Types of Property Ownership
Modes of Acquisition of Property/ when possession ripens into ownership
Roti, Kapada aur Makaan has been the slogan which we have been hearing since time memorial. In the present times, it is comparatively easy to get Roti and Kapda, however Makaan (Property) remains a challenge for a major proportion of the country. The concept of property occupies an important place in human life because it is virtually impossible to live without the use of material objects which constitute the subject matter of property.
In this present article we will see what are the various means and avenues by which property can be transferred and owned from one person / entity to another, in a legal and legitimate manner.
The concept of property and ownership are very closely related to each other. The two are mutually interdependent and correlative. One necessary implies the existence of the other. There can be no property without ownership and no ownership without property.
In modern times, apart from its common use, ‘property’ is used in a wider sense also. In its widest sense, it includes all the rights which a person has. Thus a person’s life, liberty, reputation and all other claims which he might have against other persons is his property.
The term property is used also to denote the proprietary rights of a man/woman as opposed to his/her personal rights. In this sense, it means a person’s land, house, his shares in a business concern etc.
It is used in a third sense also, that is, to mean proprietary rights in rem. Salmond takes the term in this sense. He says: “The law of property is the law of proprietary right in rem, the law of proprietary rights in personam being distinguished from it as the law of obligations. According to this usage, a freehold or leasehold estate in land, or a patent or copyright is property: but a debt or the benefit of the contract is not.”
There is also a fourth and the narrowest sense in which the term ‘property’ is used. In this sense, property includes nothing more than the corporeal property or the right of ownership in material things. Bentham has preferred to interpret the term property in this sense.
According to Ahrens, property is “a material object subject to the immediate power of a person.”
Modes of Acquisition / Ownership of Property
There are four important modes of the acquisition of property. They are:
1. Possession,
2. Prescription,
3. Agreement, and
4. Inheritance.
These four modes may be put in two classes:
A. Acquisition inter Vivos- it includes possession, prescription and agreement.
B. Succession on death i.e. Inheritance.
Possession
Possession is the objective realization of ownership. It is prima-facie evidence of ownership.
A property which is already in possession of someone else, when acquired by possession, gives a good title to the possessor against all third persons except the true owner. In such a case of adverse possession there are in fact two owners, the ownership of one is absolute and perfect, while that of the other is relative and imperfect and often called as possessory ownership by reason of its origin in possession.
If the person in adverse possession i.e. possessory owner is wrongfully deprived of the thing by a person other than the true owner, that person cannot set up the defence of jus tertii, that is, she/he cannot plead that the thing does not belong to the possessory owner either.
In other words, a possessory owner’s possession shall be protected against all except the true owner. This rule is justified on the ground of maintenance of peace and order and to prevent misuse of force.
Examples: When a borrower defaults, Banks take possession of the mortgaged (secured) property by possession. This possession is done under the Securitization (SARFAESI) Act, and the Bank becomes the deemed owner and can exercise its right to sell the property through auction to recover its dues.
Prescription
Prescription may be defined as the effect of lapse of time in the creation and extinction of legal rights. It is operation of time as a vestitive fact. It has two aspects, namely, positive or acquisitive and negative or extinctive.
The creation of a right by the lapse of time is called the positive or acquisitive prescription whereas the extinction of a right by the lapse of time is called extinctive or negative prescription.
For example, the acquisition of right of way by use of it for a prescribed period (in India according to the easement act this period is 20 years) is a positive prescription.
For example, the right to sue for debt is destroyed after a prescribed period (in India it is 3 years – limitation). Thus, it is a case of negative prescription. The prescription is based on a conclusive prescription of rightfulness of a long possession, and it is against the person who is not in possession or is not exercising his rights.
The positive prescription is generally based on the ground of possession. Therefore, it would apply on those objects only which admit of possession. nNegative prescription is common to law of property and obligations. According to Salmond, negative or extinctive prescription is of two kinds, namely: Perfect and Imperfect.
Perfect negative prescription results in the destruction of principal right itself whereas imperfect prescription destroys only the right of action not the principal right.
Law of prescription is based on the general principle that law helps the vigilant and not the dormant.
Agreement
Property may also be acquired by agreement which is enforceable by law.
Paton defines agreement as an expression by two or more persons communicated to each other, of a common intention to affect the legal relations between them. It therefore follows that an agreement has four essential elements, namely:
1. It being a bilateral act, there should be two or more parties to an agreement;
2. Mutual consent of the parties;
3. It should be communicated;
4. There should be common intention to affect the legal relationship.
As a proprietary right in rem, agreement is of two kinds, namely:
1. Assignment;
2. Grant.
An assignment transfers the existing right from one owner to another, e.g., assignment of a subsisting lease-hold from assignor to assignee.
Example: Banks and Financial Institutions sell their loan books. DHFL has sold its loan books to various banks like SBI, ICICI and as such DHFL is the assignor and SBI / ICICI is the assignee. All the rights, duties and obligations of DHFL are transferred to SBI / ICICI and they step into DHFL shoes.
Under a grant, new rights are created by way of encumbrance upon the existing rights of the grantor, e.g., grant of a lease of land is the creation of agreement between grantor and grantee.
Example: States have Industrial Development Corporations (IDC) eg. Maharashtra and Gujarat have MIDC and GIDC respectively. These IDCs grant land on lease to business units to undertake and expand their business’. Here the MIDC is grantor and the business unit is grantee.
Agreements may either be formal or informal. Formal agreements are written and require the formality of registration and attestation of the deed to be completed before they are effective. Informal agreements are verbal and do not require any formality.
Inheritance
The right of inheritance is found on the assumption that property serve as a best means of social security. Security of food, dwelling house and means of living to the members in a joint family was the foremost obligation of the Karta which barred from him alienating the family property except for legal necessity and family benefit or seeking relief from distress.
This in turn conferred right of inheritance to the coparceners which included right to be maintained out of family property and to claim partition as co-owners. Even the illegitimate sons, who were not entitled to inherit property as heirs, were required to be maintained by their father.
Mitakshara rules of succession regulated the law relating to inheritance applying the principle of survivorship. The wife, widowed mother, minor sons and daughters as a child in the mother’s womb (unborn) were entitled to inherit property as successors of the deceased and they could not be deprived of this right by alienation or otherwise.
The death of the owner of property could result in two kinds of rights, namely:
1. Inheritable; and
2. Un-inheritable rights.
A right is inheritable if it survives its owner and it is un-inheritable if it dies with him/her.
Proprietary rights are inheritable and most personal rights are un-inheritable.
But there are certain exceptions to this general rule. For example, the right of action survives the death of both parties as a general rule. Proprietary rights may be un-inheritable in case of a lease for the life of the lessee only or in case of joint- ownership.
The rights which a dead man behind him vest in his representatives or successors. But he has also to bear the liability of the deceased. This liability is, however, limited to the amount of property which he has acquired from the deceased. Thus, inheritance is some sort of legal and fictitious continuation of the personality of the dead man.
Example: If Ramesh has taken a loan from Bank A, against his residential flat and is deceased. Then the property is attained by his successors, however they need to pay the Bank A dues and then take the property.
Succession to the property of a person may be either testate or it may be intestate i.e. by means of will or without a will.
If the deceased had made a will, succession would take place according to the terms of the will.
But if there is no will, then succession would take place by the operation of law which is known as non-testamentary succession. In case there are no heirs of the deceased, his property shall vest in the state.
The power of a person to dispose of his property by testament (will) is subject to the following limitations:
1. Limitations of time;
2. Limitation of amount; and
3. Limitation of purpose.
We will see more information in our coming articles.
