Extinction of condominium refers to the disappearance of joint ownership of a specific asset by several people. Condominium is joint ownership by several holders, where each is assigned ownership shares.
The most common cause for extinction of condominium is the owners' desire to no longer be part of this community. However, it is not the only one.
When extinction of condominium cannot be achieved by mutual agreement and the asset is indivisible, the division of the asset will be carried out through auction.
Causes for extinction of condominium:
The causes for extinction of condominium are established in the Civil Code, in articles 395 to 406.
The Civil Procedure Law must also be taken into account, in cases where the division of assets must be carried out through a judicial auction.
The causes for extinction of condominium are, in principle, the same as for extinction of ownership, such as abandonment, destruction, or usurpation, among others.
However, due to the conditions of condominium, the Civil Code establishes some specific causes:
Renunciation of rights by co-owners in favor of one of them.
Sale of the asset to a third party and distribution of the proceeds among the members of the community.
Division of common property. Any co-owner has the right to request the division of assets. It is a judicial procedure; the initiation of the division of a common asset declares the extinction of the condominium. The result may be material division, constituting horizontal property, or economic if the asset is indivisible. In this case, one of the owners retains ownership, and the others receive compensation according to their shares. Division by auction may also be reached if there is no agreement between the parties.
Extinction of condominium by mutual agreement:
Extinction of condominium can be achieved by mutual agreement, choosing one of the foreseen methods, whether one of the owners acquires the undivided shares of the others, or the one who wishes to withdraw from the condominium receives compensation.
Although it is also possible for the asset to be sold and the co-owners to distribute the money according to their respective shares.
The co-owners who opt for an agreement must carry out an appraisal of the asset they wish to divide and establish preliminary agreements on how the appraisal will be conducted, as well as a commitment to accept said appraisal.
The deed of extinction of condominium can be executed before a Notary Public, paying the corresponding tax.
In the case of a property that is the family home of a married couple undergoing divorce or separation, the extinction of condominium must be included in the regulatory agreement.
If this agreement is ratified by the Court, it becomes, along with the sentence, the deed of extinction of condominium. When done this way, unlike a divorce before a notary, the tax on documented legal acts is also not paid.
Extinction of condominium through judicial means:
If the co-owners do not agree, either on the price or the method of division of the asset, the only possible path is to resort to the Courts by filing a lawsuit for the division of common property.
The action for division of common property involves requesting the court to extinguish the condominium, either by adjudicating to each owner their corresponding share if the property is divisible, or by selling and subsequently distributing the resulting money if it is indivisible.
In reality, there is no specific procedure in the laws to carry out the sentence for the division of common property, but rather the idea is to achieve the realization in the most expeditious way possible, without violating the rights of any of the parties.
For this reason, one of the most commonly used procedures is that provided for in Article 670 of the Civil Procedure Law, which establishes the public auction or sale of the asset.
Necessary documentation:
Title deeds of the assets subject to the dissolution of the community.
D.N.I. of the co-owners. If any company is involved, valid powers of attorney or appointment of administrators.
For urban properties, a certificate from the community of owners stating that community fees are up to date.
Cadastral references of the properties (last IBI receipt)
Whether or not they are leased.
Value assigned to each asset.
How the assets are adjudicated to the co-owners.
How the costs of the operation are paid: Notary fees, municipal capital gains tax (if it concerns urban properties).