What Happens To Joint Property after Divorce

Last Updated at: Oct 23, 2019
What happens to joint property after divorce

Houses are bought for different reasons by different people, but the primary reason most houses are bought is to start a family after marriage. Both the spouses join forces to purchase and renovate their new home and savings from both sides may be utilised for this purchase. Loans are applied for, ideal properties are scouted and picked, and in no time, the family has a new place to call their home. While all of this paints a beautiful picture, the reality may be very different from this. To the disappointment of many, most families do not have a happy life after that, and some find their differences to be irreconcilable, and this leads to a divorce. Caught between their crossfire is the new home they had bought? What happens to the house? Here’s a close look at what happens to joint property after a divorce.

Ownership of a Property

As far as the law is concerned, a specific property belongs to the individual in whose name it has been registered. It doesn’t matter who put in cash into it, or who’s the primary contributor or anything of that sort. Legally speaking, the owner of a property is its registered user whether or not the individual paid for the property.

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Real Scenario

The government, to encourage ownership of property by women, offer several incentives to them such as less stamp duty at the time of registration. This has led to most properties being registered in the name of women as it costs less. Similarly, banks offer women loans at cheaper interest rates leading to most loans being taken in the name of women even if the male is the one who pays it back every month.

Legally, the house belongs to the registered owner, and the loan has to be repaid by the one in whose name it has been taken. Hence, at the time of divorce, the asset goes to the woman as it is her name that is present in both places.

Joint or Sole Ownership

  1. If the property is registered as joint, then the wife would have a claim on it at the time of divorce.
  2. No regard is given to her contribution to the purchase of the property; the court will grant her rightful share nonetheless.
  3.  If the property has been registered under the wife’s name, then she has full claim on the house, and unless the husband can come up with solid proof that he contributed to its purchase.
  4. Account statements and financial records can be used as proof as they show the payment of mortgage and payback of loans.
  5.  The same can be used by a woman to prove she contributed if the husband is the sole owner as per the registration.
  6.  If a joint property was bought by a couple who both have taken out loans in their names, a thorough study of contribution is made, and the court of law divides the asset based on their share towards its purchase. Also, both the spouses would be liable to pay the loan back in this scenario.
  7. If the property is registered in the man’s name and he is also the one who has contributed to buying it by applying for loans, then the woman has no stake on the property and will get no share of it.
  8. If the wife has made an upfront payment, then the husband will be asked to treat this as a loan and pay it back with interest.
  9. The man’s ancestral property which he is to inherit will also be out of reach of the woman in case of a divorce.
  10. All co-borrowers have a responsibility to repay the loan, and in situations such as a divorce, the financial institution gives no waiver and so every co-borrower is liable to make the repayment on time.
  11. Houses which have been mortgaged to a financial institution has to be dealt with effectively. To settle the remaining amount:
  • The couple could sell the home, clear the dues and then split the remaining money.
  • One person could take ownership by repaying the contribution of the other. The owner is then liable to repay the mortgage.
  • Clear one’s name from the loan account after cross-checking by the financial institution.

Buying a home requires a lot of financial pressure and paperwork, and hence most couples prefer to do it with each other. While generally, this seems like a good idea, during a divorce, things can go south very quickly. Chances of an amicable divorce are often crushed due to issues related to a property. As the number of divorce cases increases exponentially on an annual basis, it becomes imperative for couples to know how to plan their finances so as to prevent issues in the future.