Extinction of joint ownership
What is the extinction of the proindiviso?
First of all, it is important to understand what the extinction of condominium or pro indiviso consists of. It is a legal concept relating to the right of ownership over an asset, which implies that one person has the right of ownership over that asset only partially, sharing the ownership with other persons.
Jointly owned property acquired during the marriage, for example, once divorce proceedings begin, is subject to the extinction of condominium or proindiviso.
How many types of pro indiviso extinguishment are there?
We can distinguish between two different types of proindiviso extinguishment depending on whether the common property is divisible or indivisible.
Firstly, if it is a divisible asset, the extinguishment would consist of an equitable distribution among the co-owners of the common thing. To illustrate this with an example, we have recourse to the money included in a bank deposit. In this type of case, it is simplest to divide the money among the co-owners according to the share of participation held by each one. Consequently, the law states that if a common property can be divided without losing its value, the joint ownership can also be divided. Likewise, lots of assets of similar value are a case similar to that of a bank deposit.
Secondly, if we speak of indivisible property, this is defined as that which, if it were to be divided, would lose its value. In this type of extinction of condominium, it is most common to find ourselves faced with assets in joint ownership in scenarios of inheritance, separation and divorce. See a proindiviso extinguishment of the second residence of the married couple.
In such cases, it is advisable to sell the property to a third party or for one of the co-owners to buy the part from the other. If no agreement is reached between the co-owners, the property can be auctioned. These actions will be detailed later.
Who can carry out the pro-indivision?
It will be the co-owners of the common thing who can bring about the extinction of the condominium. This is an inalienable right from which situations such as those explained below may arise.
What are the causes that provoke its extinction?
The pro indiviso, in addition to the general causes of the extinction of ownership, can be dissolved for the following causes:
- Consolidation. This occurs when a co-owner wants to put an end to the joint ownership by repurchasing parts of the property belonging to the rest of the co-owners. It can also occur when a third party takes over the entire share and acquires full ownership of the former common thing. In this way, what was previously divided in the hands of different co-owners will now only be the property of the one who has paid all the shares or owns all the percentages of the common thing.
- Renunciation of the common thing by the co-proprietors. In this case, any co-owner may decide to renounce his share in the common thing. No co-owner can prevent this from happening. In this way, he may transfer it to a third party or to one of the other co-owners if they are interested.
- Division of the common thing. If the property is divisible, it will be divided according to the percentage of the shares held by each co-owner. However, in the event that it is indivisible, it will have to be divided by agreement or through the courts. These means will be discussed in more detail below.
Before which courts can the condominium be extinguished? Who has jurisdiction?
As far as jurisdiction is concerned, we can differentiate between two cases:
- If the joint ownership is a consequence of the existence of a community of property subsisting after the divorce, the liquidation of the community of property will be dealt with before the same court that issued the divorce decree. The spouses may initiate proceedings for the division of the property or indivisible property held in joint ownership.
- If the joint ownership has arisen as a result of the separation of property during the marriage, there are two options. The general rule of jurisdiction will apply if the property is community property, but in the case of claims for payment, the courts of the defendant’s domicile will have to be seised.
What are the means of extinguishment?
Extinguishment can be achieved by agreement or by judicial means.
Extinction by agreement: extinction by agreement may consist in the reallocation of the property by instalments if it is indivisible, in the award to one of the co-owners with financial compensation to the others, or in the sale of the entire property to a third party. On the other hand, if the property is divisible, it will be divided equitably.
Extinguishment by judicial means: if it is impossible to extinguish the joint ownership voluntarily, it can be terminated by means of judicial proceedings. Depending on the type of joint ownership, it is necessary to take a matrimonial property regime liquidation proceeding or a judicial division of inheritance proceeding or a division of common property proceeding, depending on the origin of the joint ownership situation. If the property is divisible, it will be divided. If it is indivisible, it will be sold as a whole and a price will be obtained by means of a judicial auction. This must be analysed by a lawyer in accordance with the provisions of the LEC.
What are the consequences of the extinction of the joint property?
The affected parties will have to take into account:
- With regard to taxes, it is important to remember that extinguishing a joint ownership is taxed by AJD (tax on Documented Legal Acts). If it is sold to a third party, it will have to pay ITP (Transfer Tax).
- On the other hand, as far as the owners or third parties are concerned, everything will depend on the type of agreement that has been reached. It is advisable to have a specialist analyse the agreement, as well as the stipulations regarding the use and enjoyment of the joint ownership.
- As far as community property is concerned, it should be borne in mind that in a marriage where there are children, the termination of the condominium will not affect the right of use and enjoyment of the children and the custodial parent.
Thanks to our specialisation in divorce and separation cases, usually linked to the extinction of joint ownership, at Winkels Abogados we can advise you to guarantee an advantageous process.