Sale of a House or Apartment in the Event of Non-Consent by a Co-owner

First, we recommend that you send the co-owner a demand for the dissolution and partition of co-ownership. In this demand, it is necessary to specify in more detail how you envision the dissolution of the co-ownership and, if applicable, whether he wishes to buy out your co-ownership shares. If the co-owner does not respond, or if he does not agree, we recommend filing a lawsuit for the dissolution and partition of co-ownership.

The court proceeds pursuant to Section 142, Paragraph 1 of the Civil Code: “If no agreement is reached, the court shall, upon petition of any co-owner, dissolve the co-ownership and carry out the partition. In doing so, it shall take into account the size of the shares and the effective utilization of the property. If the division of the property is not readily feasible, the court shall allot the property to one or more co-owners in exchange for adequate compensation; in doing so, it shall take into account whether the property can be effectively utilized and any abusive behavior of a fractional co-owner toward the other co-owners.

If none of the co-owners wants the property, the court shall order its sale and distribute the proceeds according to the shares.” In the proceedings, the court will have the real estate appraised and order an expert opinion to determine the market price of the real estate. You may also have an expert opinion prepared prior to filing the lawsuit and present it directly to the court.

The legal regulation of co-ownership (tenancy in common) is embodied in the Civil Code. Pursuant to the provision of Section 137 of the Civil Code: “A share expresses the extent to which the co-owners participate in the rights and obligations arising from the co-ownership of a common asset.”

Each co-owner has the right to use the common asset to the extent corresponding to the size of their co-ownership share, and at the same time, has the obligation to tolerate that the asset is used by the other co-owners to the extent of their respective co-ownership shares.
An agreement may be reached between the co-owners regarding the manner in which the common asset will be used (for instance, which rooms will be used by which co-owner, or which part of the garden, etc.). If one of the co-owners uses the common asset beyond the scope of the size of their co-ownership share, the remaining co-owners become entitled to compensation for such over-utilization.

In potential court proceedings where a co-owner would claim compensation for the over-utilization of a common asset by another co-owner, the subject of proof would be whether the co-owner – plaintiff was able to use the common asset, and whether they were restricted in the use of the common asset, e.g., whether they were provided with access to the common house, etc.
Decisions regarding the management of a common asset are made by the co-owners by a majority vote calculated according to the size of their shares. If the co-ownership shares of the co-owners are equal (in this case, ½), the court may decide upon the motion of any co-owner.

It follows from the above that unless Ms. Zuza is prevented from using the real estate to the extent corresponding to the size of her co-ownership share, but on the contrary, has the opportunity to properly use the common asset, she is not entitled to compensation for the use of the common asset beyond the scope of her co-ownership share. She would be entitled to rent only in the event that a lease agreement had been concluded with respect to her co-ownership share.

The fact that your brother, as one of the co-owners of the real properties, is in custody or serving a prison sentence does not in itself affect the disposal of the real property. Provided that your brother consents to the sale and is willing to sign the purchase agreement, the notarization of his signature on the purchase agreement can be performed by a notary directly on the premises of the remand center or the prison facility. We recommend inquiring directly with the respective facility regarding the specific feasibility of this execution.

If your brother does not consent to the sale of the real properties, it is possible to file a lawsuit for the dissolution of fractional co-ownership. Pursuant to Section 142 of the Civil Code: “If no agreement is reached, the court shall, upon petition of any co-owner, dissolve the co-ownership and carry out the partition. In doing so, it shall take into account the size of the shares and the effective utilization of the property.

If the division of the property is not readily feasible, the court shall allot the property to one or more co-owners in exchange for adequate compensation; in doing so, it shall take into account whether the property can be effectively utilized and any abusive behavior of a fractional co-owner toward the other co-owners. If none of the co-owners desires the property, the court shall order its sale and distribute the proceeds in proportion to the shares.”

