The most significant changes in the regulation of joint ownership

26. 5. 2015

Joint ownership according to the New Civil Code (NCC) has undergone a considerable number of changes. The new legislation differs strikingly, qualitatively and quantitatively, from the previous interpretation in the Civil Code of 1964, both in terms of the number of statutory provisions, in that the original 6 paragraphs in the Civil Code of 1964 have been replaced by more than 125 paragraphs, and in terms of new and "restored" institutions.

Those who have joint ownership interest in a thing – joint owners – are legally considered to be a single person having disposal of that thing. Each of the joint owners has the right to the thing as a whole, limited only by the rights of the other joint owners. One new element is the right of a joint owner to a final statement of the way in which the jointly-owned thing has been disposed of, including a share in the fruits and gains from the jointly-owned thing (for example, income from rent etc.).

Disposal of a joint ownership share

The regulation of joint ownership shares remains the same; however, it is now expressly possible to dispose of a share at one's own discretion. The only limitation here is the obligation to dispose of a share in a way that does not harm the other joint owners, this reflecting the case law of the Constitutional Court, such that the management of the thing must respect the legitimate interests of a (minority) joint owner; otherwise such action would be the exercising of a right in conflict with good morals. Respecting good morals might prove fundamental in the case of a dispute between joint owners, when it could formally be a case of conflict with the law; nonetheless, the court must take action that complies with good morals into consideration.

The pre-emptive right of a joint owner

The pre-emptive right of joint owners has been entirely amended from the regulation of the Civil Code of 1964. The pre-emptive right of joint owners is now limited to a pre-emptive right established by acquisition for the case of death or other legal fact such that the joint owners were unable to influence their rights and obligations from the beginning. Even then, however, the pre-emptive right is limited to a period of 6 months from the creation of joint ownership. Otherwise, joint owners only have a pre-emptive right in the case of transfer without consideration (donation). Joint owners then have the right to buy a share for the normal price. Apart from these situations, joint owners shall not have pre-emptive rights and it is also important to point out that the statutory pre-emptive right of joint owners according to the Civil Code of 1964 also ceased to exist on 1.1.2015.

The management of a jointly-owned thing

For the decisions of joint owners to be effective, all joint owners must at least have been informed, the exception here being urgent matters (even in such case, limits have obviously been set in order to protect joint owners).

The ratio of the influence of joint owners has also changed – an absolute majority is sufficient for routine decisions and a majority of 2/3 of the joint owners for decisions to concern more significant matters. Meanwhile, all joint owners must consent to encumbering the thing (for example, with security interest) or other limitation of the right of ownership for a period of longer than 10 years. An outvoted joint owner may in certain cases turn to the court.

Recompense of the costs of managing a thing

The NCC supposes that whoever is taking care of the thing has the right to recompense for the necessary costs, whether it be the manager of the thing or a joint owner who, without informing the other joint owners and indeed without their consent, paid costs to save/rescue the thing. However, a joint owner may also seek recompense of a proportionate part of those costs invested to appreciate the value of the thing in the interest and to the benefit of the other joint owners. The law does not regulate any further everything that could be considered "to the benefit of other joint owners" and therefore the situations in which other joint owners are compelled to contribute (for example, to repairs with which they do not agree, but which actually appreciate the value of the thing). Unfortunately, therefore, frequent disputes could arise and only case law will decide what is actually in the interest and to the benefit of other joint owners.

The cancellation of joint ownership

The NCC also brings more detailed regulation to the cancellation of joint ownership. Apart from the fact that it is possible to arrange postponement of the cancellation of joint ownership, it is now laid down that joint owners are obliged to mutually settle claims and debts relating to joint ownership or the jointly-owned thing. In the case of dividing the jointly-owned thing, those who have property rights to the divided thing are also protected.

Joint ownership of parts making up a whole

The final amendment we refer to is the new institution of joint ownership of parts making up a whole. The intention here is to maintain the functional wholeness of individual things that belong to different owners – a typical example might be a common path to all the gardens in an allotment. For the supposed use to be achieved, therefore, a share in the thing which is the subject-matter of joint ownership of the parts that make up a whole may only be transferred together with the main thing; for example a share in the land on which the path lies may only be transferred together with the adjacent garden and vice versa. All joint owners are proportionately obliged to contribute towards the management of the thing in such joint ownership and to provide the manager advance payments (invariably by 31 January).

Mgr. Petra Kratochvílová

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