What is an Undivided Agreement
Signing an Undivided Agreement, instructions for use
Content of the Undivided Agreement
Undivided agreement: the possible appointment of a manager
The undivided co-ownership agreement adapts the legal regime of undivided ownership, allowing the co-owners to manage their property more freely.
Signing an undivided co-ownership agreement, instructions for use
Mandatory terms and conditions
When it concerns real estate, the undivided co-ownership agreement must:
– be in writing;
– describe the undivided property covered by the agreement
– mention the share of each co-owner in the property;
– be an authentic act: drawn up by a notary.
Note: when 2 divorced spouses sign an undivided agreement, the judge must also approve it.
The formalization before a notary is more reassuring, especially since if all the undivided co-owners agree and sign the undivided agreement, it is considered a temporary renunciation to ask for the sharing to remain in the undivided property.
Moreover, using a notary becomes mandatory when the undivided agreement concerns one or more real estate assets, even when it is annexed to a petition for divorce by mutual consent, which, by law, must include “a liquidation statement of the matrimonial regime”. In this document, the ex-spouses can agree to keep the family home undivided: they must, however, express their will before a notary. In addition to the drawing up of a notarial act by this public officer, land registration formalities must be carried out at the land registration service to inform third parties of the joint ownership situation.
Suppose an undivided co-owner does not pay the occupancy indemnity for the undivided property under the terms of the undivided co-ownership agreement. In that case, it is sufficient to call upon a bailiff to obtain the execution of the contract without having to call upon a judge.
How long is the undivided agreement valid?
The co-divisors determine together the duration of the agreement.
The agreement can be concluded for 5 years, tacitly renewable.
Attention: when the undivided agreement is concluded for a fixed term, no co-divisor may request partition before the end of the term, and leaving the undivided property is forbidden – except in exceptional circumstances, in which case the intervention of a judge is necessary.
Good to know: this situation gives stability to the undivided property since it ensures that the co-divisors remain in the undivided property, but it can also be restrictive insofar as it commits co-divisors to an undivided property that they cannot leave.
Therefore, five years is the maximum initial length of a fixed-term undivided agreement.
However, an undivided agreement can be concluded for a shorter period: notaries often advise a 2 or 3 years commitment.
A fixed-term undivided agreement can be renewed expressly or by tacit agreement. In practice, notaries advise foreseeing the renewal by unanimous agreement. At the end of the term, the parties must meet again to sign a new undivided agreement.
Good to know: it is impossible to leave the undivided property before the expiry date of the undivided property agreement unless you can show “just cause”. If the undivided co-owners cannot agree on the renewal of the contract or the duration of the renewal, the legal rules will apply. The law then applies: the undivided co-ownership situation can permanently be terminated, and no one can be forced to remain in it.
An indefinite duration
The undivided agreement is applicable until the partition of the undivided property, which can be requested at any time by any of the co-divisors. This indefinite duration often frightens the undivided co-owners. However, the formula is more flexible than a fixed-term agreement since any may request a partition of them without the need to invoke cause.
The second advantage of this undivided agreement is that the registration of the deal is done only once at the time of its signature. In contrast, it must be repeated at each express renewal of a fixed-term agreement.
Good to know: an agreement initially concluded for a fixed term can be transformed into a contract for an indefinite period if the manager is dismissed. Or if the circle of the undivided ownership is extended to a person outside it, the heirs of the deceased, for example. But the arrival of a third party is generally the occasion to provide for an agreement adapted to the new situation… or to take particular precautions by inserting a clause of repurchase by the other undivided co-owners of the share left by the deceased.
Content of the undivided co-ownership agreement
The purpose of the undivided co-ownership agreement is to organize the management of one or more undivided assets; it may therefore contain various clauses, including
the management of the undivided property:
- the appointment, powers, remuneration and terms of dismissal of a manager of the undivided property;
Good to know: A manager can also be appointed outside of any indivision agreement through a management mandate.
- the organization of the undivided property: the terms of distribution and reimbursement of the undivided property costs, the terms of enjoyment of the property by the co-divisors, the beneficiary of the voting right if the property is part of a co-ownership;
- the fate of the undivided property in the event of death: the right of acquisition or allocation of the shares of the deceased co-divider by the surviving co-divider in the event of death.
This clause is very astute when the co-divisors are cohabitants; it allows the survivor to keep the property alone and avoids him/her being in joint ownership with the heirs of the deceased.
Note: even though the law protects the family home by prohibiting a spouse from carrying out an act of disposition concerning the said home alone, it does not prohibit the creditors of a spouse from causing the partition and the licitation of the family home held in undivided ownership with his or her spouse.
Undivided property agreement: possible appointment of a manager
The interest of signing an indivision agreement is to avoid each undivided co-owner taking an active part in managing the property held. The manager’s role is to take care of the management, being obliged to communicate to each undivided co-owner who would request any document relating to his work.
Insofar as the manager administers the undivided property, he exercises the equivalent of the powers attributed to each spouse over the common property. In concrete terms and practice, this means that he can perform acts of day-to-day management on his own:
- Declare and pay taxes.
- Settle co-ownership charges.
- Carry out insurance formalities.
- Carry out work (maintenance, repairs and even improvements) on a property.
- Agree to rent it for residential or professional use.
- Perform conservatory acts (work necessary in case of emergency).
On the other hand, and according to all logic, the manager must obtain the unanimous agreement of all the undivided co-owners to carry out acts of the disposal: to conclude a commercial or rural lease, to take out a loan in the name of the undivided property, to carry out major non-emergency work, to grant a mortgage, to sell the property…
In this last case, if all the undivided co-owners do not agree to sell a property, there is, nevertheless, an emergency exit: the law allows any undivided co-owner holding at least two-thirds of the undivided rights to ask the judicial court of the place where the property is located for authorization to sell it by auction.