Can I Buy A House With My Friend?
Joint ownership or co-ownership of property has a lot of advantages which includes pooling of funds and receiving better loan sanction limit, besides huge tax benefits. Co-owning a house with spouse or a family member is common. Since for most of us, friends are family, it makes us wonder if co-ownership of a property with a friend is possible. The answer is yes, but there are some legal and financial implications that need to be considered before you decide to go ahead with your decision.
It is easy to secure joint home loans between spouses, between children and parents and between siblings. However, banks do not sanction joint home loans for relations other than those mentioned above. Friends or unmarried couples are not allowed to take joint housing loans in India. The co-owners must ensure that they have individual savings account with a bank from where loan is to be availed of and they must individually give guarantors. Besides, they must take ensure that they have loan re-payment capability. They need to decide about the primary and secondary applicant.
The property title
As both of you will have a definite share in the property, it is thus advised to discuss the options with a lawyer before proceeding with the investment. It is important to have a sale agreement under your as well as your friend's name. Joint registration of agreement implies both you and your friend are joint owners of the apartment with equal share of 50 per cent each.
Types of co-ownerships
It is also crucial to record the type of co-ownership - joint tenants or tenants in common, in case of joint property ownership with a non-relative. Consulting a tax adviser on tax implications of such joint purchase and holdings is also recommended. The maintenance and other expenses are shared in proportion to the ownership shares.
Whether joint ownership is between family members, friends or business partners, it is advisable to sign a partition deed among co-owners. When the owners decide to divide the property among themselves through an agreement, each retains his share and rights. Each portion of the property gets a new property title which needs to be registered.
In scenarios when one of the joint owners dies, the type of joint property ownership may supersede the will of the deceased. For instance, A and B are joint owners of a property and if A dies who left a will, stating the joint property will be inherited by his wife. If the sale deed mentions A and B as joint tenants, the property will be transferred to B and not A's wife. Thus, it is important to record the type of joint property ownership in the sale deed.
In case of tenants in common, the interest of the deceased tenant will pass to his or her legal heirs.
In case of more than two joint owners as joint tenants, the surviving joint owner receives share in proportion of ownership in the property. For example, if there were five joint-owners and one deceased owner had a share of 20 per cent, the four surviving joint owners will now have a share of 25 per cent.