Difference Between Partnership and Co-Ownership

Partnership vs Co-Ownership
 

As co-ownerships and partnerships are terms that are commonly misunderstood to be the same thing, it is valuable to know the difference between partnership and co-ownership. There are quite a number of differences between partnership and co-ownership. A co-ownership is joint ownership of some asset or property that does not create a partnership. In a partnership, on the other hand, partners are also co-owners of the business. While a co-ownership is not a partnership, a partnership certainly creates a co-ownership between the partners. The article that follows explores the differences between these two forms of business arrangements clearly outlining the similarities and differences between  partnership and co-ownership.

What is Co-Ownership?

A co-ownership is an arrangement of ownership between two or more individuals, and may or may not have the intention of making profits or carrying out business activities. The main aim of a co-ownership is to enjoy the property, assets, funds or right that are jointly owned. Co-ownerships can be formed through a contract or through the enactment of law. For example, the death of a father may leave his property in co-ownership of his children. Co-owners of a business have the ability to transfer to sell their shares to an outsider without the permission of other co-owners. There are no limitations on the number of members in a co-ownership. A co-owner has a legal claim over jointly held property, assets and funds and has the right to sue other co-owners for his entitlement. A co-ownership cannot be dissolved in the event of death or retirement of a co-owner.

Difference Between Partnership and Co-Ownership

What is a Partnership?

A partnership is where a number of individuals get together under a business arrangement to conduct business and share profits. A partnership is formed through a contract. Partners cannot sell their shares or transfer their shares to anyone without the permission of other partners. There is a limit to the number of members that a partnership can have which may depend on the industry in which the partnership is formed. A partner does not have the right to demand that the property that is jointly held be divided among the partners. A partner does, however, have the right to request for his share of profit in the partnership. A partnership is dissolved in the death or retirement of a partner.

Partnership

What is the difference between Partnership and Co-Ownership?

It may seem that the terms partnership and co-ownership are similar to one another and are often mistaken to be the same. However, there are quite a number of differences between the two. While a partnership is set solely for the purpose of making profits and carrying out business activities, a co-ownership is set up with the aim of jointly reaping the benefits of, or enjoying property, assets, funds, rights, etc. There are number limitations in partnerships when it comes to the transfer of shares and number of members. Such limitations are not enforced in a co-ownership. While a co-ownership is not a partnership, a partnership certainly creates a co-ownership between the members in the partnership. Another main difference between the two is that in a partnership a partner can act as an agent and this can bind the firm to a partner’s actions, whereas in a co-ownership there is no agency affiliation and each co-owner can be held answerable to his own actions.

Summary:

Co-Ownership vs Partnership

• A co-ownership is an arrangement of ownership between two or more individuals, and may or may not have the intention of making profits or carrying out business activities. The main aim of a co-ownership is to enjoy the property, assets, funds or right that are jointly owned.

• A partnership is where a number of individuals will get together under a business arrangement to conduct business and share profits. A partnership will be formed through a contract.

• There are a number of limitations in partnerships when it comes to the transfer of shares and number of members. Such limitations are not enforced in a co-ownership.

• While a co-ownership is not a partnership, a partnership certainly creates a co-ownership between the members in the partnership.

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