CO-OWNERSHIP OF PROPERTY: THE EMERGING TREND IN OWNERSHIP OF COMMERCIAL PROPERTY IN TANZANIA.
By Rayson Elijah Luka
Margaret Mitchell has been quoted saying,
“Land is the only thing in the world that amounts to anything for, it is the only thing in this world that lasts, it is the only thing worth working for, worth fighting for, worth dying for”
Therefore, it is such worthiness of the land that makes land disputes inevitable. However, the laws, at some point, try to mitigate these disputes. For example, to avoid disputes for spouses especially after the demise of one spouse, the law allows spouses to own landed property jointly. Where spouses own land jointly, the demise of either spouse means that the ownership of the land automatically vests with the surviving spouse. The law also allows land ownership under tenancy in common where each individual occupier owns undivided shares. One of the advantages of land ownership under tenancy in common is that parents may wish to give apportion of the landed property to their children while they still have access to it. Ownership under tenancy in common guarantees security in the sense that the children cannot dispose of the property and at the same time their parents can use and partly own it. At this juncture, we find it worthy to discuss and highlight the two modes of co-ownership.
Section 159 (1) of the Land Act, [Cap 113 R.E 2019], “the Land Act” recognizes co-ownership of land. However, the law makes it very clear that, although the land can be owned jointly, such landed property is undivided. It further specifies that the co-occupancy of landed property allowed in Tanzania may be either joint occupancy or occupancy in common. Now let us spend some time to discuss these two types of ownership created by our law. This discussion will enable us to determine which kind of co-occupancy suits what kind of relationship.
Joint Occupancy/ Joint Tenancy
This is the type of co-occupancy by more than one person of undivided landed property and owners do not have specific shares. In this kind of ownership, joint owners do not have specific shares and upon the demise of one of the owners, the interest of such land automatically passes to the surviving occupier. Under this type of co-occupancy, a joint occupier may transfer his interest therein inter vivos only and only to the co-occupier and if any disposition is to be made, then it must be made jointly by joint occupiers. Taking into account the strict nature of this mode of land ownership, the Land Act, section 159 ( 8) states in clear terms that;
“Joint tenancy capable of being created shall be for spouses only.”
Although other people apart from spouses may create this kind of ownership, the leave of court must first be obtained.
Grey Area in Joint Tenancy Process & Practice
Currently, the straightforward practice to register the Joint Tenancy is only made during application for a granted right of occupancy where the application forms give room to indicate both spouse names as joint owners. On the other hand, if one of the spouses is already a holder of the right of occupancy and wishes to join a spouse as a joint owner, the process is more complicated as there is no specific form to join the spouse. In practice, one has to invoke section 52 of the Land Registration Act, [Cap 334 R.E 2019] “the Land Registration Act” which allows a person to transfer a right of occupancy to himself and another person. It is only through this process the spouse can be joined in joint ownership. This process is completely a normal transfer which, among other things, includes payment of Capital Gain Tax (CGT).
In our opinion this complicated process is unnecessary and payment of Capital Gain Tax is illogical because there is no gain between the spouses as they are recognized as one soul. We also find it unnecessary to go through transfer process to join a spouse as a joint occupier. We strongly recommend that there should be a prescribed form to this effect.
Tenancy in Common/ Occupancy in Common/ Co-ownership
This mode of ownership is the opposite of joint tenancy. Under occupancy in common, the co-occupiers jointly own undivided landed property but there are defined shares of the co-owned property. Section 159 (3) (b) of the Land Act provides that under occupancy in common, shares in the property are defined. That is why the law makes it mandatory that any instrument made in favour of two or more persons under tenancy in common, must specifically indicate the share (s) of each common occupier. This kind of ownership is available to both spouses and other types of relationships. Occupancy in common is also a bit more flexible due to the following features; –
- Each occupier is entitled to his undivided shares.
- Upon the death of one co-occupier, the undivided share shall be treated as part of the deceased occupier’s Estate capable of bequest to his heirs other than the surviving occupier.
- A co-occupier can transfer her/his undivided shares to the fellow co-occupier (s).
- A co-occupier can transfer her/his undivided shares to another person but with the consent of the co-occupier.
Tenancy in Common Practice
Application for a grant of right of occupancy under tenancy in common is a straightforward process. It is done by filling in application forms with names of co-owners and indicating each share for each co-owner as required by Section 159 (3) (b) of the Land Act. However, this type of co-ownership is not free from legal hurdles. The Complex issue arises when the registered holder of the right of occupancy wishes to join another person as a co-owner. The procedures for joining another person as a co-owner under tenancy in common are the same as those highlighted above in joint tenancy. They also include payment of Capital Gain Tax for the portion which is being transferred. Nevertheless, the most important feature in this kind of co-ownership is that each co-owner has a defined share (s) in such undivided property.
With the emerging inheritance problem, succession issues and for the purpose of avoiding future disputes on land, it is high time for Tanzanian community to consider embracing the co-ownership modalities. Co-ownership of property is considered as one of the best estate planning techniques. We further call for the responsible authorities to
modify and customize the practice of co-ownership in terms of registration and taxation. We also recommend the legislators to consider amendments to address the procedure for joining a spouse as a joint owner of landed property and payment of Capital Gain Tax for the property.
For more details and legal advice on commercial property reach out our Corporate & Commercial Property Department through the address below; –
Victory Attorneys & Consultants,
IT Plaza Building, 1st Floor,
Ohio Street/Garden Avenue
P.O. Box 72015,
DAR ES SALAAM.
Mobile No: +255 754 959 726
DISCLAIMER: This article is not intended to provide legal advice but to provide general information on the matter covered in the Article. The article does not constitute and is not to be relied upon as legal advice. Victory Attorneys & Consultants shall not be responsible for any loss in the event this Article is relied upon without seeking our professional advice first