Hug (A) 03 May 2010

Brother and Sister Joint or Co Owners of a Property

Dear Gurus,

My Sister had purchased a Flat wherein I am the Co (or Joint) Owner. She is the First Owner. The property was registered in both of our's names in Feb 2010. My Sister had now applied for Bank's Loan and have been informed that loan application is rejected on the grounds that she is owning the Property with her brother.

The two Banks where she approached were HDFC Bank and ICICI Bank. Both said the same thing that loan cannot be given if she co-owns (irrespective of the fact that she is the first owner) with Brother loan cannot be given.

They said that there are various legal issues based on which the Property must never be co-owned between a Brother (B) and a Sister (S).

I request for few good suggestions from this forum:

1. Are these Banks right in saying that B and S cannot co-own a property?

2. What is the procedure to remove my Name from the property?

3. Whether removing the name will be termed as a separate transaction and do we need to pay Stamp Duty thereon?

Please advise.

Your help is much appreciated.

Thanks

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4 Replies

R.R. KRISHNAA (Legal Manager) 03 May 2010

There is no legal prohibition / bar for a brother and sister to own a property together.

But the banks are right in denying loan because one co-owner is not entitled to seek loan as it would create legal hurdles for the bank in case of recovery proceedings if there is any loan default in future.

It is advisable that the brother may transfer his share by way of RELEASE DEED (to be registered) in favour of the sister and as such the sister will become the full owner of the property. It will attract stamp duty for a maximum amount of Rs.10,000/- irrespective of the value of the share released by way of release deed. But sometimes stamp duty varies from state to state. It is advisable to verify the stamp duty rates in the concerned registration offices.

1 Like

adv. rajeev ( rajoo ) (practicing advocate) 03 May 2010

I do agree with R.R.K. but my suggestion you can go for regd., rights relinquish deed which costs very less. Minimum stamp duty you will have to pay

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Hug (A) 03 May 2010

Dear RRK and Rajoo,

Many Thanks for your revert.
Please note that it is not the Co Owner that is seeking loan. Its actually my Sister (the first owner) applying for loan.

Another question, whether Rights Relinquishment Deed has got good legal weightage? Whether it can be executed on Rs.100 Stamp Paper? I am sure I will have to get this relinquishment deed registered.

Thanks Again.