The division of common property. How to end the co-ownership of real estate

5 June, 2024
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Real Estate
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Pablo del Estal


There are two typical situations in which what we legally known as “common property” (shared ownership or co-ownership) arises. A first example would be an inheritance in which three brothers inherit the same property. A second example would be the case of a marriage where both spouses buy a property at 50% which will become their habitual residence.

Now then, once I have a real estate property shared with one or more people, can I leave this state of co-ownership? The answer is affirmative, and moreover, it is a right of each co-owner.

Everyone has the possibility to end their co-ownership at any time, that is, to stop being the owner of a property together with other people. It is at this very moment that the procedure for the division of common property arises.

Where is the possibility of ending a co-ownership situation regulated?

In common civil law, this right is enshrined in art. 400 of the Civil Code (CC) and states that: “No co-owner shall be obliged to remain in the community. Each of them may request at any time that the common property be divided.”

That is, you can exercise this right at any time without having to argue the reasons that give rise to it.

In Catalan civil law, art. 552-10 of the Civil Code of Catalonia (CCCat) states very similarly: “1. Any co-owner may demand, at any time and without stating their reasons, the division of the community property.”

However, this right will exist as long as there is no agreement that obliges the co-owners to preserve the property for a specified period – which cannot exceed 10 years – (arts. 400 CC and 552-10.2 CCCat).

Is the real estate divisible or indivisible?

It is important to clarify this issue as the procedure for dividing the property will be totally different.

–> In the case of a divisible real estate property, the procedure will be carried out through the material division of the property. A clear example would be the material division of a plot among its co-owners based on the percentage of ownership of the real estate. The result will be as many plots as there are co-owners.

–> In the case of an indivisible real estate property, it will be carried out through an economic division of the property. This indivisibility is not always a physical matter but a legal one. It can occur:

1) When the real estate property becomes unusable for the intended use after being divided (art. 401 CC).

2) If the division of the property significantly decreases its value (art. 1062 CC).

3) When a regulation prevents the material division of a property into two (segregation of properties).

A clear example of this type of division would be a house.

The division procedure will be carried out by:

–> The extrajudicial route: provided the owners act by mutual agreement. The division will be formalized by signing a deed of termination of condominium before a Notary. This division can be done:

1) By allocating the property to one of the co-owners and this one compensates the rest. This solution is interesting if the co-owners agree on the valuation of the property.

2) By selling the property to a third party and subsequently distributing the proceeds among the co-owners based on the percentage of ownership they hold over the real estate (art. 404 CC).

Both options are very common as, undoubtedly, an extrajudicial solution is much more beneficial than going to court, where the time and costs for resolution increase. However, there are situations where there is no other option, and it will be inevitable to go to court to divide the co-ownership of a property.

Unlike common civil law, it is important to note that the Civil Code of Catalonia, in its article 552-11.3, allows the division of common property by allocating to one or more co-owners the right of usufruct over the property and to another or several co-owners the allocation of the bare ownership.

Also, the Civil Code of Catalonia, in its article 552-11.4, allows the allocation of the property to a co-owner if this one hold 4/5 of said property. Undoubtedly, this is an interesting provision that the state legislator should consider in future reforms of the Civil Code.

–> The judicial route: if the co-owners cannot agree on any aspect of the division, it will be necessary to file a lawsuit for the division of the common property. In this case, the courts will decide on the method of division of the property, either by selling it or by public auction of the property.

Special mention to the division of common property by public auction

What is a public auction?

It is a sale process in which interested buyers compete for the property through a bidding system. The buyer who offers the highest bid will get the property being auctioned.

Where is the auction held and who can participate?

These types of auctions are conducted through the BOE auction portal and are open to any interested person (upon registration).

The option of public auction of the property is the most used option to resolve the situation of indivisibility of a property when the co-owners cannot agree on who will keep it, compensating the others economically.

The process will be carried out through the verbal trial procedure (art. 250.1. 16º LEC) and it will be necessary to declare the indivisibility of the property and for one of the parties to request it to be auctioned.

Conclusions

The division of common property of a real estate is a right that allows one or several of its owners to end the co-ownership situation at any time.

It is a complex procedure, so it is essential to be well-advised from the beginning. This helps to guide the co-owners in the best possible way and avoid future detrimental situations.

At MES Advocats, we offer comprehensive advice and support in the process of dividing common property of a real estate. If you need more information or are interested in obtaining a quote, you can contact our real estate law area at this link.

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Division of common propertyReal EstatePropietarisProperty

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