Last week, we described what co-ownership is, and in today's article from the "Tuesday Mornings for Construction Professionals" series, we want to continue this topic and analyze the rights and obligations of co-owners. Of course, all co-ownership rights can be exercised with respect to real estate.
First and foremost, each co-owner may dispose of their share without the consent of the other co-owners. This means that each co-owner has full ownership rights over their share and can, for example, sell it without the consent of the others. However, this does not prevent a co-owner from entering into agreements regarding their share that would affect the entire joint property or the shares of the other co-owners. Furthermore, in some cases, the ability to dispose of a share is limited by law, such as the requirement to obtain the consent of a spouse to dispose of a share in an asset subject to marital community property.
For acts exceeding the scope of ordinary management, including in particular the disposal of a jointly owned property (as a whole, not a share), the consent of all co-owners is required. Unfortunately, there is no defined catalog of acts of ordinary management and acts exceeding the scope of ordinary management. The classification of a given act into one or the other category may depend on a number of factors. The Civil Code explicitly lists only the disposal of a jointly owned property as an act exceeding the scope of ordinary management (e.g., establishing an easement on real estate or encumbering the entire property with a mortgage). Court case law plays a significant role in determining whether a given act is an act of ordinary management or one exceeding the scope of ordinary management. It has classified acts exceeding the scope of ordinary management as, among others: erection of a permanent structure on a property that is the subject of joint ownership (see, among others, the judgment of the Regional Administrative Court in Białystok of 12 February 2013, II SA/Bk 692/12), construction of a storey above a building that is the subject of joint ownership (see the judgment of the Supreme Administrative Court of 29 March 1990, IV SA/33/90). It is important to note that in the absence of consent of all co-owners, co-owners whose shares constitute at least one half may request that a given act be performed by a court, which will rule taking into account the purpose of the intended act and the interests of all co-owners.
For ordinary management of a jointly owned property, the consent of the majority of co-owners is required. The majority of co-owners is calculated based on their shareholding. In the absence of such consent, each co-owner may request court authorization to perform the act.
When it comes to concluding a lease or tenancy agreement, court case law does not clearly indicate whether these constitute ordinary management activities or activities exceeding ordinary management. In its judgment of July 10, 2020, II CSK 616/18, the Supreme Court stated that "whether the transfer of real estate constituting the subject of co-ownership for use based on an obligation is an ordinary management activity or an activity exceeding the scope of ordinary management is determined primarily by the type of real estate, its intended use, and the scope of the part of the real estate that is the subject of such legal act."
Each co-owner is obligated to cooperate in the management of the jointly owned property, meaning they are obligated to co-decide on actions concerning the jointly owned property. This applies to all management actions – both factual and legal. This obligation lasts as long as the joint ownership relationship exists, but the legislature has not provided any sanctions for failure to comply.
If a majority of co-owners decide to perform an act that is blatantly contrary to the principles of proper management, any of the remaining co-owners may request a court ruling. It should be noted that a co-owner who consented to the act does not have the standing to file such a motion. Acts already performed cannot be challenged in this manner.
Each co-owner may apply to the court to appoint an administrator if it is impossible to obtain majority consent in important matters concerning ordinary management or if the majority of co-owners violate the principles of proper management or harm the minority.
A co-owner who manages a jointly owned property may demand compensation from the other co-owners, corresponding to their reasonable workload. This is available to a co-owner who manages the property under an agreement entrusting them with these duties, entered into with the other co-owners, or under a court order, as well as to a co-owner who actually manages the property with the implied consent of the other co-owners.
Each co-owner not exercising management of the joint property may demand an account of the management at appropriate times. This applies to both contractual management and management through actual acts performed by one of the co-owners. This does not apply to management appointed by a court, as such management is subject to supervision according to specific provisions of the Code of Civil Procedure. This right is mandatory, meaning it cannot be excluded by agreement. The primary purpose of this regulation is to protect the individual interest of the co-owner by enabling them to monitor the management's activities.
Each co-owner is entitled to joint possession of the common property and to use it to the extent compatible with the joint possession and use of the property by the other co-owners. Joint possession refers to a situation in which possession of a given property is exercised by several people. This means that each co-owner has the same right to actual control over the common property. Each co-owner is an independent possessor of the common property within the scope of his or her share. Joint use means the right to use the property, to receive benefits and other income from the property, and to consume the property. It is possible that if only one co-owner exercises their rights to the property after a certain period of time, adverse possession may occur, but this topic will also be the subject of a separate analysis.
Profits and other income from a common property accrue to co-owners in proportion to their shares. Co-owners bear expenses and burdens related to the common property in the same proportion. This principle is dispositive in nature, meaning that co-owners may regulate their mutual settlements differently through an agreement entered into by all co-owners. The most common case encountered in real estate is the establishment of the so-called right of exclusive use – quad usum. This right is recorded in the land and mortgage register and grants a given co-owner the right to use part of the property to the exclusion of the other co-owners – it also entails both the right to collect profits and the obligation to bear the associated costs. Personal or land easements may also be established in favor of individual co-owners – which, of course, requires the consent of the co-owners.
Each co-owner may perform any actions and pursue any claims aimed at preserving the joint right. Preservative actions are characterized by two basic features: their purpose is to protect the right against potential danger, and this protection must relate to the joint right and protect the interests of all co-owners. Examples include filing a motion to divide the property or filing a debt collection action, which aims to regain the co-owners' lost control of the property.
Each co-owner may request the dissolution of co-ownership in fractional shares. This right may be excluded by a legal act for a period not exceeding five years. In the last year before the expiration of the stipulated period, it may be extended for another five years. This extension may be renewed. We will discuss the methods of dissolution of co-ownership and exclusions in detail in a subsequent article.
As you can see, joint ownership entails a number of rights, but also obligations.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of November 27, 2023.
authors:
