Dissolution of Co-Ownership of Real Estate

The right to dissolve co-ownership

Under the Civil Code, each of the co-owners may, as a rule, demand the dissolution of co-ownership. This power is permanent in nature and does not expire with the passage of time, although co-owners may, in a contract for a specified period, exclude the possibility of exercising it. Thanks to this, no one has to remain in co-ownership against their will indefinitely.

The dissolution of co-ownership leads to a situation in which the existing community ceases and the rights of the individual persons are put in order. This may mean a new, independent title of ownership, a buyout of a share, or money from a sale.

The contractual route

The simplest and usually cheapest way is to dissolve co-ownership by way of a contract between all co-owners. This requires agreement as to the manner of division and any buyouts and additional payments. A contract concerning real estate must be concluded in the form of a notarial deed.

The contractual route gives the parties great freedom in shaping the division, provided they are in agreement. It allows the lengthy court proceedings to be avoided and the solution to be adapted to actual needs, for example by awarding the property to one person in exchange for buying out the others.

The court route

When co-owners cannot reach agreement, the dissolution of co-ownership takes place through the courts. The court then rules not only on the dissolution itself, but also on the manner of division and any buyouts and additional payments. These proceedings tend to be longer and involve additional costs.

In court proceedings, an important role is often played by the valuation of the property prepared by an expert, which forms the basis for determining the value of shares and the amount of buyouts. The court tries to select a solution that takes into account the interests of all participants.

Ways of dissolving co-ownership

The Civil Code provides for three basic ways of dissolving co-ownership. The first is the physical division of the thing, that is, the separation of distinct properties corresponding to the shares, provided this is possible and is not contrary to the nature of the thing or the regulations. This is the preferred solution when the actual situation allows it.

The second way is awarding the entire property to one of the co-owners with the obligation to buy out the others. The third, used especially when other solutions are impossible or unfavourable, is the sale of the property and the division of the price obtained among the co-owners in accordance with their shares.

Buyouts, additional payments and costs

If the physical division does not exactly match the size of the shares, or the property goes to one person, buyouts or additional payments arise to equalise the differences in value. The court may spread them over instalments or specify the deadline and manner of payment, taking into account the situation of the obligated person.

The overall cost of dissolving co-ownership includes, among other things, notarial or court fees, valuation costs and taxes, which may arise depending on the manner of division and settlement. It is worth estimating them in advance in order to choose the optimal route.

Summary: how to choose the right route

The dissolution of co-ownership is a way to permanently put the situation in order when joint possession of a property no longer serves the parties. The law offers a choice between the faster contractual route and a court ruling, and between physical division, awarding the thing with a buyout, and sale. The choice of solution depends on the agreement of the parties, the nature of the property and financial possibilities, so it is worth considering all options before making a decision.