Planning to buy a house with your spouse? Here are key legal tips on joint property ownership

Delhi HC rules a husband can't claim sole ownership of jointly held property even if he paid EMIs, stresses the need for clear documentation in joint purchases

The Delhi High Court has ruled that a husband cannot claim exclusive ownership of a property registered jointly with his wife, even if he alone paid the EMIs. Legal experts say the order provides clarity on the fact that joint registration makes both parties co-owners, not just the one who funded the purchase. The order also observes that such property does not qualify as stridhan, as it is not an exclusive gift to the wife.

The Delhi High Court has ruled that a husband cannot claim exclusive ownership of a property registered jointly with his wife, even if he alone paid the EMIs. (Photo for representational purposes only) (Pixabay)

Legal experts say that couples purchasing property in joint names should note that once a property is registered in the names of both husband and wife, they are considered co-owners, unless the ownership share is clearly specified in the property documents. As good practice, buyers must ensure the property is acquired from legitimate, documented sources of income, maintain a proper title deed outlining ownership and usage rights, and make consistent, transparent disclosures to tax and other relevant authorities.

Key takeaways from the Delhi High Court ruling

Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar ruled recently that “….once the property stands in the joint names of the spouses, the husband cannot be permitted to claim exclusive ownership merely on the ground that he alone provided the purchase consideration. Such a plea would contravene Section 4 of the Benami Act, which imposes an absolute bar against the enforcement of rights in respect of property held benami.”

Section 4 of the Prohibition of Benami Property Transactions Act bars a person, claiming to be the real owner of the property from instituting any suit, claim or action to enforce rights against any other person in whose name the property stands.

In this particular case, the wife contended that the proceeds became part of her stridhan under Section 14 of the Hindu Succession Act and therefore, she had the exclusive ownership over the same. On this, the Court observed that a property jointly purchased at the time of marriage cannot be treated as the stridhan of the woman.

“A jointly acquired property, purchased in the name of both spouses, is by its very nature a joint asset and cannot fall within the ambit of stridhan, since it is not a gift exclusively made to the wife but rather an acquisition contributed to and held by both parties,” the Court said.

The court noted that when a husband and wife acquire property during marriage, it is legally presumed to be bought from common family funds, with both spouses considered to have contributed equally, regardless of who earns.

The case

As per the case details reported by the Hindustan Times newspaper, the couple got married in 1999 and jointly purchased a house in 2005 in Mumbai. However, they began living separately in 2006, and the husband subsequently filed for divorce the same year, citing cruelty and desertion. The flat was, however, sold by the bank as the loan amount was not paid, but after the dues were adjusted, a sum of ₹1.09 crore was released to HSBC Bank. While the divorce proceedings were ongoing, the husband filed an application in 2012 seeking the ₹1.09 crore from the bank.

The family court granted his request in December 2017, while also directing the wife to issue a no-objection certificate, enabling the husband to withdraw the amount from the bank.

The wife challenged the family court’s order by approaching the Delhi High Court, arguing that the sale proceeds should be equally divided between both parties. In December 2017, the high court directed that 50% of the amount be released in the husband’s favour. Later, in 2019, it ordered the Registrar General (RG) to place the remaining 50% in a fixed deposit with UCO Bank, the Hindustan Times reported.

Although the wife moved the Supreme Court against the high court’s 2019 order, her petition was dismissed in January 2020. The Supreme Court, however, directed that the issue of her share in the proceeds be decided along with the husband’s appeal against the family court’s January 2019 decision, which had dismissed his divorce petition.

In her petition before the high court, the wife claimed that 50% of the surplus amount belonged to her, asserting that it formed part of her stridhan (a woman’s absolute and exclusive property as per Hindu Law) and, therefore, she had exclusive ownership over it.

However, the husband opposed the petition, contending that he alone had borne the entire cost of the property, including all EMI payments, the newspaper report said.

This is what legal experts have to say about the order

This recent judgement of the High Court of Delhi addresses the critical issues as to whether a husband can claim exclusive ownership of a property which is registered in the joint names of the husband and wife, merely on the ground that the husband has paid the purchase consideration for such property. The HC has provided abundant clarity on the above issue, said Sunil Tyagi, Managing Partner, ZEUS Law Associates.

In view of the combined effect of the presumption of equal ownership between spouses and prohibition under Section 4 of the Benami Act, the HC held that once the property stands in the joint names of the husband and wife, the husband cannot be permitted to claim exclusive ownership of the property merely on the ground that he alone provided the purchase consideration for the said property, he said.

The HC has also dealt with an issue of whether the share of wife in such jointly held property would constitute stridhan of the wife. While dealing with this issue the HC drew a distinction between a gift exclusively made to the wife, and an acquisition contributed to and held by the husband and wife both. In view of the above, a property purchased jointly in the names of husband and wife is by its very nature a joint asset and though wife has a share in the property the same cannot fall within the ambit of stridhan since it is not a gift exclusively made to the wife but rather an acquisition contributed to and held by both parties, he said.

“This judgement has provided more clarity on the ownership rights of a husband and wife in a property which is registered in their joint names, even where the purchase consideration has been paid solely by one of them,” explained Tyagi.

Here’s what couples wanting to purchase joint property should know

A couple desirous of purchasing a property in joint names should keep in mind that if the property is registered in joint names of husband and wife, then both will have share in such property.

The share of husband and wife in the property should be clearly specified in the property papers, otherwise both will be deemed to have equal share; and

The payment made by husband and wife for the property should be clearly specified in the property papers, said Tyagi.

Here's what couples planning to buy property in joint name should know (HT Graphics)

S.Vasudevan, Executive Partner at Lakshmikumaran and Attorneys, said that when a property is acquired jointly in the name of the husband and the wife for the mutual benefit and enjoyment of the couple and/or their children, the said property is not considered as ‘benami property’ in the light of express exclusion provided in the definition of ‘benami transaction’ as per Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 (“Benami Act”) (Section 3 of the unamended Benami Act). This position holds good even if the entire consideration is paid by the husband.

Couples planning to buy property in joint name must ensure that the property is acquired using known sources of the individual and the same is properly documented; the title deed containing details of ownership and enjoyment of the property must be maintained and the disclosures to tax and other relevant authorities must be clear and consistent, he added.