No one can force you to remain in a joint ownership arrangement, and you can therefore request that it be dissolved in two ways: either voluntarily or through legal proceedings.
Joint ownership – owning something together
Joint ownership means that two or more parties share ownership and costs of an object, so that all parties own an ideal share of the purchased object – including, for example, a home. In the rest of this text, the jointly owned object is therefore referred to as a “home.”
The rights of co-owners should be set out in agreements between the co-owners; if no such agreements have been drawn up, the Co-ownership Act will apply.
Co-ownership agreements are normally entered into with the best of intentions, but we are constantly contacted by co-owners who want to get out of a co-ownership agreement.
The main rule is that none of the co-owners can be forced to remain in a co-ownership against their will. The co-ownership can be dissolved either voluntarily or by applying to the district court for dissolution, cf . Section 15 of the Co-ownership Act.
How to dissolve joint ownership – voluntarily
Voluntary dissolution of a joint ownership is both time- and cost-effective for each of the co-owners.
The co-owner who wishes to dissolve the co-ownership must give the other co-owners reasonable notice. The notice should expressly state that you wish to dissolve the co-ownership.
If the other co-owners agree to dissolve the co-ownership, either the entire property can be sold, or the other co-owners can form a new co-ownership by buying you out.
It is therefore important that the co-ownership association keeps accounts that show:
- What ideal share each of the parties owns (this is also stated in the land register)
- How much equity each of the co-owners has contributed
- Distribution of expenses, repayment of loans, etc.
Naturally, the above does not apply to all types of co-ownerships, but the basic principle is that the settlement must be fair – each party receives the correct share of the proceeds from the sale, or is left with a fair share of the remaining debt.
How to dissolve joint ownership – legal process
One or more of the co-owners may refuse voluntary dissolution. The next step will then be to petition for dissolution of the co-ownership through legal proceedings. The petition must be sent to the district court.
Upon receipt of the petition, the court will decide whether the co-ownership can be dissolved. If the formal requirements are met, the petition will be granted by appointing a legal assistant to carry out the sale of the property. The assistant is normally an experienced lawyer or real estate agent.
The sale will be advertised in the usual manner, but any interested parties will be informed of the basis for the sale prior to bidding.
In connection with the bidding round, the other co-owners have preemptive rights to the property. To activate their preemptive rights, the other co-owners must match the highest bid made by an outside bidder.
A compulsory dissolution of a co-ownership is normally a lengthy process that can take up to six months. However, this is often a necessary process in order to dissolve the co-ownership.
Legal assistance in the dissolution of joint ownership
Our advice is to engage legal assistance when attempting to dissolve a joint ownership – both voluntarily and compulsorily. An experienced lawyer will be able to assist with negotiations in connection with a voluntary sale.
Legal assistance will also be useful in legal proceedings. A lawyer will ensure that the formal requirements for compulsory dissolution are met and that the petition is drawn up correctly.
Co-ownership disputes will normally be covered by your home contents insurance. Legal aid coverage will then be something a lawyer can apply for on your behalf, thereby reducing the costs of dissolving your co-ownership.