What is the Difference Between Partnership and Co-ownership?
“In co-ownership, there is only a combined ownership without any business purpose. In partnership, joint ownership and business are pooled. ”
It would be naïve if we call Partnership and Co-ownership as one and the same thing. The possession of a property by more than one persons is called co-ownership. If two brothers or friends acquire property collectively, it is a case of co- ownership. The property can only be disposed off with the approval of co-owners.All the co-owners share ever kind of revenue arising from co-ownership. The property is not purchased with the object of earning profits. If a house is purchased to let it for rent, it becomes a case of partnership and not of co-ownership. So, any activity that is undertaken with a view to earn profit does not fall under the purview of co-ownership.
In co-ownership, there is only a combined ownership without any business purpose. In partnership, joint ownership and business are pooled. Partnership is based on contractual association among partners. Co-ownership may be by a procedure of law.
On the death of father, sons become co-owners of his possessions. On the other hand partnership is the result of an accord. The purpose of partnership is to enter into some business and earn profits whereas co-ownership is not meant for business intentions.
No partner can reassign his interest without the approval off all other partners. A co-owner can transfer his interest whenever he likes without asking from other co-owners. Partners can also act as mediators of business. The have an indirect power to bind the firm by their acts.
No agency affiliation exists in co-ownership. Every co-owner is answerable for his deeds only. A co-owner can insist the division of property but in partnership such a provision is not feasible. A partner can demand the imbursement of his share in business through cash.
If a partner pays out some money for business he can demand its repayment. On the other hand, if a co-owner spends money for the upgrading of property he cannot claim it by the way of a lien of property.
Co-ownership does not require the formation of a well-defined act that can govern its functioning, whereas such an act is mandatory in the case of partnership.
Author - DeeKay
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