Chapter 5: Co-ownership

Nature of co-ownership

• Two or more persons cannot simultaneously exercise different kinds of ownership

regarding the same object, but two or more persons can be co-owners of a thing at the
same time.
• This does not mean that the thing is divisible or that the ownership is distinguishable –
in the case of co-ownership the thing is simply owned by several persons in undivided
co-ownership shares.
• It is only one ownership which vests in several persons in idealised, undivided shares.
• Consequently, the co-owners cannot divide the thing physically while the co-ownership
still exists and a co-owner cannot alienate or encumber the thing without the consent
of the other co-owner(s).
• It is, however, possible for a co-owner to alienate or encumber his undivided co-
ownership share.
• The entitlements to the thing are, likewise, not divisible, but the co-owners must
exercise the entitlements jointly in accordance with the undivided shares.

Establishment of co-ownership

Ways of establishment

• Inheritance
• Conclusion of a marriage in community of property
• Mixing
• Estate holdership
• Voluntary association without legal personality
• Contract
Co-ownership is established in the following ways:

a. Inheritance

When a testator leaves an indivisible thing to two or more persons or leaves a divisible
thing to two or more persons provided that it may not be divided, it is owned by the
heirs in co-ownership.

b. Conclusion of a marriage in community of property

The conclusion of a marriage in community of property implies that the parties to the
marriage are co-owners of all things in the common estate in equal, undivided shares
as long as the marriage exists.

c. Mixing

When movable things of different owners are mixed, without the permission of the
owners, in such a way that the mixture creates a new thing, it is owned by the owners
in co-ownership. The previous owners of the mixed things become co-owners of the
new thing in the relation in which their property contributed to the new thing (mixture).

d. Estate holdership

The surviving spouse in a marriage in community of property continues the community

of property together with the heirs of the deceased spouse.

e. Voluntary association without legal personality

The members of such an association are co-owners of the assets of the association in
undivided shares. Such a member may, however, not alienate or encumber his
undivided share because of the unique consequences flowing from his contract of
membership of the association.

f. Contract

By means of a contract two or more persons can jointly buy a thing and have the
ownership transferred in undivided shares through delivery or registration.
Bound common ownership

• Bound common ownership exists between common owners as a result of an

underlying legal relationship between them, which forms the basis for their common
ownership of the thing or things and which implies that the common owners cannot
terminate the common ownership while the legal relationship is still in existence.

In the case of bound common ownership there exists an underlying legal relationship between
the common owners which forms the basis for the common ownership of the thing or things.
There are several examples of underlying legal relationships on which bound common
ownership can be based:

• A marriage in community of property where the underlying legal relationship between

the parties to the marriage is determined by matrimonial property law.
• A partnership, where the underlying legal relationship between the partners is
determined by the law of partnerships and the partnership contract between the
partners.
• A voluntary association, where the underlying legal relationship is determined by the
law of associations and the membership contract between the members.

Bound common ownership has the following implications:

1. A common owner can usually not alienate or encumber his share of the common
ownership as long as the underlying legal relationship exists. While a partnership is in
existence, partners cannot transfer their common ownership share in the assets of the
partnership to a person who is not a partner.
2. The joint exercise of entitlements of ownership is determined by the underlying legal
relationship. During the existence of a marriage in community of property the law of
matrimonial property determines the way in which the spouses may exercise their
entitlements regarding the communal assets.
3. The common ownership cannot be terminated unilaterally by a common owner while
the underlying legal relationship still exists. A particular form of bound common
ownership exists in the case of a sectional title scheme. The sectional owners are
bound common owners of the common property of the sectional title scheme and a
sectional owner cannot give up her undivided share in the common property while she
is still the owner of a section of the building.
Free co-ownership

Definition

Free co-ownership means that the only legal relationship which exists between the parties, is
the co-ownership of the thing or things. No other (underlying) legal relationship exists between
the parties.

Free co-ownership has the following implications:

• A co-owner can alienate or encumber his undivided co-ownership share

independently.
• The co-ownership can be terminated unilaterally because no other legal relationship
exists between the parties which would make such a termination impossible.
• The joint exercise of entitlements is not determined by an underlying legal relationship
between the co-owners.

The distinction between such a contract and a partnership agreement, which regulate the
entitlements of free co-owners and bound common owners respectively, was explained as
follows:

• Co-ownership is not necessarily established by contract, while the basis of a

partnership is always a contract.
• Co-ownership does not necessarily include a community of profit and loss, while that
is always the case with partnerships.
• A co-owner can alienate his undivided co-ownership share without the permission of
his co-owner(s), while a partner may not.
• One co-owner is not automatically the representative of another co-owner, while
partners are.
• Co-ownership does not necessarily have a basic profit motive, while partnerships do.
Rights and obligations regarding the property

In the case of co-ownership the thing is not physically divisible for the purposes of alienation
or encumbering of portions thereof by individual co-owners, but it can be divided for the
purpose of its use. The exercise of entitlements resulting from co-ownership and all legal
actions pertaining to the thing, must be performed by the co-owners jointly. The co-owners
have certain rights and obligations regarding the thing.

