Many people who have purchased property in Spain over the last 20 years do not fully understand the importance of the concept of co-ownership and the legal rights and obligations that go with it. The way in which property is owned in Spain is relevant when a couple divorce or when a spouse dies and even more important when a partnership or co-habitation breaks down.
The law on co-ownership is regulated by Article 392 of the Civil Code. A co or joint owner cannot be obliged to be permanently fixed with their co-ownership. This means that each co-owner has the right to request the liquidation or dissolution of their co ownership. There are two legal rights; the right of first refusal and the right of retraction. Many people assume they will have the right of first refusal if the other owner or owners want to sell or transfer their share of a property. However in Spain this right (tanteo) does not apply in most cases of co ownership as the property must be registered as a “finca enfiteútica” which is a rare form of ownership arising from staged or monetary payments – Articles 1.637 Civil Code.
The right of retraction is however a legal right to all co owners and if a joint owner sells their share to a third party the transaction can be challenged. This means that the sale or transfer must be resolved and the co owner must be allowed to acquire the asset paying the same price and under the same terms and conditions. Articles 1.518 and 1.525 state that the costs and legitimate expenses of the sale and costs of use has to be paid at the moment the right of retraction is exercised.
In practical terms the issues of occupation and the right of retraction means that very few purchases of part of a property take place without the knowledge and consent of the other co-owners. However this does serve to warn co owners how important it is to know their legal rights particularly on the breakdown of a relationship. Where there is a mortgage over jointly owned property it is even more important to get good advice. In most cases a negotiation with the bank and between the parties can resolve the issues and as with many legal problems a good and practical explanation of how the law applies in your particular case will help.
Illustrative case studies:
A)
“A joint owner, Mr.Biscuit, sells his 50% share of a property to Mr. Grabalot for 150,000€ without notifying his wife who is a joint owner of the property. 2 months later Mrs. Biscuit finds out that Mr.Biscuit – who is now living in the Seychelles with Miss Charm – sold half of the property she lives in to Mr.Grabalot and his title is now registered with the property registry.
Mrs. Biscuit can challenge the transaction BUT she would have to pay the 150,000€ plus the costs of the transaction at the same time as she challenges the sale. There would then be an argument as to whether she had exercised this right within the time period available in the law, 9 days from the time of inscription or from the date of knowledge!”
B)
“Mr. Biscuit dies leaving his 50% of the jointly owned matrimonial home to Miss Charm and his two children from his first marriage; crumbs!”
Sandra Wrightson is a Barrister Overseas at De Cotta McKenna y Santafé, a law firm offering support with all aspects of Spanish Law for English speaking clients. Offices in Mijas-Costa, Coín, Nerja, Granada and Tenerife.
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De Cotta McKenna & Santafé, English solicitors, and lawyers, and Spanish Abogados, in Marbella, Andalusia, Spain