Commonhold, co-ownership and division of co-ownership

Knowledge of the specific rights and obligations of owners and co-owners of real estate is essential for the efficient use and disposal of real estate and for orderly relationships between them.

Our extensive and long-standing experience, our monitoring and knowledge of the regulations, as well as our professional and personal approach to our clients and the entities confronting them, enable us to resolve complex cases involving the division of co-ownership and the establishment of commonhold, as well as to regulate relationships between commonhold unit owners, co-owners and relationships in building management.

Division of co-ownership 

We carefully consider with our clients all possible aspects of the efficient exploitation and management of the co-owned real estate and, to this end, we represent our clients appropriately vis-à-vis the other co-owners or third parties. 

Where co-ownership proves to be problematic and uneconomical in practice, both from the point of view of use and from the point of view of the ongoing and investment maintenance itself, we advise our clients to divide the co-ownership as follows:

  • Division in kind: Depending on the needs and circumstances of the case, we organise the valuation of the real estate with a view to an equitable distribution, so that each co-owner receives a certain part of the real estate corresponding in value to their co-ownership share. We organise the allocation of the land, prepare the relevant documentation in the form of a co-ownership division agreement, carry out the tax procedure, register the ownership right and transfer any mortgages, easements or other encumbrances in the land register.
  • Division in kind through the establishment of commonhold: For buildings with several individual units, we organise the preparation of a study for the registration of the building and its units in the buildings cadastre and the drafting of an agreement on the division of co-ownership into commonhold. See also: Establishment of commonhold.
  • Civil division by sale: We also represent clients in cases where it is uneconomical or even impossible to divide the real estate in kind and the sale of the real estate proves to be the only reasonable solution. Depending on the actual circumstances and the commercial interest, we advise our clients on the sale or purchase of the real estate, organise negotiations with the other co-owners or third parties on the terms of sale, if necessary, prepare the relevant powers of attorney for the sale of the real estate and the agreement on the division of co-ownership through the sale of co-ownership shares, arrange for payments to be made to the sellers through the escrow account and the registration of the ownership right of the buyer of the co-ownership shares in the land register.

Tax aspects of co-ownership division 

We carry out the division of co-ownership in accordance with the applicable legal and tax regulations, taking particular care to ensure that the co-owners’ shares are correctly valued and that the transaction is treated in a tax-neutral manner, i.e. that the client is not burdened with unnecessary tax liabilities when dividing the co-ownership. 

Power of attorney for the sale of real estate and payment through an escrow account 

In the case of civil division by the sale of co-ownership shares in favour of a third party, we carry out the sale on behalf of our clients by means of a special power of attorney for the sale of real estate, which ensures the security and transparency of the sale for all contracting parties and the execution of the real estate transaction within the specified timeframe. Due to the large number of parties involved, we organise the payment and distribution of the purchase price for our clients through the law firm’s escrow account, thus ensuring the security of the transaction for all contracting parties.

Judicial division of co-ownership

We advocate a contractual or amicable division of co-ownership. If an amicable solution between the co-owners is not possible, we represent the parties in judicial proceedings for the division of the co-ownership, with the aim of ensuring that the division is optimal for the client.

Establishment of commonhold

We carefully examine the documentation establishing the ownership and other rights, the factual and land register status of the real estate and, on this basis, prepare the relevant documents for the establishment of commonhold:

  • Deed of establishment of commonhold: If the real estate has only one owner, we ensure that the building and its units are registered in the buildings cadastre and draft a deed of establishment of commonhold. We manage the process until the ownership right is registered in the land register. The most common form is the establishment of commonhold by investors in the construction of a new apartment building, commercial building or other building with several units.
  • Agreement between co-owners: If the real estate has more than one owner, or in cases of so-called virtual commonhold or de facto commonhold, we ensure that an appropriate study is prepared for the registration of the building and its units in the land register, draft an agreement on the establishment of commonhold and ensure that the land registrations are carried out successfully.
  • Preliminary agreement for the establishment of commonhold: If there is a potential dispute over the ownership of individual units or common areas, we provide the parties with a preliminary legal opinion on the evidence of their ownership of individual units and common areas and prepare a preliminary agreement on the establishment of commonhold, which is the basis for the further preparation of the study for the registration of the building and its units in the buildings cadastre, the execution of the agreement on the establishment of commonhold and the registration of the ownership right in the land register. The purpose of the preliminary agreement is primarily to clarify the ownership situation before further steps are taken, thus saving the parties time and money when establishing the commonhold.
  • Court decision: If it is not possible to establish the commonhold by agreement, we represent the parties in accordance with their interests in “classical” non-contentious proceedings in accordance with the Law of Property Code (SPZ) or in special non-contentious proceedings for the establishment of commonhold and the determination of the commonhold land (ZVEtL-1), which are conducted at the request of the acquirer of an individual unit or the manager on behalf of the community of co-owners.

