Meaning of Co-Ownership
Partnership and co-ownership have different meanings. In partnership, there is an association of two or more, persons who carry on common business for earning profit. They share its profits and losses as per oral or verbal agreement.
Co-Ownership refers to joint ownership in a property by more than one person. If two, or more persons A 6 and C, purchase a property collecUvely without any business motive it will be a case of co-ownership. Co-ownership thus has joint ownership but business is not combined with it. The main points of distinction between partnership and co-ownership as stated by Lindley are as under:-
Basis of Difference Partnership Co-Ownership
Partnership always arises out of contract. Co-ownership may or may not be based on agreement. It can also arise by operation of law, such as by inheritance. On -the death of father, sans and daughters become co-owners of property.
2. Number of Partners The limit for maximum number of partners is 20 in a firm and 10 for banking.
There is no ceiling on the maximum limit of co owners.
3. Agency Relationship A partner is an agent of the other partners. He can bind them for his acts in the ordinary course of business
A co-owner is not the agent of the other co owner/co-owners; every co-owner is responsible for his own deeds only.
4. Sharing of Profits and Losses A partnership is always entered into for business, it involve sharing of profits and losses. A co-ownership does not involve sharing of profits and losses.
5. Transfer of Interest A partner cannot transfer his right and interest to any person without consulting his partners. A co-owner can transfer his right and interest without the consent of the other co-owners.
6. Right of Investment If a partner spends money far the business, he can demand its repayment. If a co-owner spends money for the improvement of the property, he has no legal claim (lien) for its refund.
7. Right of Division No partner can seek division of the partnership property in specie (in parts). His only right is to have a share of the profits or demand the payment of his share in cash.
A co-owner has a right to demand the division of property n specie or parts.
8. Minor A minor cannot enter into a contract and as such is not able to become a regular partner of a firm. A minor can be the co owner of a property.
9. Regulations Partnership business is regulated by the Partnership Act of 1932 as adopted in Pakistan.
There is no separate law to regulate co-ownership.
10. Dissolution Partnership can be dissolved on the insolvency, death, misconduct etc of a partner. A co-ownership can not be dissolved on any such grounds.
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