A property may have multiple owners. This is unproblematic if the co-owners – for example spouses – live together and jointly use the entire property.
However, if the use of the property becomes disputed between co-owners – for example due to co-ownership arising from inheritance or prior to a sale – it is advisable to seek a legal solution for regulating its division of use.
Note: This is not limited to residential houses; it may arise in the case of any jointly owned property.
What qualifies as a single property?
If only one title deed (land registry sheet) and one cadastral number are associated with the property, it is legally considered a single property.
This is the case even if physically it appears to be multiple separate units – for example, if two houses stand on one plot, or in the case of a semi-detached house with separately fenced gardens and entrances. In such cases, a use-sharing agreement is required.
f the co-owners are able to reach an agreement, they may regulate the use of the property by contract. This agreement records between the co-owners:
• which parts of the property are used exclusively by whom – for example, who uses the ground-floor unit, a specific part of the garden, or the garage
• which parts are used jointly – for example, a driveway or corridor
• how costs are to be shared – for example, separate utility meters or agreed cost-sharing arrangements
I always attach a layout plan to use agreements to illustrate the division. The plan does not require official approval from the land registry, but it is advisable to have it prepared and measured by a licensed surveyor.
If the intention is to sell a physically separated unit within the property, a lawyer countersigned use-sharing agreementis indispensable for bank financing and strongly recommended in any event to prevent future disputes.
What is the problem if there is no use-sharing agreement?
• Legal uncertainty: Without a use-sharing agreement, each co-owner may use the entire property. The law limits this by stating that no co-owner may exercise this right to the detriment of the others’ rights or essential interests. However, what qualifies as such detriment depends on circumstances and interpretation, making it uncertain.
• Difficulties regarding rights and obligations: Without division of use, the collection of benefits, bearing of costs, risk allocation, and preservation of condition apply proportionally to ownership shares. Decisions require majority voting, and in certain cases unanimity. This is often difficult to coordinate. A contract can clarify that each owner collects the benefits and bears the costs of the part allocated to them.
• Conflicts arising from joint use: “This is my part,” “Don’t park there,” “I want a cheaper fence,” etc. Without written regulation, such disputes are difficult to resolve.
• Difficulties in sale: Without regulated division of use, selling an ownership share is almost impossible due to the issues above. In the case of bank financing, proper legal regulation of use is a requirement.
What happens if the owners change?
There is no need to conclude a new agreement, as the previously concluded contract also binds future owners. I draft agreements with effect extending to all current and future owners of the property.
Modification or termination is only possible by unanimous agreement of all co-owners currently registered in the land registry, in the same formal manner as the original agreement.
Should I be concerned if my co-owner takes out a mortgage or incurs debt?
A co-owner may encumber only their own ownership share and is liable only to that extent. If they take out a mortgage loan, it is registered against their ownership share. In enforcement proceedings, only their share may be affected.
A use-sharing agreement concluded before enforcement proceedings will also affect the terms of a judicial sale. Any purchaser at auction will likewise be bound by the existing use agreement.
hat is required for a property to be divisible in terms of use?
Both nothing and quite a lot.
If co-owners merely wish to regulate use among themselves, the agreement can be flexible.
However, if the goal is that a separated unit be independently marketable – for example with bank financing – the following should be considered:
• Optimal: separate main entrances for each unit
Possible: one common entrance leading to a shared area (e.g. corridor) with separate entrances from there
• Optimal: separate utility meters
Possible: agreement on cost-sharing arrangements
• Optimal: yard divided with exclusive use and fencing
Possible: shared yard or shared driveway
• Optimal: lawyer countersigned use-sharing agreement with layout plan
Possible: agreement without countersignature if no bank financing is involved
If there is a use-sharing agreement, may I freely sell my ownership share and the associated exclusive use part?
Co-owners have a right of first refusal against third parties.
This means the ownership share may be sold, but the seller must notify the co-owner entitled to pre-emption and offer the property under the same conditions as agreed with the external buyer (price, payment terms, possession date, etc.).
If the pre-emption right is exercised, the contract is concluded with that co-owner. If not, the sale may proceed with the third-party buyer.
Clearly defined use rules ensure lawful use and prevent disputes between co-owners in the long term – thereby protecting peace of mind and the value of the property.
The next part of this series will discuss what can be done if no agreement exists but a formal division of use is specifically desired.