It is quite common even today that complete strangers enter into joint ownership due to inheritance for instance. It is also known from the old saying that “common horse has scars onhis back”, hence no one has interest in maintaining joint ownership for long.In case you are in joint ownership of a real estate, you shall claim your share of revenues in theproportion to your ownership, but keep in mind that you shall also bear the obligations,expenses and the cost of damage recovery in that same proportion.
So if all owners use the jointly owned property, then all costs shall be paid jointly. In case onlyone owner uses the jointly owned property then the costs of running that property shall be bornesolely by the owner using the property, while the costs related to maintaining the condition of theproperty shall be borne jointly.(The later one can be included proportionally to the usage fee,see below.)
According to Article 5:84 of the Civil Code, there are the following ways of terminating jointownership:
- Physical division. Creating two separate flats from the joint property, so both owners canreceive their private property that could be sold separately. In case of larger flats ordetached houses on the same lot this could be an easy choice as it is much cheaperthan having one owner buy the share of the other. However designing the two separateflats within the jointly owned property can turn out to be technically complicated, makingthis choice a rather expensive one. If that is the case, you can always choose anothermethod from this list.
- Buy or exchange. It is possible to buy the part of the property belonging to the otherowner or exchange it for another property. However this assumes that the buyer eitherhas assets/own capital or wishes to carry out the business with bank loans. The mostsensitive part when choosing this way to terminate joint ownership is to determine thevalue of the part of property one wishes to obtain ownership for. For this very reason, itis always wise to involve a real estate appraiser to prevent disagreement between theowners of the property.
- Sell and divide. In case the owners of the joint property cannot agree otherwise, theproperty must be sold and the amount received for this business shall be dividedaccording to the proportion of their ownership.
- Take it to court. If the relationship between the parties of joint ownership becomeshostile, it is possible to enforce the claim for division in court proceedings. The courteither evokes one of the above methods for division or puts the property up for auctionwhere it usually gets sold below its market value. Therefore it is definitely advisable toavoid the involvement of the court.
It is important to emphasize that the owner not using the jointly owned property may claimusage fee from the other owner using the property. The amount of this compensation shallcorrespond to the proportion of ownership of the owner who is not using the property. Meaning, that the owner who lives in the jointly owned house shall pay a rental fee to his co-owner to beable to use his/her part of the property as well.
The Land Registry Office needs to be notified when the owners reach an agreement, so theownership can be officially transferred. You will receive a fee reduction for the administration ofterminating a joint ownership agreement at the Land Registry Office.