Undivided Ownership contact
After years of living together, certain life events may lead to the separation of spouses, or even divorce. In such cases, the question of dividing assets becomes crucial, especially regarding the primary residence. Selling, buying out the other party's share, or maintaining co-ownership of the real estate are viable options, but co-ownership comes with several advantages and needs to be well understood.
What is Co-ownership in the Case of Divorce?
Co-ownership refers to a situation in which multiple individuals hold rights to an asset of the same nature. In the case of divorce, spouses, whether married under the separation of property regime or civilly partnered, may find themselves in co-ownership, especially in the case of the dissolution of the community of property. But what are the advantages of maintaining co-ownership?
Advantages of Maintaining Co-ownership After Divorce
Although co-ownership may not be the immediate solution for many couples, it offers notable advantages:
1. Time for Reflection: It gives ex-spouses time to reflect on the future of the asset, particularly if they are waiting for cash or an inheritance to finalize the transaction.
2. Faster Divorce: The liquidation of assets can be complex and time-consuming. Maintaining co-ownership avoids a quick move and the immediate consequences of a sale.
3. Better Transaction: In cases of a rushed sale, ex-spouses risk selling at an unfavorable price. Co-ownership allows them to wait for a better offer in the market.
4. Right to Leave Co-ownership at Any Time: According to Article 815 of the Civil Code, one spouse can exit co-ownership whenever they wish, except in cases of suspension.
Procedure in the Case of an Amicable Divorce
For couples going through an amicable divorce, the process is simplified, although it’s essential to make decisions about the fate of the assets early on. If the division is straightforward and without conflict, a conventional settlement should be drafted, and a notary is often involved to create a liquidation statement for the assets.
Buying Out the Shares and Selling to a Third Party
If one spouse wishes to remain in the property, they can buy out the other’s share (buyout of the share). This transaction must be notarized and can include assets such as the house or other properties. If neither spouse wants to keep the property, selling to a third party might be a solution.
Cases of Disagreement
In the event of a disagreement between the spouses, the process may extend and result in additional costs. In extreme cases, the judge may order a sale at auction, according to Article 1377 of the Civil Code.
Drafting a Co-ownership Agreement
The co-ownership agreement allows ex-spouses to delay the division of the property. This is a notarized document that sets out the rules of co-ownership and can last up to five years, with tacit renewal.
Costs and Conditions of the Co-ownership Agreement
In addition to notary fees, taxes, and attorney fees, additional costs may arise, particularly when selling a co-owned asset. Sometimes, maintaining co-ownership helps optimize the tax situation related to divorce, particularly by avoiding the division rights on the sale.
Exemption from Capital Gains Tax
Separated spouses may benefit from an exemption from capital gains tax when selling their primary residence, provided certain conditions are met, such as the sale occurring within the year following the separation.
Conclusion
Maintaining co-ownership is a solution that, although temporary, offers significant flexibility during the divorce process. It is crucial to consult a lawyer or notary to avoid mistakes and ensure that the procedure is carried out smoothly and advantageously.