In the case of a house held in fractional co-ownership, the fractional co-ownership may be dissolved and partitioned either by an agreement consented to by all co-owners or by a court. The manner in which a court may partition fractional co-ownership is statutory provided for in Section 142 of the Civil Code as follows: “(1) If no agreement is reached, the court shall, upon petition of any co-owner, dissolve the co-ownership and carry out the partition. In doing so, it shall take into account the size of the shares and the effective utilization of the property. If the division of the property is not readily feasible, the court shall allot the property to one or more co-owners in exchange for adequate compensation; in doing so, it shall take into account whether the property can be effectively utilized and any abusive behavior of a fractional co-owner toward the other co-owners. If none of the co-owners wants the property, the court shall order its sale and distribute the proceeds according to the shares. (2) For reasons worthy of special consideration, the court shall not dissolve and partition the co-ownership by allotting the property in exchange for compensation or by selling the property and distributing the proceeds. (3) Upon the dissolution and partition of co-ownership by dividing the property, the court may establish an easement (in rem encumbrance) over the newly created real property in favor of the owner of another newly created real property. The dissolution and partition of co-ownership may not be to the detriment of persons who hold rights attached to the real property.” Therefore, the following options are considered when fractional co-ownership is partitioned by a court:

• division of the property (if it is technically feasible to divide the house into two functional residential units)

• allotment of the property to one of the co-owners, who would pay compensation to the other

• sale of the property and distribution of the proceeds The specific manner of partition is subject to the assessment of the court, as the court is not bound by the method of partition proposed by a co-owner. We bring to your attention that a fractional co-owner is entitled to use the common property to an extent proportionate to their co-ownership share. Likewise, they are obliged to contribute to the costs of the common property to the extent corresponding to the size of their co-ownership share. In the event that one of the fractional owners uses the property beyond the scope of the size of their co-ownership share, the other co-owner becomes entitled to compensation for the over-utilization of the common property, which may be awarded in judicial proceedings.

If it is entirely ruled out that your sister would be willing to reach an agreement and provide cooperation in resolving the situation that has arisen, a viable option is to file a lawsuit for the judicial dissolution and partition of fractional co-ownership. The outcome of such judicial proceedings could be (depending on the specific circumstances of your case, which are unknown to us) the allotment of the apartment into the sole ownership of either you or your father, and the payment of financial compensation to the remaining former co-owners.

Pursuant to Section 141, Paragraph 1 of the Civil Code: “Co-owners may agree on the dissolution of co-ownership and on a mutual partition; if the subject of co-ownership is real estate, the agreement must be in writing.”

Pursuant to Section 142, Paragraphs 1 and 2 of the Civil Code: “If no agreement is reached, the court shall, upon petition of any co-owner, dissolve the co-ownership and carry out the partition. In doing so, it shall take into account the size of the shares and the effective utilization of the property. If the division of the property is not readily feasible, the court shall allot the property to one or more co-owners in exchange for adequate compensation; in doing so, it shall take into account whether the property can be effectively utilized and any abusive behavior of a fractional co-owner toward the other co-owners. If none of the co-owners wants the property, the court shall order its sale and distribute the proceeds according to the shares. For reasons worthy of special consideration, the court shall not dissolve and partition the co-ownership by allotting the property in exchange for compensation or by selling the property and distributing the proceeds.”

Sale of an Ownership Share in Real Estate If real estate is held in fractional co-ownership, it cannot be sold to a third party without the consent of the remaining co-owners. This, however, does not apply to individual, distinct shares. Pursuant to Section 137, Paragraph 1 of Act No. 40/1964 Coll., the Civil Code (hereinafter referred to as the “CC”), “a share expresses the extent to which the co-owners participate in the rights and obligations arising from the co-ownership of a common asset.” However, the share is “merely” fictitious; this means that no real (physical) part of the real estate corresponds to the share. In other words, if a person holds a 1/5 share in real estate, it does not mean that they are entitled to a physical fifth of the given real estate (e.g., a specific room). A share in an asset determines solely the scope of rights and obligations arising for the co-owner from the co-ownership relationship (e.g., voting rights – the larger the share in the asset, the greater the “weight” of their vote, enabling a co-owner, when decisions regarding the common asset are made, to outvote even three other co-owners whose shares combined are still smaller than theirs).

