Exiting from a co-ownership

What is co-ownership?

Co-ownership is the legal position in which multiple persons are jointly owners of the same property. A co-ownership arrangement may be voluntary, during the acquisition of property by spouses or persons in a civil partnership, or involuntary, during the course of an inheritance or the dissolution of a matrimonial regime of community of goods at the time of divorce.

According to the French Civil Code, “no one may be forced to remain in a state of undivided ownership”. Thus, during a conflict between co-owners, those seeking the sale of property may exercise this right through the courts. Often at the cost of long legal proceedings.

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Administration of co-ownership

Before the law of 23 June 2006, any decision concerning an undivided property would have to be taken by a unanimous decision of the co-owners. Since then, the law facilitates the administration of the co-ownership as it distinguishes 3 rules according to the type of acts concerned:

  • Protective acts to maintain the inheritance in a good condition (for example the repair of a roof): every co-owner may act with needing to ask the consent of the others.
  • Administrative acts, day-to-day management of operations (for example the sale of commonly used furniture): these acts require a two-thirds majority of the undivided rights.
  • Acts of disposition which modify the substance of the property (for example the sale of property): these acts require unanimity.

Selling a property under undivided ownership

To sell a property, the unanimity of the co-owners is required. However Article 815 of the French Civil Code  stipulates that, “no one may be forced to remain in the state of undivided ownership and partition may be initiated at any time, unless it has been suspended by judgment or agreement.”

Thus a co-owner may exit the state of undivided ownership at any point in time. There are three possibilities:

  • by selling their share to another co-owner,
  • by selling the property: if other co-owners also want to exit from the undivided ownership,
  • by selling their share to a third party.

The first solution is, clearly, the most simple.

Unfortunately, family conflicts and bitterness often lead one section of the co-owners to oppose the sale of the property.

After the law of 12 May 2009 no. 2009-526 which simplifies pre-existing laws, if co-owners representing at least 2/3 of the undivided rights seek to sell the property, it is possible.

After having verified if the application is admissible, the notary will initiate the sale procedure, and will inform the other co-owners through the bailiff of the joint intention of certain co-owners (⅔ by share) to sell the property. In light of this information, the other owners may then adopt one of two stances:

  • Notify their acceptance within a period of three months. The sale may be executed.
  • Refuse or not respond (which is equivalent to a refusal after a period of 3 months)

In the case of refusal, the notary shall state the same through a “report of the impasse” After mediation and in case of the failure of the same, co-owners desirous of selling must approach the High Court (Tribunal de grande instance) in order to proceed with its auction sale.

It involves a long and costly procedure. Between the dealings with the notary and the proceedings before the Court, it may run for one or more years.

Sale of the undivided share to a third party

According to Article 815-14 of the French Civil Code, it is possible to sell undivided shares to a third party: “The co-owner who intends to yield, for a pecuniary interest, all or part of his interest in the undivided property or in one or more of these properties to a person who is alien to the undivided property, is obliged to notify the other co-owners of the price and the conditions of the proposed transfer as well as the name, residence and profession of the person who intends to acquire it, by an extrajudicial document. Any co-owner may, within a period of one month following this notification, inform the transferor by extrajudicial document, that he wishes to exercise a right of pre-emption at the price and the conditions which were notified to him.”

The law imposes the obligation to inform the other owners because they have priority over the purchase of the property. This takes the form of a right of pre-emption.

If a co-owner is interested in the purchase of the shares, he then has a period of one month to inform you of the same through the bailiff. The sale deed must then be signed in the following two months. On the lapse of this period, if no action has been taken, the result would take the form of placing the co-owner under an ultimatum to sign off on the sale.

If this ultimatum remains ineffective, at the end of 15 days, the co-owner may sell his share to the person of his choice without restriction.

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