Extinction of condominium is the disappearance of common ownership of a certain asset by several people. Condominium is common ownership by several holders, in which ownership shares are assigned to each of them.
The most common cause for the extinction of condominium is the owners' will not to continue being part of this community. However, it is not the only one.
When extinction of condominium by mutual agreement is not possible and the asset is indivisible, the division of the asset will be carried out through auction.
Causes of extinction of condominium:
The causes for the extinction of condominium are established in the Civil Code in its articles 395 to 406.
The Law of Civil Procedure must also be taken into account, in case the division of assets must be carried out through a judicial auction.
The causes for the extinction of condominium are, in principle, the same as for the extinction of dominion, such as abandonment, destruction, or usurpation, among others.
However, due to the conditions of condominium, the Civil Code establishes some specific grounds:
Waiver of rights by the co-owners in favor of one of them.
Sale of the asset to a third party and distribution of the proceeds among the community participants.
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 condominium. The result can be physical division, constituting horizontal property, or economic division 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 is also possible 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 wishing to withdraw from the condominium receives compensation.
Although it is also possible for the asset to be sold, and the co-owners distribute the money according to their shares.
The co-owners who opt for an agreement must carry out a valuation of the asset they wish to divide and establish preliminary agreements on how the valuation will be carried out, and furthermore, a commitment to accept said valuation.
The deed of extinction of condominium can be executed before a Notary Public, after paying the corresponding tax.
In the case of a property that is the family home of a couple undergoing divorce or separation, the extinction of condominium must be recorded in the regulatory agreement.
If this agreement is homologated by the Justice system, it becomes, along with the judgment, 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 levied.
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 Justice system by filing a lawsuit for the division of common property.
The action for division of common property implies requesting the court to extinguish the condominium, either by adjudicating to each of the owners their corresponding share if the property is divisible, or by selling and subsequently distributing the resulting money if it is indivisible.
In reality, the laws do not have any specific procedure to carry out the judgment of division of common property; instead, the idea is to achieve the execution in the most expeditious way possible, but without violating the rights of any of the parties.
For this reason, one of the most used procedures is the one provided for in Article 670 of the Law of Civil Procedure, which establishes the auction or public sale of the asset.
Necessary documentation:
Property titles of the assets subject to the dissolution of the community.
D.N.I. of the co-owners. If any company is involved, the powers of attorney or current appointments of administrators.
For urban properties, a certificate from the community of owners stating that they are up to date with community fee payments.
Cadastral references of the assets (last IBI receipt)
Whether they are leased or not.
Value assigned to each asset.
How the assets are adjudicated to the co-owners.
How the operation expenses are paid: Notary fees, Municipal Capital Gains Tax (if urban properties are involved).