Division of real estate

It is not uncommon for several persons to own one property, that is, to be its co-owners. Their ownership shares may be equal or different. Such situations most often occur through inheritance. Co-ownership often complicates the legal transfer of real estate, as well as the enjoyment of ownership rights to it.

What is the procedure for leaving co-ownership?

Of course, co-owners can agree to sell their share to each other, that is, if there are more than two co-owners, it is possible for more of them to sell their shares to others. This way of leaving co-ownership does not require the role of the court. However, it is also possible that the co-owners cannot come to an agreement, that is, that some co-owner, for example, is not satisfied with the offered price or does not want to terminate the co-ownership at all.

Can co-ownership be dissolved against the will of a co-owner?

The answer is: yes, it can. Each co-owner has the right to request the division of the common property at any time, except for the time when such division would be to the detriment of the other co-owners (the so-called “untimely”). This means that division can also be requested by e.g. only one of the five co-owners, who owns e.g. 1/5 of the stuff or less. The proposal for division must include all other co-owners.

How is the division of common property carried out?

The division of common property can be physical or civil. Physical division implies the division of real estate into separate parts and the ownership of each co-owner of that separate part, so that he becomes the owner of 1/1. In practice, physical division of houses is more often not possible than it is. In order for it to be possible, it would be necessary, for example, that it has separate entrances, separate units that can be used as apartments (eg one or more floors). Physical division of fields, e.g. is more often possible. It is possible to obtain several new separate plots from one plot in the pre-parceling process, which would then belong to each of the co-owners 1/1. Civil division implies the public sale of real estate according to the rules of enforcement procedure, and the distribution of the realized price to the co-owners according to their co-ownership shares.

When is physical and when civil separation carried out?

 Physical division always has priority, that is, the law stipulates that the court will decide that the division should be carried out by selling things if physical division is impossible or is possible only with a significant reduction in the value of things. As a rule, if this fact is disputed between the co-owners, the court determines it based on the opinion of an expert in the construction profession.

What if the ownership stake is disputed?

If the court, acting on the proposal, determines that the right to things that are the subject of division or the right to property, a share in common things or property is disputed between the co-owners, or it is disputed which things or rights are included in the common property, it will terminate the proceedings and instruct the proposer to initiate litigation within a certain period.

Can I sell my co-ownership share without the consent of the other co-owners?

Yes, a co-owner can sell his share without the consent of the other co-owners. However, the other co-owners have a legal right of first refusal, which means that the seller must first offer them his share under the same conditions. If they do not accept the offer within 15 days, the seller can sell his share to a third party. This is regulated by the Law on Real Estate Transactions.

What if a co-owner sells his share to a third party without first offering it to the other co-owners?

In that case, the other co-owners have the right to file a lawsuit for annulment of the sales contract, if they were not offered a share for sale or if the sale was made under more favorable conditions than what was offered to them. The lawsuit can be filed within 30 days of learning about the sale, and no later than within 2 years from the date of conclusion of the contract.

Can a co-owner waive the right to partition?

The right to partition is guaranteed by law and cannot be excluded in advance. An agreement by which the co-owner waives the right to partition would be considered null and void.

What if the co-owners cannot agree on how to manage the real estate?

In case of disagreement between the co-owners about the method of real estate management, each co-owner can submit a proposal to the court to decide on the management method. The court will make a decision taking into account the interests of all co-owners.

Is it possible to divide if the real estate is encumbered with a mortgage?

Subdivision of mortgaged real estate is possible, but requires the consent of the mortgagee or appropriate court approval, in order to protect the creditor’s rights.

Is it possible to partition if one of the co-owners is unknown or unavailable?

If one of the co-owners is unknown or unavailable, the court can appoint a temporary representative who will represent his interests in the partition procedure. This ensures that the partition procedure is not delayed due to the unavailability of one of the co-owners.

Can I use the entire property if I am a co-owner?

It can only be done if the other co-owners do not object, that is, if they agree, because the rule is that the co-owner has the right to use the real estate in proportion to his share. If there is a dispute, the court can decide on the method of use.

What if the co-owner does not want to sell his share?

The co-owner is not obliged to sell his share. However, if the other co-owners want to get out of the co-ownership, they can initiate a court partition procedure, where the court can decide on the sale of the entire property and the division of assets.

Danilo Babić- lawyer in Novi Sad