Termination of common property is the process of dividing commonly owned assets, such as land or real estate, between several individuals, via an agreement between those participating in the process by mutual consent. If there is no such agreement, termination occurs via a court ruling or sale. The proceeds are then distributed to the participants according to their shares in the property.
Laws for termination of common property
The now-outdated Common Property Termination Law No. 21 of 1986 distinguished between common properties within zoning plans and those outside them. Under this law, a body called the Common Property Termination Committee considers such termination for real estate outside of zoning plans. The committee is led by a judge and includes representatives from the General Directorate of Cadastral Affairs, the Farmers’ Union and the relevant governorate. Meanwhile, the civil reconciliation courts are tasked with terminating common property within zoning plans.
However, Law No. 1 of 2015 terminated Law No. 21 of 1986 and dissolved the committees it had set up. Under Law No. 1, the civil reconciliation courts became the bodies responsible for terminating common properties within and outside zoning plans.
If the properties in question were intended for construction, then their subdivision plans must be shown to the local municipality for approval, according to Article 116 of Municipalities Law No. 172 of 1965.
Common property termination lawsuits
Any partner with a share in real estate, no matter how small, may file a common property termination lawsuit. The lawsuit must be filed against all partners in the property, and they all must be summoned before the court, or else the suit is not valid according to Court of Cassation jurisprudence in Decision No. 392 of 1955.
If any one of the partners is absent, then a judicial agent must attend on their behalf. If a partner has lowered competence, they are represented by a guardian or executor. Furthermore, if there is an expropriation sign on the land record for the property in question, then the public entity responsible for that sign is also called on to be a party to the common property termination lawsuit, according to jurisprudence in Decision No. 100 Basis No. 329 of 1976.
Finally, a common property termination lawsuit requires, at its outset, that a lawsuit sign be placed on the land record for that property according to jurisprudence in Decision No. 103 Basis No. 150 of 1975.
Dividing the real estate
Civil Law No. 84 of 1949 regulated the provisions for dividing common property so that such division would occur in kind, that is, through partitioning the property into “separate” subdivisions equivalent to the partners’ shares of the original property. The partners must be able to retain the ability to benefit from the subdivisions afterwards without a significant loss of value. This applies only if the real estate undergoing division is land. The property may only be divided for buildings if no damage could lead to a loss in value. In this case, the property can be sold via public auction.
In all cases of common property division, an expert must be appointed by the court to carry out the process in one of three ways set by the Civil Code:
- First, division by smallest share. For example, if the property had three partners and the first share was half the property, the second share one-third and the third share one-sixth, then one-sixth will be the basis for dividing the property. The partner with a share of one-half of the property will receive three parts, the partner with one-third will receive two parts, and the final partner will receive one part.
- Second, division by retainer. Each partner is allocated a subdivision of the property according to their share. For example, if a property is one storey and consists of two apartments and one apartment is bigger than the other, then partner with the larger share will receive the larger apartment. There is also the option of paying cash to complete the value of a partner’s share. Division by retainer is not permitted except for cases in which division based on the smallest shares is impossible, according to jurisprudence in Decision No. 962 of 1964.
- And finally, if neither of the previous two methods is possible, then the only solution is division through liquidation. This requires selling the property and distributing the proceeds. The auction may be restricted to the partners if they all agree to it, but if one rejects the idea, it must be open for anyone to participate.