other hand, is not the best approach to add a co-owner to your property.
You also can’t just declare that you’ve chosen to add a co-owner to the property. You can create an interest in your children’s benefit by adding their names to the current deed. They will not, however, automatically receive your part of the property once you pass away, and your personal ownership stake will be subject to probate.
An owner who wants to add a co-owner to his property must do so through the creation of a new deed. To be legally legitimate under the Transfer of Property Act, this new deed must also be recorded at the sub-office. Registrars
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Types of deeds used to transfer partial ownership of a property
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The owner might add a co-owner to his property in one of two methods. He has the option of creating a sale or gift deed.
This transaction takes the form of a standard sale deed. A new sale document must be produced as part of this procedure, explicitly stating the piece of the property that is being transferred in the name of the co-owner. This deed, like all other sale deeds, must be recorded with the local sub-office. Registrar’s at the time of registration of the new sale deed, stamp duty, and registration fees would apply.
Property ownership can also be transferred through a gift deed, in which a piece of the asset is gifted to the designated beneficiary. A deed of a gift must be executed and legally registered with the sub-office registrars of the region in question as part of this process. At the time of registration of the gift deed, stamp duty and registration fees would apply.
The title is clear.
Clarify how you and your co-owner will split the title in the new deed. Joint tenancy with the right of survivorship would be necessary if you wanted to divide it equally. If one of you dies, the ownership of the property immediately goes to the other. The co-ownership would be a tenancy in common if the shares were uneven.
Stamp duty and registration fees apply to sale deeds and gift deeds, respectively.
Type of deed Stamp duty Registration charge Sale deed 4%-8% of property value,
depending on the state.
1% of the property value. Gift deed 2% of the property value. 1% of the property value.
The Consequences of Adding a Co-Owner to a Home Loan
If the owner is still paying off a mortgage on the property he intends to partially give or sell, he must notify the bank of the new arrangement. To add a co-owner, the bank would have to draught a new home loan agreement, which would then have to be registered once stamp duty and registration fees were paid.
The bank would also require that the co-owner be added to the house loan as a co-borrower. The bank will conduct a credit check on the new party in accordance with its usual processes. According to the bank’s rules, the owners will be responsible for any costs.
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Adding a co-owner to the property has tax consequences.
Individual tax refunds are available for residences owned in joint names under Sections 24 and 80C of the income tax code. The co-owners will have to pay capital gains tax equal to their part of the property when it is sold in the future.
A word of warning
Adding a co-owner to your home is not a decision that should be taken lightly. Because it includes expenses and control concerns, the original owner must make a well-considered decision. The co-owner, for example, is the only owner of the property.
For the future sale and division of the property, the original owner will need to confer with the co-owners. The new owner also has the option of living in the house or renting it out. He also has the option of selling or mortgaging his portion of the property. To prevent these problems, make sure the new deed specifies the type of rights you wish to provide the new co-owner.
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