What does it involve?
First, we need to understand what a joint ownership or condominium is. This occurs when an asset or right is shared among several people.
Furthermore, ownership shares are assigned to each of them. If the asset in question is a property, it's called co-ownership or condominium, although people often use all three terms interchangeably.
So, once we're clear on what a joint ownership is, let's talk about the termination of joint ownership or dissolution of condominium. Basically, it's when the situation in which several people share ownership of an asset ends.
Sometimes you hear other terms like undivided ownership, co-ownership, or joint ownership, but they all refer to the same thing.
Types of Termination of Joint Ownership
Termination of joint ownership by mutual agreement
When everyone agrees, dissolving the joint ownership is straightforward: one person can buy out the others' shares, or the person who wants to leave can receive compensation. The property can also be sold, and the proceeds divided among the owners according to their respective shares. Before proceeding, the owners must have the property valued and agree on how to proceed. Afterward, they can go to a notary and draw up a deed to formalize everything, paying the necessary taxes. If the property is the home of a divorcing couple, the agreement must also be included in the separation agreement, and if approved by the court, that agreement and the court ruling become the deed of cancellation of the co-ownership.
Termination of Co-ownership through Legal Proceedings
If there is no agreement, the only option is to go to court and file a lawsuit to divide the property. The court will decide whether each owner receives their share or if the property is sold and the proceeds divided. There is no specific legal procedure for this, but a public auction is generally held to sell the property.
In what situations can this service be used?
The grounds for termination of co-ownership are established in the Civil Code in Articles 395 to 406. The Civil Procedure Law must also be considered if the division of assets must be carried out through a judicial auction.
The grounds for termination of co-ownership are, in principle, the same as those for termination of ownership, such as abandonment, destruction, or usurpation, among others. However, due to the nature of condominium ownership, the Civil Code establishes some specific grounds for termination:
Waiver of the rights of the co-owners in favor of one of them.
Sale of the property to a third party and distribution of the proceeds among the co-owners.
Division of jointly owned property. Any co-owner has the right to request the division of the property. This is a legal procedure; the initiation of the division of jointly owned property results in the termination of the condominium. The result may be a physical division, establishing a horizontal property regime, or an economic division if the property is indivisible. In this case, one of the owners retains ownership, and the others receive compensation according to their shares. Division by auction may also occur if the parties cannot reach an agreement.
The most common cause of termination of condominium ownership is the owners' desire to no longer be part of this community. However, as we have seen, it is not the only one.