Settlement of co-ownership
The previous parts of this series of articles dealt with general issues of co-ownership and the management of the common property. But what happens in a situation where the individual co-owners do not agree on issues relating to the common property and one of them does not want to continue co-ownership? According to the provisions of § 1140 of the Civil Code, no one can be forced to remain in co-ownership, therefore the law provides clear rules for its settlement.
Agreement of co-owners
Section 1141 of the Civil Code states that co-ownership is primarily dissolved by agreement of all co-owners. This agreement must include the method of settlement. In addition, in the case of real estate or plants, a written form of agreement is required.
The settlement of co-owners can take place in several ways:
- by dividing the common cause,
- by selling the common property and dividing the proceeds;
- by transferring ownership to one or more co-owners with payment of the others.
Restrictions on the division of the community property
Section 1142 of the Civil Code provides that if the common property is to serve a purpose as a whole, its division is not possible. Another statutory restriction relates to agricultural land, namely the restriction that agricultural land may be divided only to create land that is capable of being cultivated in a meaningful way, both with regard to its size and the possibility of permanent access. The exception is where the land is divided for the purpose of erecting a building or for any other purpose for which the land could be expropriated. However, further restrictions on the divisibility of land may also be found in specific legislation, such as the Forest Act.
Settlement of co-ownership by the court
If an agreement between the co-owners on the settlement is not possible, the co-owner who does not want to remain in co-ownership must bring an action for the settlement of the co-ownership before the court. The judicial settlement process is governed by the principle of “judicia duplex“, which means that the court is not bound by the proposal of either party and decides at its discretion (within the limits set by law). Obviously, the co-owners in the court proceedings will have to consider their procedural course very carefully so that the court does not settle the common property contrary to the interests of one of them on the basis of the evidence taken.
The court shall proceed to the division of the co-ownership so that the property is divided in one of the ways already mentioned, i.e:
- by dividing the common cause,
- by selling the common property and dividing the proceeds;
- by transferring ownership to one or more co-owners with payment of the others.
Legal barriers and subjective harm
There are legal obstacles that may prevent the division or dissolution of the community of property. These obstacles include inconvenient time or injury to even one of the co-owners. The inappropriate time must be assessed objectively, for example in the case of a temporary price crisis or the expectation of an increase in the value of the land. On the other hand, prejudice is a subjective obstacle and must be assessed in the light of the legal position and circumstances of the co-owner concerned.
Judicial protection and postponement of the dissolution of co-ownership
A co-owner may defend the dissolution of the co-ownership by an action for a stay of the dissolution of the co-ownership if the dissolution of the co-ownership could lead to a loss of property or a serious threat to the legitimate interest of one of the co-owners. In such a case, the court may extend the duration of the co-ownership for a maximum of two years.
Real division and indivisibility of the thing
The court must first examine the possibility of a realistic division of the community property if this is possible; however, it cannot divide the property if this would substantially reduce its value. However, if division is possible (in particular, if it is possible to divide the property into parts corresponding exactly to the shares of the co-owners, making up the difference in money), the court is also obliged to take into account whether the co-owners are willing to bear the costs of such division (for example, the necessary structural alterations in the case of immovable property). If none of the co-owners is willing to bear these costs, the property must be considered indivisible.
A real division is not excluded even if the resulting common property will be used with certain limitations compared to the previous situation or if additional easements have to be established on the immovable property. The defendant’s disagreement with a particular method of division does not prevent the court from carrying out such division unless it proposes a better solution which respects the interests of both parties.
Assignment for compensation and public auction
If division of the property is not feasible, the court may decide to assign it to one or more co-owners for reasonable compensation or order its sale by public auction. When allocating the property to one of the co-owners, the court may take into account various factors such as solvency, long-term care of the property, historical and family ties, maintenance and investments made in the common property.
If none of the co-owners is interested in taking possession of the property, the court will order its sale by public auction. In some cases, the court may decide that the item will be auctioned only between the co-owners.
Clearly, this is a complex process that requires a careful assessment of all the legal and factual circumstances in order to achieve a fair and efficient settlement of the co-ownership.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.
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