Study for the registration of a building and its units in the buildings cadastre 

Irrespective of the form of the procedure for establishing commonhold, we provide our clients, in collaboration with a network of selected surveyors, with the appropriate study for the registration of the building and its units in the buildings cadastre and draft the relevant deed, agreement or proposal for the establishment of commonhold, in which the following are defined:

  • Individual units: apartments, commercial premises, cellars, parking spaces, other individual areas.
  • General common parts: common land, corridors, staircases, laundries, drying rooms, bicycle storage rooms, heating stations, other common areas with the corresponding co-ownership shares belonging to the individual units, and co-ownership shares in the common areas in favour of each of the respective owners of the individual units.
  • Specific common parts: common land, atriums, other common areas benefiting only certain individual units and co-ownership shares benefiting only certain individual units.
  • Components: according to the Real Estate Cadastre Act, components may also belong to units, which in nature represent land belonging to a unit (atrium, parking space) and are registered in the buildings cadastre by means of a so-called polygon. In this way, the identification number of the unit to which the component belongs, the area of the component and the type of component, the number of the parcel on which the component is located and the number of the unit to which the component belongs are obtained. The determination of the components is a category that is registered only in the buildings cadastre and not in the land cadastre, therefore we advise our clients to be careful when determining the components and to protect them with legal acts by clearly defining them so that later there is no confusion regarding the ownership status and rights to the real estate.

On the basis of the study of the building and its units, we ensure the registration of the building, individual units, common parts and components in the buildings cadastre and, on the basis of the executed deed, agreement or decision on the establishment of commonhold, we ensure the registration of the ownership right of the individual units and co-ownership shares in the common areas of the building in the land register.

Mutual relationship agreement: 

We recognise that the relationship between commonhold unit owners is far from being regulated. The key to defining the mutual rights and obligations between the commonhold unit owners and vis-à-vis the manager is a mutual relationship agreement, which is carefully drafted in conjunction with our clients, and which sets out in particular:

  • the definition of the costs and obligations to be borne by the commonhold unit owners in the event of deviations from the statutory provisions,
  • how the reserve fund is to be formed if it exceeds the prescribed minimum amount,
  • any specific restrictions on the use of individual commonhold units,
  • how the common parts are to be used,
  • the purpose of the use of the individual commonhold units,
  • the legal representation of the commonhold unit owners,
  • how the common parts are to be managed,
  • the use of specific commonhold units for specific purposes,
  • the insurance of the building as a whole,
  • the manager’s powers where these differ from the provisions of the law.

Management of multi-dwelling and commercial buildings 

We work in partnership with building managers to provide commonhold unit owners with the support and services they need to manage their multi-dwelling or commercial buildings. We understand that good real estate management is not just about invoicing and paying running costs, but about carefully planning the capital maintenance of a multi-dwelling or commercial building to ensure quality of life and long-term real estate value. These objectives are pursued through the careful drafting of legal acts such as:

  • Resolutions and ballots for the removal of the manager and the appointment of a new manager.
  • Resolutions and ballots for ordinary management matters and for transactions going beyond ordinary management matters.
  • A management contract in line with the mutual relationships agreement and legislation.
  • Contracts with contractors and tradesmen for maintenance and investment work.
  • Construction contracts.
  • Personal data protection rules (e.g. for video surveillance, management communications, contract execution, etc.).

Representation in court 

We advise and represent clients in disputes that arise:

  • between commonhold unit owners and/or tenants,
  • between commonhold unit owners and managers regarding the termination of management contracts and the appointment of a new manager,
  • from voting irregularities in relation to ordinary and extraordinary management matters,
  • from voting irregularities at meetings of commonhold unit owners,
  • from the improper implementation or non-implementation of decisions taken by the commonhold unit owners,
  • from challenging decisions taken by commonhold unit owners,
  • with contractors and tradesmen.

In addition to careful consideration of the factual and legal relationships, we pay great attention to proper communication when dealing with relationships between co-owners and between commonhold unit owners, as we are aware that a well-considered and correct approach is the fastest and most cost-effective method of achieving our clients’ objectives and interests.

Krištof & Brečko Advokatura