In practice, situations may arise where a property is owned by several persons and one of the owners wishes to sell their share, while another objects. Can an owner sell their share independently in such circumstances, and what rights do the other owners have?
Under Latvian law, a co-owner generally has the right to sell their share of a property without the consent of the other co-owners. However, it is important to understand that a co-owner does not own a specific room or a physically separated part of a land plot, but rather an undivided share in the entire property. By acquiring such a share, the buyer becomes a co-owner and assumes not only the right to use the property but also the obligation to contribute to its maintenance. For example, if a building requires roof repairs, the associated costs must generally be borne by all co-owners in proportion to their respective undivided shares. Furthermore, when selling an undivided share, the other co-owners’ rights of first refusal must also be taken into account.
An important consideration is the right of first refusal. Section 1073 of the Latvian Civil Law provides that, where a co-owner sells their undivided share to a person who is not already a co-owner, the other co-owners have a statutory right of first refusal. This means that the other co-owners have priority to purchase the share on the terms and conditions of the relevant sale agreement, in accordance with the procedure prescribed by law. Failure to observe these rights may give rise to additional legal risks and disputes concerning the transaction. For example, another co-owner may be entitled to exercise a statutory right of redemption, allowing them, where the legal requirements are met, to acquire the share sold to a third party in place of the original buyer.
Where co-owners are unable to reach an agreement on the use, management or sale of a property over an extended period, termination of co-ownership may be considered. For example, co-ownership may be terminated by physically dividing the property into separate parts, transferring ownership of the entire property to one co-owner subject to compensation being paid to the other co-owner for the value of their share, or applying another method provided for by law.
However, not every property in Latvia can be physically divided. For example, the division of a commercial building or a small land plot may be restricted by the property’s technical characteristics, applicable spatial planning regulations or construction requirements. Therefore, before seeking to terminate co-ownership, it is important to assess not only the legal options available but also the practical and economic feasibility of the proposed solution.
What can be done if another co-owner refuses to agree? The first step is to consider whether a mutual agreement can be reached on buying out a co-owner’s share, selling the entire property or terminating co-ownership. If no agreement can be reached, it may be necessary to bring a claim before a court for the division of co-owned property, subject to the conditions and restrictions laid down in the Latvian Civil Law.
Before selling an undivided share in a property or seeking to terminate co-ownership in Latvia, it is essential to review the Land Register records, assess the applicable rights of first refusal and consider the available methods of dividing the property. Seeking legal advice at an early stage can help avoid prolonged disputes and financially disadvantageous decisions.
Our law firm provides legal assistance to individuals and businesses throughout Latvia on matters relating to co-ownership, including the sale of undivided shares, the assessment of rights of first refusal, the drafting of agreements and the resolution of disputes concerning the termination of co-ownership.
This article does not constitute legal advice for any specific situation. Appropriate legal solutions may vary depending on the particular facts and circumstances of each case.
Article written by: legal assistant Agate Sloboda