Discontinuing the community of property when co-owners disagree

Community of Property or coownership is where two or more persons are vested with the ownership of an undivided share of one and the same thing, or of one and the same right.

Dr Joseph Calleja is an Advocate by profession practising in Malta

Acommon example would be when a couple decide to purchase an apartment together or when a house is inherited by siblings. This implies that the asset in question would not be susceptible to the exclusive use and enjoyment by an individual co-owner to the exclusion of the other/s. In effect, the law sets out that each co-owner is entitled to make use of the common property on condition that it is used for the purpose it is destined to and that such use does not prevent the other co-owner/s from enjoying the common property according to their rights.

While the state of co-ownership can be brought about voluntarily, such as when two or more persons decide to jointly purchase a property, this state can also arise involuntarily, the most common occurrence being when property devolves to various persons through a testamentary disposition. By way of a general observation, it could be noted that the law is more inclined to favour individual ownership rather than encouraging co-ownership. In fact, the law caters for various actions that are intended to termi- nate the community of property.

One such action that is often resorted to is that found in Article 495A of the Civil Code, Chapter 16 of the Laws of Malta. This action is mainly intended to bring about the termination of the community of property by requesting the Court to authorise the sale of a property when the co-owners fail to agree. It is worth nothing that this action can be resorted to with respect to both movable and immovable property. The legislator’s objective in promulgating this remedy was to avoid having property, in particular immovable property, being left vacant due to disagreement between its owners. In order for this action to succeed, there are six cumulative requirements that must be complied with. Firstly, the property in question should not be one that falls within the ambit of a condominium or be otherwise subject to necessary community of property. Secondly, the state of co-ownership should have been in existence for a period of at least three years, which prior to 2016 was a 10-year period. Thirdly, none of the co-owners should have instituted an action in Court for the partition of the property that is held in common. The fourth requirement is that the coowners failed to agree with regard to the sale of the property. The fifth is that the majority of coowners agree to sell. The sixth and last requirement is that the court needs to be satisfied that none of the disagreeing coowner/s will be seriously prejudiced by the sale of the property. If the Court is satisfied that these requirements are met, it will proceed to authorise the sale in accordance with the wish of the majority of co-owners.

The co-owners requesting the authorisation of the Court in their application also have to present a declaration that they agree to the sale together with a prospectus showing the number and the value of their share from the property. Moreover, the terms and conditions under which the sale is to take place should be brought to the attention of the Court and an indication of the date and circumstances when the co-ownership arose should also be provided together with the application.

In a situation where there are numerous co-owners, it is a common occurrence that some of them might not be known or might be difficult to trace. In such instances, one of the co-owners filing the action is to confirm this fact on oath and the application is then served on curators that are appointed by the Court to represent their interests. Within 20 days from service of the acts, the dissident co-owner/s as well as the curators may oppose the sale by claiming the serious prejudice that they or the co-owners, represented by them, may suffer because of the sale. In the Court’s deliberation on whether the sale will be of serious prejudice to any of the co-owners, it will take into account all the relevant factors including the value of the property and the price of the sale and may also appoint experts to assist it in the appraisal of the property.

If the Court decides that the sale should go through, it shall determine the price or any other consideration for the sale and shall further set the time, date and place when and where the transfer is to take place. In cases of immovable property, it shall also appoint a notary to publish the deed of sale and appoint curators to represent any of the co-owners who fail to appear for the publication of the deed or other instrument of transfer.