What does it consist of?
First, it is important to understand what a community or condominium is. This situation arises when an asset or right is shared among several people.
In such cases, ownership shares are allocated to each of them. If the asset in question is a property, it is referred to as co-ownership or condominium, although people often use all three terms as synonyms.
Once we are clear about what a community is, we can talk about the termination of a condominium or dissolution of co-ownership. Basically, it is when the situation in which several people share ownership of an asset comes to an end.
Sometimes, other terms such as proindiviso, co-ownership, or community of property are heard, but they all refer to the same concept.
Types of Termination of Condominium
Termination of condominium by mutual agreement
When all parties agree, terminating the condominium is straightforward: one party may buy out the shares of the others, or the one who wishes to exit may receive compensation. The property may also be sold and the proceeds divided among the owners according to their share.
Before doing so, however, the owners must appraise the property and agree on how to proceed. Afterwards, they may go to a notary to execute a deed to formalize everything, paying the required taxes. If the property is the family home of a divorcing couple, the agreement must also be included in the regulatory settlement, and if approved by the court, that agreement and judgment become the deed of cancellation of the condominium.
Termination of condominium through judicial proceedings
If there is no agreement, the only option is to go to court and file a claim to divide the property. The court will decide whether each co-owner receives their share in kind or whether the property should be sold and the proceeds distributed. There is no specific procedure established by law for this, but generally the property is sold through a public auction.
Required Documentation
Title deeds of the assets subject to dissolution of the community.
National Identification Document (DNI) of the co-owners. In case of corporate involvement, valid powers of attorney or appointment of current administrators.
For urban properties, a certificate from the homeowners’ association confirming payment of community expenses.
Cadastral references of the assets (latest IBI receipt).
Rental status of the properties.
Value assigned to each asset.
How the assets are allocated to the co-owners.
How the transaction costs are paid: Notarial fees, municipal capital gains tax (in the case of urban properties).
In what situations can this service be used?
The causes for termination of condominium are set forth in the Civil Code, 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 judicial auction.
The causes for termination of condominium are, in principle, the same as for termination of ownership, such as abandonment, destruction, or dispossession, among others.
However, due to the specific nature of co-ownership, the Civil Code establishes certain particular causes:
Renunciation of the co-owners’ rights 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 division of assets. This is a judicial procedure, and the initiation of the division of a common asset constitutes the termination of the condominium. The result may be a material division, creating horizontal property, or an economic division if the asset is indivisible. In such a case, one of the owners retains ownership, and the others receive compensation according to their shares. The division may also be carried out through auction if no agreement is reached among the parties.
The most common cause for termination of condominium is the will of the co-owners not to continue as part of such community. However, as we have seen, it is not the only one.