Can You Sell Your Share of an Undivided Property
Summary
– Decision to sell an undivided property
– Terms of sale of undivided property
– Complex procedure of the judicial sale
Co-dividers can sell an undivided property at any time, either to one of them or to a third party. Here is how to manage the sale of an undivided property in your best interests. What are the procedures and what to do in case of disagreement?
The decision to sell an undivided property
The sale of an undivided property can be motivated by several reasons
– the will of the co-divisors to get out of the indivision ;
– the need for money ;
– a move, etc.
Whatever the reason, the property sale can be requested by any of the co-divisors, insofar as “no one is obliged to remain in indivision”.
From then on, 2 hypotheses can arise:
– the co-divisors agree to sell the property: the sale is made amicably by the co-divisors themselves;
– the co-divisors disagree on the principle and the terms of the sale: the co-divisors must have recourse to the judicial court (ex-tribunal de grande instance).
Good to know: the judicial sale is a heavy procedure that it is better to avoid; the judge can block the sale for 2 to 5 years if the interest of a co-divisor justifies it.
Terms of the sale in undivided ownership
To sell an undivided property, the unanimity of the undivided co-owners is required. They can agree verbally or proceed to a vote. In the latter case, all the undivided co-owners or representatives must vote in favour.
The sale of an undivided property can take 3 forms:
– the property is sold to a third party: under these conditions, the sale of the property causes the end of the indivision:
◦ each co-divider recovers his percentage of shares in money from the proceeds of the sale of the property;
◦ the intervention of a notary is mandatory when selling an undivided property: he is in charge of drawing up the liquidation act.
Attention: the percentage of each – taken into account to calculate the shares at the time of sale – is specified in the deed of acquisition; therefore, the percentage of each must correspond to its financial participation.
– the property is sold to one or more co-dividers:
◦ if all the co-divisors do not wish to sell the property and they have the financial means, they can buy out the share of the co-divisor who wishes to sell;
◦ in this hypothesis, the co-divisors who buy back the share of the one who sells remain undivided ownership.
Example: A, B and C buy a house together, which all 3 of them live in; A pays 100, B pays 200 and C pays 250. C wants to move while A and B want to stay in the house: A and B can buy back C’s share, i.e. 250 + the capital gain; A and B remain in the house in undivided ownership.
Good to know: in the case of undivided ownership following a divorce or a breakdown of a civil union, the ex-spouse who decides to buy back the other’s half-share benefits from notary fees reduced to 2.5% of the sale price of the property.
– the share of the one who wants to sell is sold to a third party:
◦ if all the co-divisors do not wish to sell the property but they do not have the financial means to buy out the share of the co-divisor who wishes to sell, the latter may sell his share to a third party ;
Note: this last hypothesis is rare because it means that a third party is in indivision with the original co-divisors.
The complex procedure of the judicial sale
Reminder: due to notary obligations, the undivided co-owners must first declare their intention to sell to a notary. The notary will notify the other undivided co-owners of this intention by a bailiff in the following month. If the other undivided co-owners respond positively within 3 months of this notification, the sale can occur. If, on the other hand, at least one of the undivided co-owners refuses the sale or does not respond, the notary must record this in a report of difficulties.
Authorization of the judge of the judicial court
The undivided sellers must then refer the matter to the judge with a report of difficulties so that he can authorize the sale.
A period of between one and two years may elapse, which may be extended to several years if one or more undivided co-owners contest the proposed sale based on the general rules of undivided ownership and their possible division or because, according to the provisions of the Civil Code, the sale would be excessively detrimental to their rights.
According to established case law, a court can refuse the sale of a family home if the moral prejudice caused to the undivided co-owners who oppose it, even though they regularly contribute to its upkeep, is too great.
Sale by auction
Once authorized, the sale must be made by auction, i.e. before a notary or before the court.
In practice, this form of sale guarantees the fairness and transparency of the sale price, but not necessarily, far from it, the best price.
The sale by auction generates approximately 30% more costs than a private sale through an estate agent.
Finally, the sale proceeds are used only to settle any debts of the undivided property. The rest is shared between the undivided co-owners in proportion to their rights in the undivided property.
