How a co-ownership agreement can be dissolved

For various reasons, several people may own property. The co-ownership may, for example. arise from the fact that at least two people buy something together or become joint owner of property through gift, inheritance, will or division of property. Over time, co-ownership can create problems and the question of how to dissolve co-ownership can then become relevant.

How do you dissolve co-ownership?

If you are several owners of a certain property, you can agree on what should apply to the management of the property and how the joint ownership should be dissolved. If the co-owners have not entered into an agreement, they are referred to the Law on Co-Ownership, which regulates co-ownership. All decisions regarding the co-owned property must be made with full agreement between the owners, which can create problems.

There are several ways to dissolve co-ownership. If the co-owners agree, they can freely decide how they want the co-ownership to be dissolved, for example by selling to a third party. 

If all the co-owners cannot agree on how the co-ownership right is to be dissolved, the co-owners are referred to request sales according to the co-ownership law. The partner (s) wishing to dissolve the joint ownership may then apply to the District Court for sale at a public auction.

A partner may, in his request, grant the right to decide that the property may not be sold below a certain minimum price. If the district court, after giving the other shareholders the opportunity to comment, decides on a minimum price, the property may not be sold if, at an auction, no bids corresponding to or exceeding the minimum price are made.

Good man

The district court appoints a good man who handles the auction and distributes the purchase price between the partners after the auction. If any of the owners themselves are interested in purchasing the property, they are not prevented from participating in the bidding. The good man must make the necessary decisions about the sale and look after all the interests of the partners. The good man decides what measures, and therefore costs, are justified to achieve the best possible price at the auction.

Costs

The costs incurred as a result of the sale at a public auction must be paid by all the owners in proportion to each person’s share of the jointly owned property. In practical terms, the co-owners often have to pay an advance to the good man to cover costs and fees. If the property is subsequently sold, the cost of the auction is regulated from the purchase price and the partners are credited when the advance paid.

It happens that the property is not sold at the auction. It may be that stakeholders are missing from the object, but it also happens that the minimum price demanded by a partner, and as the district court determined, is too high in relation to what the stakeholders are willing to pay. In my opinion, it is important that the co-owner, who requests that the district court determine a minimum price, carefully considers the size of the minimum price and understands the consequence of his request. If the property is not sold, the co-owners are obliged to pay the good man for work and costs in relation to his share in the jointly owned property.