Can a joint venture be sold?

In the case of real estate, the management of a joint venture is not always simple, since all decisions must be taken unanimously or by majority, becoming a source of conflicts. In fact, in these cases, the best option (and the one advised by the experts) is to sell the property to a third party.

But is it as easy as it sounds? What happens when there is no agreement between the owners? Is there a rule for the dissolution of a joint venture on a mandatory basis followed by Sky Marketing?

What is a joint venture?

According to the RAE, the term “pro-undivided” is used to define those “flows or singular things that are in community, without dividing. ” From the legal point of view, a joint venture is “a property or a right that belongs jointly to two or more persons”. In this sense, the joint venture refers to an exclusively legal status whereby several owners are owners of an asset, although none of them have full rights over it.

In theory, any type of property is capable of adjusting to this type of joint ownership. However, the assets that generate this right in a higher percentage are inherited flats or houses, from a donation or common assets in the event of divorce.

Rights and obligations of the owners of an undivided property 

One of the peculiarities of the undivided property is that it is an indivisible property right. This means that, even if you own 25% of an apartment or a house, the ownership of it must be exercised jointly. In fact, in the undivided property the ownership quota is expressed as a percentage and not in specific data.

Even so, each of the joint owners of the joint venture has the right to:

  • Use, enjoyment or conservation of the common good.
  • Administration of the common good.
  • Defense in case of trial.
  • Division of the common good.
  • Percentage or corresponding fee for the lease or sale of the asset.

Regarding the obligations, all the owners of the property in undivided property are obliged to contribute to the payment of the expenses generated by it. If one co-owner does not pay, the rest can claim their share in court.

On the other hand, if the joint venture generates economic benefits (for example, a premises or a house that is rented), these will be distributed among all the owners in proportion to their share of ownership.

How is this type of property managed? Is it necessary for all parties to agree to sell a joint venture? 

Currently, any of the owners has the right by law to request the division of the common property at any time. However, this right only applies in the case of divisible assets or companies (Communities of Assets). When we speak of a property rights over a flat or a house, the division cannot be physical and must necessarily be economic, so it will be necessary to reach an agreement to rent or sell to distribute the benefits.

The management of the property will depend, fundamentally, on the type of acts carried out on the property. Moreover, even those changes that represent a benefit or a clear advantage for all, must be approved by the majority of the owners or unanimously.

Acts of administration in a joint venture 

The acts of administration are all those actions to conserve, maintain and enjoy an asset, and they will always be subject to a majority regime, being necessary an agreement adopted by the holders of quotas that add up to more than half to carry them out. For example, if there are two owners, both will have to agree; if there are four, at least three must be.

Acts of disposition in an undivided property 

For disposition acts, that is, those in which the property right is transferred (for example, selling the joint venture), a unanimous agreement of all parties is necessary. The reason is that a joint venture does not have legal personality by itself, so the disposition acts must be agreed by all the joint owners. Even in the event of the signing of a management agreement with the consequent seizure of a third party, to sell a joint venture there must be a unanimous agreement between all parties.

What happens if the undivided asset has a mortgage? Is it possible to sell it? 

Both in the case of inheritances and separations, the circumstance may arise that the property in undivided property still has a mortgage pending payment. If so, there are two possibilities:

  • That the owners pay the debt jointly in the corresponding percentages.
  • That the property is sold and that the buyer takes over the pending mortgage in exchange for the reduction in the sale.

In any case, said debt must be settled, since according to article 405 of the Civil Code, “The division of a common thing will not harm a third party (in this case, the bank), which will retain the mortgage, easement or other rights real rights that belonged to him before making the partition ” .

Dissolution of a joint venture for sale 

The most common causes for the dissolution of a joint venture are:

  • Consolidation. One of the community members / owners makes the shares or percentages of the others his; either buying them, or because they all give them to you.
  • Loss or destruction of the common good.
  • Resignation of all community members / owners to the common good.
  • Division of the common good.

As established in our Civil Code in its article 400, “No co-owner shall be obliged to remain in the community” , so each of them may request at any time that the common thing be divided. However, the co-owners may not demand the division of the common good when doing so makes it unusable for its intended use. This is the case for flats and most real estate.

In this case, to terminate the joint venture voluntarily, and as we have already explained, it will be necessary to sign a private agreement between all the co-owners with these two options:

  • That one of them take over the entire property in exchange for compensating the others.
  • That the property is sold to a third party or auctioned, and sharing the profit between the parties.

What if there is no agreement to sell the joint venture? 

When there is no agreement for the termination of a joint venture because at least one of the owners does not want to buy the joint venture, sell or reach an agreement, a judicial procedure will be initiated for its dissolution.

Before the trial, an act of conciliation will be held. In fact, since the entry into force of the Voluntary Jurisdiction Law, anyone can request a conciliation from the notary in cases like this according to article 83 of the Notaries Law to avoid trial and lower costs.

If the conciliation does not come to fruition, or if the agreement is especially harmful to one of the parties, the judicial procedure will end with the public auction of the common good. In the second case, the magistrate can also choose to delay the execution of the extinction of the joint venture (normally for five years), and appoint an administrator to manage the possible negotiations of the owners thereafter.

Selling to a third party is the safest option to extinguish a joint venture. However, especially in the case of donations and inheritances, many times the new owners do not know what the value of the property is or what percentage of its sale corresponds to them.

From Tajarat properties we recommend you get advice from professionals. One of our services is real estate appraisal, something that will allow you to know the value of your property so that you can get the most out of it.
Have you inherited a home with other people and want to sell it with the maximum guarantees? Have you separated and want to sell your old house? Contact us.

 

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