How Is an Undivided Property Managed
The law provides a framework for the management of undivided property with rules that are sometimes restrictive: it is however possible to modify them.
Management of an undivided property: legal rules
Which acts by whom?
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Conservatory acts |
Acts of administration |
Acts of disposal |
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Definition |
– Acts intended for the good conservation of the property. Example: roofing work. – The co-divisor who incurs undivided expenses must obtain compensation. |
– Acts of current management. Example: conclusion of a residential lease. – All the co-divisors must be informed. |
– The most serious acts. Example: sale of the undivided property. |
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Who can perform them? |
Any undivided co-owner is authorized to carry out this type of act alone. |
The undivided co-owners holding at least 2/3 of the shares can perform this type of act. |
Unanimity is necessary to carry out this type of act. However, the judge can authorize a sale if at least 2/3 of the undivided co-owners agree and if: – the property to be sold is not dismembered; – no undivided co-owner is absent or unable to express his or her will. |
Example: A, B, C, and D own an apartment in joint ownership; A and B each have 1/3 of the shares, and C and D each have 1/6. A and B can rent the apartment without the consent of C and D; however, C and D must be informed.
Note: the action of revendication (the act of legally claiming ownership of a property), when it concerns an undivided property and its purpose is to preserve the rights of each undivided co-owner, constitutes a conservatory act that each of the undivided co-owners may perform alone and not with the unanimous consent of the co-owners.
Amendments to the rules of management of undivided property
When the co-owners are numerous and in conflict, they can arrange the property management to make it easier; there are two ways to alleviate the legal rules of management: appointing a mandatary or entering into an indivision agreement.
Appointing a mandatary
The co-divisors choose together one of the co-divisors or a third party to manage the undivided property.
– The mandate may be verbal or written, by private deed (between the co-divisors only) or by authentic act (before a notary).
– The mandate specifies the conditions under which the agent must ensure the management. It may be:
◦ a unique mandate: it authorizes the mandatary to perform a particular type of activity; or
◦ a general mandate: the mandatary is responsible for performing all acts relating to the management of the property.
– Appointing a mandatary allows the co-divisors to avoid cumbersome formalities and/or conflicts insofar as the mandatary alone makes decisions relating to the management of the property.
Conclude an indivision agreement
The co-divisors can choose to conclude an indivision agreement together, i.e., a contract by which they adjust the legal rules.
If indivision remains too restrictive for the co-divisors despite these adjustments, they can always choose to leave the indivision.
Important: the distribution of property rights on a property purchased in undivided ownership is done following the shares indicated in the acquisition deed and not according to the financing. Suppose two purchasers each buy a property in undivided ownership. In that case, they will have acquired the property in the same proportion without considering the terms and sources of financing of the property. The fact that one of the purchasers has contributed more than the other does not affect their respective ownership rights.
Management of the undivided property by a single undivided co-owner
When a property is in undivided ownership, each undivided co-owner has, in principle, a right of enjoyment over the property. Consequently, if one of them makes private use of it or obtains an exclusive right of enjoyment following a judgment, he or she is liable for an occupation indemnity.
The payment of an occupancy indemnity is required if the other undivided co-owners are deprived of their rights. It does not matter if the undivided co-owner has exclusive use of the property he occupies.
Good to know: the occupation of the property by only one of the undivided co-owners is not, in principle, free of charge, but the undivided co-owners or a judge can decide that it will be. The family court judge can thus attribute, within the framework of his non-reconciliation order, the unrestricted use of the joint property to a spouse until the judgment is pronounced. It should be noted that when the judgment does not specify whether the private use is free or not, it is presumed to be paid for.
In the absence of an agreement between the undivided co-owners or provisional partition of the property, the compensation due by the person who has private use of the property must revert to the undivided co-owners.
The injured undivided co-owners have up to 5 years to claim an occupation indemnity:
– in the case of divorce, this period starts from the decision pronouncing the payment of the indemnity as soon as it is no longer subject to appeal;
– in other cases, the indemnity is only due for the 5 years preceding the request. However, it is important to remember that the undivided co-owner who occupies the premises can waive the prescription period.
Note: an undivided co-owner is not required to pay an occupation indemnity to the undivided co-ownership when he occupies an undivided property privately if he rents it under a verbal lease, even if the property’s rental value is much higher than the rent paid.
Read more:
– How to Get Out of Undivided Co-ownership?