When selling a share, however, a co-owner is restricted by the so-called statutory pre-emption right. Pursuant to Section 140 of the CC: “If a co-ownership share is being transferred, the co-owners have a pre-emption right, unless it is a transfer to a close relative (Sections 116, 117). If the co-owners do not agree on the exercise of the pre-emption right, they have the right to buy out the share proportionally according to the size of their shares.” If a co-owner plans to sell their share in real estate to a third party, they must first offer it for sale to the remaining co-owners, specifically for the same price and under the same conditions as they would offer it to a third party. The purpose of this provision is the protection of the existing co-owners.

A co-owner who transfers their share to a close relative, however, is not bound by the pre-emption right. Pursuant to Section 116 of the CC, a close relative is “a relative in the direct line of descent or ascent, a sibling, and a spouse; other persons in a family or similar relationship are considered close relatives to each other if the harm suffered by one of them would reasonably be perceived by the other as their own harm.” A relative in the direct line is, for example, a son, daughter, mother, father, or grandparents. Therefore, if a mother who is a co-owner transfers her 2/3 share in real estate by means of a deed of gift to her adult daughter, she is not obliged to offer the share for buyout to the remaining co-owners.

More detailed information regarding the pre-emption right, its execution and effects, as well as its successful enforcement, can be found in our article here.

Can I sell half of a house that is held in co-ownership? If it concerns a share of a 1/2 size, the co-owner who is the proprietor of this share may freely dispose of it (i.e., sell it, donate it, encumber it with a lien, etc.) even without the consent or expression of will of the other co-owner. However, they cannot dispose of the remaining share. When selling their share, the co-owner must respect the pre-emption right of the other co-owner (Section 140 of the Civil Code), unless it involves a transfer to a close relative (Section 116 of the Civil Code).

Can I pledge half of a house that is held in co-ownership?

A co-ownership share, which expresses the extent of a co-owner’s participation in the rights and obligations arising from the co-ownership of a specific asset, constitutes an eligible subject of ownership. This means that the owner of the share may, among other things, freely manage and dispose of it (Section 123 of the Civil Code, hereinafter referred to as the “CC”). The most common forms of disposal include, for example, the sale of the share, donation of the share, devisal of the share in the event of the co-owner’s death by a will, or encumbering the share with a lien or an easement, etc. Since the disposal of a share is one of the manifestations of the right of ownership, the owner of the share may encumber the share with a lien even without the consent of the remaining co-owners (as the owner of the share is a co-owner solely in relation to the common real estate, not in relation to their individual share).

The subject of a pledge (security interest) is the so-called collateral. The pledgor is understood to be the person who provides the collateral.

Pursuant to Section 151d, Paragraph 1 of the CC: “Collateral may be a thing, a right, another asset value, an apartment, or a non-residential space which are transferable, unless the law provides otherwise. Collateral may also be a set of things, rights, or other asset values, an enterprise or a part of an enterprise, or another collective asset.”

Pursuant to Section 151d, Paragraph 3 of the CC: “A pledge may be established over a thing, an apartment, and a non-residential space owned by the pledgor, or over a right and over another asset value belonging to the pledgor.”

In contemporary legal theory and practice, it is indisputable that a co-ownership share in a common asset may also constitute an eligible subject of a pledge (collateral). Encumbering a co-ownership share with a lien does not constitute a violation of the pre-emption right of the remaining co-owners (Section 140 of the CC).

Good day,
It follows from your inquiry that you inherited the house and garden together with your three brothers into fractional co-ownership, whereby the size of your respective shares is equal, specifically 1/4.

They cannot sell your individual share of 1/4, given that it is in your sole ownership and, therefore, is not subject to the regime of fractional co-ownership (including the majority voting principle).

We also bring to your attention that any decision regarding the common real estate must be made jointly; no co-owner may be omitted or circumvented in the voting process. This, however, does not imply that all co-owners must consent to the modification, but rather that they must be provided with an opportunity to express their views on the subject of the vote in advance. Should a decision be adopted without even a single co-owner being aware of it, such act shall, according to judicial practice, constitute an invalid legal act (Števček et al.: Civil Code – Commentary, 2nd Edition, C. H. Beck, 2019).