What is shared ownership?
Being in jointly owned is the legal situation that arises in which two or more people own the same asset together. In theory, it makes financing, maintenance and management easier. However, situations of this type are not risk-free. It is advisable to anticipate any risks in a joint indivision agreement.
Why buy an asset jointly owned?
Being in jointly owned appears to be the easiest solution, when two or more people get together to buy an asset.
Naturally, it is not the only way to do this (there are more specific options such as the SCI [property company] for example), but it is by far the least restrictive. It does not require any particular steps to be taken nor any particular formalities .
Each purchaser owns their share of the property in accordance with their financial contribution to the purchase (30/70, 40/60, 50/50, etc.), without there being any material distinction between the different shares.
Being in jointly owned is therefore very simple, at least at the outset, particularly when the owners are cohabiting or have entered into a civil partnership and wish to acquire their home together.
Once the asset has been purchased, each of the owners (known as joint owners [indivisaires in french]) has rights over the whole asset.
The most important decisions must be taken unanimously (unless there are exceptional circumstances). In the event of a disagreement, this can quickly lead to an impasse.
Furthermore, each joint owner is required to pay the debts that relate to the asset (taxes or works on the home for example), in proportion to their share of the asset. It goes without saying that it is essential to assess the risks of disagreement before the purchase is made.
Finally, the rules governing ownership in undivided shares assume that the situation is provisional. The law has laid down the principle that "nobody can be required to remain an owner of an asset in undivided shares". If one of the joint owners decides to sell their share, the others, who cannot object to this, have a right of pre-emption over the share to be sold. Unless the share is purchased (by another joint owner or by a third party ), the asset must be sold.
Situations of this type are not risk-free ; It is advisable to anticipate any risks in a joint indivision agreement.
How can the risks be avoided?
The insecurity of this situation can be avoided by signing a jointly owned in undivided shares agreement, which must be prepared in writing, on pain of being held null and void. It must list the items that are owned in undivided shares and specify the rights of each joint owner.
If the agreement relates to real estate, it must also be drafted by a notaire, and must be registered with the land charges registry. It may be entered into for a specific period (no more than five years). In such case, the joint owners are free to renew the agreement if they so wish; renewal by tacit agreement may be envisaged.
The purpose of the jointly owned in undivided shares agreement is to determine how the joint ownership will be managed and to lay down the rules that will apply. The joint owners may determine how the expenses will be divided, appoint a manager (who may, but need not be one of them), determine the amount of any occupation rent (if one of them occupies the property alone), etc.
When the agreement has been entered into for an indefinite term, none of the joint owners can require the property to be sold in order to recover their share.
What should be done in the event of a dispute?
When the sale of an asset that is owned in undivided shares has been blocked by one of the joint owners, the other joint owners, representing at least two thirds of the undivided rights, may seek authorisation to sell from the regional court [tribunal de grande instance]. These proceedings must involve a notaire.
Are there any other situations in which this type of ownership may arise
Ownership in undivided shares is not always chosen by the parties.
It may arise in the event of death, for example, before the estate has been divided among the heirs (joint ownership in undivided shares of an estate on succession [indivision successorale]); when a marital community is split up on divorce (ownership in undivided shares subsequent to the liquidation of a marital community [indivision post-communautaire]).
However, whether this situation arises voluntarily or involuntarily, ownership of this kind is subject to the same rules.
- I want to buy an apartment. My bank refused my loan. Can I ask the seller a staggered payment of the selling price?
- I'm selling my main home acquired 5 years ago. The notary claims a missing diagnosis: ESRIS. It was not provided to me 5 years ago. Am I obliged to have it done?
- I signed a reservation contract for the acquisition of a property on plan. This contract has been notified to me for more than 1 month, can I retract?
- I own an apartment that is not my principal residence. I put it on sale in order to acquire my principal residence. Can I benefit from a tax exemption on real estate capital gains knowing that I am not the owner of my main home?