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Sale of Common Properties

Common property is a type of property, owned by multiple individuals, all of whom have contributed a certain amount of money, in exchange for owning a proportionate piece of the property. Typically, this type of property is  acquired through inheritance or joint sale/purchase contracts, 

Disposal of this commonly owned asset requires the consent of all partners, however, this is not always attainable. As a result, disputes often arise when dividing and distributing the property value among the partners.

As a solution to this problem, the legislator permits disposal, if at least 75% of the partners agree to this,, provided that this disposal is necessary for substantial reasons that necessitate the disposal of the property in question, and that the minority.(those who represent 25% in the common property) are notified. To further ensure the protection of minority rights, they are also given the right to object to the proposed disposal within two months from the date of their notification. If no such objection is made within this time frame,  the decision of the majority becomes effective, allowing them to dispose of the property on behalf of all of the owners. 

Herein we refer to one of the cases, where a dispute arose between four partners over common property acquired through inheritance. Three of the individuals,(representing 75% of the common asset) had agreed to sell the entire property and had attempted to notify the fourth, minority owner, of their desire to carry out this sale. Despite their intention, they were unable to obtain the minority stakeholder’s address, leading them to proceed with the sale anyway, and subsequently inform the fourth party that the property was sold and that his share was deposited with the court treasury.

Consequently, the minority owner filed a lawsuit before the court to object to the sale, on the grounds that he was not notified of their desire to conduct this disposal, and that the notification was devoid of the ‘substantial reasons’  relied upon by the partners to justify this sale.

The court, therefore, decided to dismiss the case, and this ruling was upheld by the Court of Appeal.

This ruling was challenged on the grounds of violation and misapplication of the law, highlighting that the judge failed to properly examine the notification in question, including whether or not a substantial reason for the sale was provided by the majority, and whether the necessary conditions were included (such as the value of the property) before conducting the sale, so that the minority could use their right to approve or object to such disposal.

Furthermore, the court’s failure to respond to the appellant’s defense, and failure to state the reasons for such disposal is a blatant misapplication of the law.

The court decided to overturn the ruling on the grounds that the court is obligated to invoke the notification of the warning with the desire of the majority and the strong reasons justifying such disposal, and that turning away from the defense of the appellant who raised it in the objection is misapplying the law.

To conclude, The aim of this article is to highlight that although the legislator allows a 75% majority of the common property to decide on the disposal of such property without referring to the minority partners, this is conditional on informing the latter of their desire to sell, and allowing 2 months (from the date of notification), for the minority owner to object to the disposal  before proceeding.

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Written By

Noor Mahdy - Attorney at Law

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