Common Ownership and Its Holders
Common ownership refers to property that belongs jointly to two or more owners.
Such co-owners may include several natural or legal persons, these entities and the state, or even several states; that is, any person who can be a subject of legal property relations can be a co-owner. There are two types of common ownership: fractional (where each owner’s share is defined) and joint (where shares are not defined).
Key characteristics of the right of common ownership:
- Multiple subjects – owners. These can be natural or legal persons, the state, or municipalities. There may be two or more such subjects;
- A unified object – a specific item or a set of items. Each co-owner’s property right extends to the entire object, not to any specific physical part of it.
Fractional common ownership is managed, used, and disposed of with the consent of all participants. In case of disagreement, the court determines the rules of management, use, and disposal at the request of any participant. Each participant in fractional common ownership, in proportion to their share, is entitled to the income generated by the common property, is liable to third parties for obligations related to the common property, and is also required to participate in the expenses for its maintenance, preservation, taxes, fees, and other payments.
Each participant in fractional common ownership has the right to transfer their share of the common property to another person. If a share in the common ownership is transferred to an outside party, other participants in the fractional common ownership have the right of first refusal to purchase the share at the same price and under the same conditions, except in cases where the sale is conducted through a public auction.
The seller of a share in common ownership must notify the other participants in fractional common ownership in writing of their intention to sell their share to an outside party and must indicate the price and other terms of the sale. When a share in the common ownership of a residential house or an apartment in a multi-apartment building is being sold, the notification is made through a notary office. If the other participants in fractional common ownership refuse to exercise their right of first refusal, or fail to do so in the case of a residential house or apartment within one month, or in the case of other property within ten days from the date of receiving the notification, the seller has the right to sell their share to any person.
Each participant in fractional common ownership has the right to request to be separated from the common property. If no agreement is reached on the method of division, the property, upon the request of any co-owner, shall be divided in kind, as far as possible without causing disproportionate harm to its intended purpose; otherwise, the co-owners who are separating receive monetary compensation.
In joint common ownership, the shares of each owner are not specified or precisely defined. The rights of joint common ownership can arise only in cases provided for by law, for example, the property of spouses is considered joint common ownership. Spouses can only jointly manage and use the property they own under joint common ownership.
Liability of Co-Owners and Principles of Management
It is presumed that the shares of all co-owners are equal unless otherwise specified by law or by an agreement establishing joint common ownership.
Each owner of this type of property has the right to enter into transactions related to the management and use of the common property unless otherwise agreed in a contract between the co-owners. However, in such cases, the consent of the other co-owners is required. If one of the co-owners enters into a transaction without the necessary consent of the other owners of the joint common property, such a transaction may, at the request of the other co-owners, be declared invalid. Co-owners have equal rights to the income generated by the common item or property, are liable to third parties for obligations related to the common property, and are jointly responsible for covering the expenses for its maintenance and preservation, taxes, or other fees unless otherwise provided by an agreement or by law.