The problem of property ownership can be a tricky business, especially when a property has more than one owner. What happens when the co-owners have a fall-out? What happens to the property if one party dies? In this article, we lay down some basics of property joint-ownership.
Property Joint Ownership
It is not surprising to find a property bought under two or more names, often among spouses, family members, business associates and friends. This is known as joint-name ownership of property. One of the main reasons people buy property under a joint-name contract is in order to get a bank loan to finance the property purchase. It is important to be clear on the holding status of a property, as it may affect what happens to it in the future.
For example, a man with monthly salary of RM4,500 may not be approved to buy a house worth RM600,000 but if he buys the house together with his wife, their combined income of RM8,000 will qualify them for a bank mortgage.
Joint tenancy
Using the example given above, the husband and wife buy the house under a joint-ownership or joint-tenancy agreement. This means that they both own the house, but if one of them dies, ownership of the house will go to the surviving party (or in this case, spouse).
Co-proprietorship (Tenants-in-Common)
Section 342(1) of the National Land Code 1965 states that “co-proprietorship” means the holding of alienated land by two or more persons or bodies in undivided shares. This means that each proprietor owns a share over every part of the property in question, and each proprietor is deemed to be equal unless different proportions are specified in the memorial of registration (contract). Therefore, this means that unless it has been specified in black and white, all proprietors have an equal share in the property; not like, say, A owns the kitchen, B owns the living room, and so on. (It sounds rather silly but some people may really think it is ‘divided’ that way.) If the couple holds the property as co-proprietors, sometimes referred to as tenants-in-common, their shares will go to their respective estates on their deaths, and not to the surviving party.
Therefore, it is important to take into consideration the purpose and intention of each party before buying a property under joint names, and divide individual shares of the property (if required) in order to prevent any unnecessary problems arising in the future.
