How Property Is Divided After Divorce

When the Congress-led United Progressive Alliance (UPA) government in 2010 moved the Marriage Laws (Amendment) Bill in the Rajya Sabha, many hoped a comparatively easier exit from their troubled marital alliance. Had the Bill passed, estranged couples could have sought divorce citing "irretrievable breakdown of marriage" as the cause. This Bill also spoke of doing away with the mandatory six-month cooling period that must follow a year of separation before couples can file for divorce through mutual consent. While activists were still consumed determining the many far-reaching negative implications of the move, a Parliamentary Standing Committee, headed by the then Union minister Jayanthi Natarajan, suggested a new clause be added in the draft, giving women right to their former husbands’ property.

The panel was of the view that such a monetary implication of divorce would act as a deterrent for men who might try to misuse the "irretrievable breakdown of marriage" clause.  The panel also left it to courts to decide the share a woman would get from the matrimonial property.

After assuming power the National Democratic Alliance (NDA) government reintroduced the Bill in November 2014 which had lapsed when the UPA government completed its term earlier that year. Eight years after it was first introduced, Parliament is still sitting on the Bill. Chances of the Bill becoming an Act are quite bleak, say lawyer-activists tracking the developments.

How, then, the property of a married couple is divided if they were to part ways, legally?

“Under the current Hindu law, a woman gets a right on her husband’s property only after his death. Since marital bonds are considered sacrosanct and eternal in Hindu belief, there are no strong provisions in the existing law as far as property goes if a couple decides to call it quits. They are only eligible for maintenance, so to speak,” says Brajesh Mishra, a Gurgaon-based senior lawyer.

A woman’s husband’s ancestral property, which he is expected to inherit in future, remains out of the settlement, and so does his self-acquired property. It is only in case of a joint property that a woman could claim at the time of divorce. That, too, could be quite mind-boggling a process.

Joint pain

Do note that the person on whose name the property is registered remains its only owner in the eyes of the law.

In case a property is registered in the husband’s name, he remains the sole owner of the property, and if the woman claims to have made any contribution in the purchase, she would have to prove the same in the court.

For instance, if the payment was made using the wife’s savings at the time of property purchase, her account details would be enough to prove the same. In case she is paying the monthly EMIs (in case the property is bought using home loan), the same would reflect in her account statement. In such cases, the court would decide the contribution made by each part and divide the property accordingly.

In case the property is registered in the wife’s name only, she can claim the entire property in settlement. If the husband is able to prove his contribution, the court might order a division based on the facts.

In case the property is registered in the name of both husband and wife, it would be in their best interest to decide their share in the property based on their contribution in their purchase and divide it accordingly. Alternatively, they would sell the property and divide the proceeds.  

In case the property is bought on loan and both the parties are co-applicants, the separating couple would also have to divide their liabilities i.e. loan repayment, too. In this case the couple might go for offloading the property or one person could get the loan transferred in their name and be responsible for the payment after buying out the other party’s share. Do note here that the bank would assess the entire situation before allowing transfer the loan to one person since the loan was granted on the combined repayment eligibility of the couple.

Also read: What Happens To A Joint Home Loan After Divorce?

Tips to avoid future hassle

Think long term: A property is often registered in the name of a woman since they enjoy rebate on stamp duty even if the latter is not making any contribution in the purchase. In Delhi, for instance, a woman property holder has to pay only four per cent of the property value as stamp duty while a man has to pay six per cent of the same. This short-term saving often results into long-drawn legal battles when a couple decides to part ways.

Keep it business-like: Psychologists have proven that property purchases have a major impact on us, emotionally. However, in the best interest of everyone, do factor in an “uncertain future” while buying property from a monetary point of view. If a property is being bought jointly, be specific about the contribution made by each party during documentation to avoid any confusion. The same is true of home loan-related responsibilities.

You be the judge of that: To make sure the exceeding painful process is done and dusted quickly, the parties seeking divorce should sit together and decide how they wish to divide the property. If this is left for the court to decide, you are in there for a long haul. An ugly-lengthy divorce would have great financial implications on each party, apart from its mental, emotional and physical toll.

EMI defaults will cost you big time: In many cases once a couple decides to file for divorce, the party making EMI payments stops doing that, often in a retaliatory move. This would be a bad idea. This is a sure-shot way to lose your property, apart from the fact that you would be burning all your bridges with the world of lenders. Your credit report would reflect your defaults, and if you apply for loans in future your applications would be quickly rejected. Also, inform your bank immediately if you are going for a divorce. All parties should sit together and try to find a solution. Do not leave it to the bank or the court to decide it for you.