What is a joint tenancy and how is it dissolved?

A joint tenancy is a common legal situation within civil law that arises when two or more individuals share ownership of a property—typically real estate—without there being a physical division of the property.

Joint tenancy is often found in cases of inheritance, joint purchases, or even certain divorce situations. While it allows for shared costs and responsibilities related to the property, it can also lead to conflicts over decision-making and property use.

Below, as your specialist lawyers in joint tenancy and civil law in Barcelona, we clarify what joint tenancy entails, its legal implications, pros and cons, and the available methods for its dissolution.

What is joint tenancy?

Joint tenancy, literally meaning “undivided”, refers to a form of co-ownership where each owner holds an ideal or abstract share of the property rather than a specific physical portion. This situation is regulated by the Spanish Civil Code and involves a community of ownership among co-owners.

In joint tenancy, each co-owner has the right to use and enjoy the entirety of the property while respecting the rights of others. For example, in an inheritance where three siblings inherit a house in joint tenancy, each one is an owner of one-third of the property, but none has an assigned room or specific area exclusively.

Advantages of joint tenancy

The joint tenancy system offers several benefits that can be attractive in various situations. Here are the main advantages of opting for this form of shared ownership:

One of the main benefits is the possibility of accessing higher-value properties or those in better locations that might be individually unattainable, allowing for shared maintenance costs, taxes, and insurance.

For vacation properties, joint tenancy offers the chance to enjoy a second residence without bearing the full cost, and from a fiscal perspective, it can provide advantages in terms of deductions and estate planning.

For investors, joint tenancy facilitates diversification of real estate investments with lower initial capital, and finally, in family situations, it can be a way to keep an inherited estate intact, preserving its sentimental and economic value for future generations.

Problems arising from a joint tenancy

While joint tenancy may seem like a practical solution in some cases, it can also lead to various legal and practical issues. As litigation attorneys in Barcelona, we frequently encounter the following common and problematic situations:

Decision-making conflicts: Any major decision regarding the property must be made by unanimous consent or a majority, which can lead to disagreements and impasses over decisions related to renovations, renting, or selling the property.
Difficulty in selling: Selling a jointly owned property can be challenging, as it requires the consent of all co-owners. If one co-owner refuses, they can block the sale of the entire property, even if others agree.
Usage and enjoyment issues: Conflicts may arise over how and when each co-owner can use the property. For example, in the case of a vacation home, disputes may occur over who gets to use it at what times.
Shared expenses and responsibilities: Co-owners must agree on how to distribute maintenance costs and responsibilities associated with the property, which can lead to tension if one of the co-owners fails to fulfill their part.
Complications in case of garnishment: If one of the co-owners has debts, their portion of the jointly owned property may be garnished, affecting the other co-owners.
Inheritance succession issues: If a co-owner passes away, their share goes to their heirs, which can further complicate matters if the heirs have different interests.
Tax conflicts: Disagreements may arise over how to declare and pay the taxes associated with the property, especially if the co-owners have different tax situations.

These issues can worsen over time, particularly when the relationship among co-owners deteriorates. Therefore, it’s crucial to have expert legal guidance to prevent and resolve these conflicts.

Legal methods to dissolve a joint tenancy

When issues outweigh the benefits, co-owners may choose to dissolve a joint tenancy. Several legal methods are available for this:

1. Mutual agreement

The simplest way to dissolve a joint tenancy is through an agreement among all co-owners. This agreement can involve:

Selling the property and distributing the proceeds proportionally according to each co-owner’s share.
Allocating the property to one co-owner, compensating the others for the value of their shares.
Physically dividing the property, if feasible and legally permitted.
Establishing a condominium ownership arrangement, dividing the property into separate registrable units.

This agreement must be formalized by a notary and subsequently registered in the Property Registry to reflect the new ownership status.

2. Judicial partition

If no agreement is reached, any co-owner can petition the court for a judicial partition of the joint tenancy. This process, known as actio communi dividundo, entails:

Filing a claim with the competent court.
Notifying all co-owners.
Valuing the property through a court-appointed expert.
Hearing the parties’ proposals for partition.
The judge’s decision on how to divide or allocate the property, aiming for the fairest solution.
Enforcing the ruling, which may include a public auction sale if physical partition is not possible.

This process can be lengthy and costly but provides a resolution when co-owners cannot agree.

3. Termination of the co-ownership

In some cases, termination of the co-ownership is an option, which entails:

Allocation of the property: The property is allocated to one of the co-owners, who gains full ownership. This co-owner must financially compensate the others for the value of their shares.
Agreement or court order: Termination can be achieved through unanimous agreement or, failing that, any co-owner may request termination via the court.
Property valuation: The real, current value of the property must be determined to calculate fair compensation. A professional appraiser is generally used for an objective valuation.
Calculation of compensations: Compensations are calculated in proportion to each co-owner’s participation in the joint tenancy.

Termination of co-ownership requires a notarized public deed with either unanimous agreement or a court decision and must be registered in the Property Registry to update the ownership records.

Termination may trigger tax obligations, such as Transfer Tax or the Municipal Capital Gains Tax. If there are mortgages or liens on the property, these must be canceled or assumed by the co-owner acquiring full ownership, and a final accounting of benefits and expenses related to the property up to the termination date must be conducted.

4. Right of first refusal

Although not strictly a dissolution method, the right of first refusal can help resolve joint tenancy situations:

If a co-owner wishes to sell their share, the other co-owners have a preferential right to acquire it.
This right must be exercised within a specified period after notification of the intent to sell.
It can facilitate the consolidation of ownership among fewer individuals, simplifying property management.

Each method has its own fiscal and legal implications, so we recommend seeking advice from joint tenancy specialists like BUFET GÓMEZ FERRÉ before proceeding with any of these options to dissolve a joint tenancy.

Frequently asked questions

What happens if there is no agreement to dissolve a joint tenancy?

If no agreement is reached, any co-owner can request judicial partition. The judge will decide how to divide or allocate the property, taking into account the specific circumstances of the case and seeking the most equitable solution for all parties involved.

How much does it cost to dissolve a joint tenancy?

The cost of dissolving a joint tenancy varies depending on the chosen method. An amicable agreement may only involve notarial and registry fees. In the case of judicial partition, costs may include court fees, attorneys’ and solicitors’ fees, and possible expert witness expenses. Additionally, applicable taxes, such as the Property Transfer Tax, must be considered.

At BUFET GÓMEZ FERRÉ, we offer a free initial consultation to evaluate your case and provide a more accurate estimate of potential costs based on your specific situation.

Can a property in joint tenancy be sold without the consent of the other co-owners?

A co-owner may sell their share of the joint tenancy without needing consent from the others. However, the other co-owners have a right of first refusal, meaning they can purchase that share under the same terms offered to an external buyer within a specified period.

Free lawyer consultation – Joint tenancy and civil law specialists

Get a free lawyer consultation with BUFET GÓMEZ FERRÉ: If you’re involved in a joint tenancy and need legal advice on how to proceed, reach out to us. As lawyers specializing in joint tenancies, we offer an initial free consultation to assess your case and provide you with the best legal guidance possible.

As experts in civil law in Barcelona, we have extensive experience in resolving conflicts related to joint tenancies, inheritances, and shared properties. We have the expertise to negotiate agreements among co-owners and, if necessary, to represent your interests in court.

Do not hesitate to contact our law firm in Barcelona through the contact form on our website to receive specialized legal advice on joint tenancies, their dissolution, and any other issues related to shared properties. We are ready to help you understand your rights and options before initiating any legal action.