You are co-owner of real estate. Are you obliged to remain in undivided ownership?
If you own property jointly with someone else, are you obliged to remain in undivided ownership? Can you force other owners to leave undivided ownership? This question often arises in co-ownership situations.
Indivisibility means that the physical object or asset remains unchanged, but the ownership of it is split in a theoretical way. This creates a situation of joint ownership where there are multiple owners of 1 asset.
There are different types of co-ownership: it may be voluntary, it may arise due to circumstances, or it may be required by law, such as the shared parts of an apartment building. An example of incidental co-ownership is inheriting an estate. Here, each heir is entitled to a share, but what share it is is not determined in advance. This means that until the undivided estate ends, no one can claim exclusive ownership of a specific part.
According to Article 815 of the Civil Code, no one needs to remain permanently in undivided ownership. In fact, this situation can be restrictive because any decision about the property requires the approval of all owners. The law has stipulated that this restrictive situation cannot be imposed on anyone. But there is an exception: if co-ownership was a deliberate choice, then one cannot demand partitioning, as determined by a court ruling in 2013.
In the case of unintended co-ownership, however, division is straightforward and a request to this effect will usually be accepted by the court.
There are some exceptions to this rule, though:
- Small estates: When an estate with property does not exceed a certain amount and is inherited by minors with rights for the surviving partner, the court can impose undivided inheritance. This lasts until the youngest heir comes of age or other specific circumstances arise.
- Agreement to stay together: Sometimes co-owners choose to remain in undivided ownership, for example due to economic reasons or if one of them is a minor. They can enter into an agreement that lasts for a maximum of five years, but is renewable. If this agreement involves real estate, additional formalities are required.
Important to note: between a bare owner and someone with usufruct, there is no undivided ownership. Therefore, the above rules do not apply to these situations.
Investing in real estate together guided by Immotokens
As an investor with Immotokens, you may become a co-owner of real estate. This means that you have partial ownership of the property, without physically dividing it up. This is what we call 'undivided ownership'.
Undivided ownership can arise due to circumstances, such as an inheritance, or it can be voluntary. At Immotokens, our investors enter into voluntary undividedness, meaning they choose to invest jointly in a real estate project.
Voluntary co-ownership is distinctly different from casual undivided ownership, as in an inheritance. In cases of casual undividedness, each member of the group is entitled to a share, but no one can specifically claim that a particular part of the property is exclusively theirs.
But what does this mean concretely for you as an investor at Immotokens?
According to Article 815 of the Civil Code, no one is obliged to remain in undivided property. This is because it is often difficult to make decisions regarding the undivided property, as the approval of all co-owners is required. However, in cases of voluntary co-ownership, such as Immotokens, where co-owners consciously choose to own an asset together, this rule does not apply. Thanks to the judgment of 20 September 2013, the Supreme Court ruled that voluntary co-owners cannot claim partition.
Still, at Immotokens, we understand that situations can change and you, as an investor, may want to exit the undivided. As an extra service, Immotokens can suggest new investors to break out of the undivided and ensure a smooth transition.
As for the rule stating that an agreement to remain in undivided ownership is only valid for five years: it does not apply to the agreements at Immotokens given they are voluntary.
Finally, it is important to note that there is no undivided relationship between bare owners and usufructuaries. With Immotokens, this distinction is not made and all investors are equal in their rights and obligations.
