Going Solo In Property Purchase May Not Be A Bad Idea

Rajat Ghai has started doing the groundwork for his future home purchase. The 33-year-old software engineer has learnt, among other things, that he can increase his home loan eligibility if he made his homemaker wife, Suchita Ghai, a joint owner. He is also aware that the couple will have to pay less as stamp duty on their purchase if the registry is made in Suchita's name. And, then co-owners enjoy tax exemptions, too. All these points makes a perfect case for co-ownership of property. But, what if Rajat decided to go solo? What are the benefits that one enjoys as the sole owner of a property?

You are responsible only for yourself

Having a fallback option is a great thing.  In co-ownership of properties, you know there is someone to back you up in case there are any financial issues. The opposite is also true. If one co-owner fails to fulfill his borrowing responsibilities, the other is liable to do the needful. When you go solo, you are on your own. You pay for your own defaults. Someone who is solely responsible for repaying high-value capital loans is also likely to conduct himself more responsibly.

Your credit rating is linked only to your performance

Imagine a situation where your husband defaults on loan repayment of the property you co-own with him. Credit rating agencies would take note of that and it would severely impact your rating. In case you want to apply for a business loan in future to set up a small business, lenders may not be willing to provide you loan considering your poor credit score.

No fear of future troubles

When you are the sole owner of your property, you do not have the fear of the property getting caught in the middle of a dispute between you and a co-owner. While you are solely responsible for making payments, etc, you are also free to do what you want to do with your property.

You can sell as and when you like

In a co-owned property, a husband cannot sell his property unless his wife grants him her approval. The reverse is also true. When all is well, this might not look much of a concern. However, a disagreement between co-owners on the matters of transaction might turn out to be a major trouble.

You are not tied by preemption

The co-owner of your property enjoys the right of preemption. This means that if you want to sell your share in the property, you will have to first offer it to the co-owner. It is only after your co-owner refuses to buy it and gives you an approval to go ahead, you can sell your share to a third party. If you jointly own a property with your family members, you might find it difficult to sell your share at a later stage.

Quick tips if you jointly own a property

Do not confuse co-ownership with co-borrowing. A co-owner is always a co-borrower while a co-borrower may not be a co-owner. Also, a co-owner must be a co-borrower to enjoy tax benefits.

Clearly mention in the sale deed that you would like to go for arbitration in case of any future disputes. Approaching the court will only prolong matters.

The sale deed must clearly mention the rights, responsibilities and shares of co-owners.

In India, a wife gets half the share in any property acquired by her husband after marriage, in case the two chose to divorce.  Wives do not have to become co-owners for acquiring a totally notional security cover.

By making someone who is not working a co-owner, you will actually be increasing their burden. In case of an unfortunate event, this non-working member will be responsible for loan repayment.

 Also read

Applying For A Home Loan? Here Are The Bonuses Of Going Solo