Rights and obligations

• Alienation and encumbrance

• Use
• Profit, income and fruits
• Maintenance and expenses
• Right of veto

a. Alienation and encumbrance

• Co-owners must give permission before a thing can be alienated or

encumbered.

b. Use

• The co-owners must decide jointly how the thing is to be used. This permission
can be given by means of a use agreement, but it can also be given informally.
• Every co-owner is entitled to use the thing reasonably and in accordance with
the size of his share.
• This reasonable use means that the thing may not be used to the detriment of
the other co-owners.
• The use of a thing by a co-owner must be in accordance with the size of his
share in the joint property.
• This does not mean that a co-owner can claim the use of a part of the thing,
but it means that his use of the whole thing must be in accordance with the size
of his share while taking into consideration the use rights of the other co-
owners.
c. Profit, income and fruit

• The co-owners are entitled to an equal share of the fruit, income or profit
regarding the property proportionate to every co-owner’s share.
• This principle applies even if the profit or income was initiated by one co-
owner, except in the case where the co-owners have agreed that every co-
owner may appropriate the fruit of the use of the property proportionate to his
share.
• In this case the other co-owners share only in the profit that accrues as a result
of unreasonable use or use disproportionate to the co-owner’s share.
• One co-owner cannot, therefore, appropriate for himself the full profit of the
property through independent use and exploitation thereof.
• For example, where the land was leased without the permission of the other
co-owners either partially or in full, the co-owner who received the rent was
obliged to share it with the other co-owners in accordance with their share in
the joint property

d. Maintenance and expenses

• The co-owners are obliged to contribute to the maintenance of and expenses

regarding the property proportionate to their shares.
• The co-owners are, of course, not liable to contribute to luxurious
improvements made without their approval by another co-owner.
• The obligation to contribute is applicable only to necessary expenses for the
conservation of the property.

e. Right of veto

• The decision of the majority of co-owners regarding the use of the property is
not necessarily binding on the minority.
• This means that a minority can veto the decision of the majority. In these
circumstances the co-ownership can be terminated or the reasonableness of
the co-owners can be tested by the court in that a declaratory order or
prohibitive interdict, depending on the case, can be sought by the aggrieved
co-owners.
Entitlements regarding the undivided share

• The co-ownership share in the joint property is an idealised, undivided share in the
ownership of a thing, and not an actual division of the thing.
• A co-owner can, in the case of free co-ownership, at any time alienate or encumber
his share of the joint property without the co-operation of the other co-owners and even
against their will – it is, after all, one of the most important characteristics distinguishing
free co-ownership from bound common ownership.
• The share in the joint property can be encumbered by a limited real right given by the
co-owner to a third party regarding the thing proportionate to the co-owner’s share.
• It must be emphasised that a co-owner’s share does not entitle him to use a
proportional part of the property. He is, proportionate with the extent of his share,
entitled to the reasonable use of the whole thing, except if otherwise agreed to by the
co-owners.
• If the thing is divisible, the co-owners may agree that a co-owner may exercise his use
right in terms of his share regarding a specific part of the property.
• If the property is indivisible, the co-owners may agree to divide the use of the thing on
the basis of time.
• This is a principle of common law which is specifically applied to time-sharing. The use
agreement entered into by the co-owners is, however, enforceable only against the co-
owners who were parties to the agreement and not against their legal successors. If,
therefore, a co-owner should alienate his share, the use agreement is not enforceable
against the new co-owner.
• The co-owners will then have to conclude a new use agreement.
• The shares in the joint property need not be equal.
• A co-owner can, by subdividing his share, alienate a part of his share to a third party
who then becomes a co-owner himself, while he himself retains a share.
• The share is, however, always an idealised, undivided share in the ownership of the
thing and never in a divided part of the property.
• Co-owners cannot object to a new co-owner as a result of alienation.
• What can be objected to is a co-owner giving use rights in the property to a third party
without the permission of the other co-owners, but a co-owner can lease his share to
a third party without the permission of the other co-owners.
• In this way a use right in accordance with his share can be given to a third party.
Encumbrance

• It is possible to pledge the share; in the case of immovables to encumber the share
with a mortgage (provided such a mortgage does not infringe upon the rights of the
other co-owners); to encumber it with a personal servitude such as usufruct; to lease
it or to bequeath it.
• Since real servitudes are indivisible, such servitude cannot be given regarding a co-
ownership share in the joint property.
Remedies
Although the control and use of the property are usually regulated by means of a mutual
agreement between co-owners, it can happen that the agreement of division or use is not
complied with or that the parties cannot agree on the content of such an agreement. In these
circumstances it is necessary to approach the court for assistance.

Remedies:

a. Damages or division of profit

b. Interdict
c. Subdivision

a. Damages or division of profit

• If a co-owner should exceed the reasonable use of the thing, in terms of his
share, by using the thing for a purpose not previously used or intended or if the
extent of his use should be larger than his share, the other co-owners can claim
damages or the division of profit resulting from the use (whichever is
appropriate) from such a co-owner.
• The division of profit and damages can be claimed from the co-owner in the
usual manner by instituting an action.
• Considerations like the income of the co-owner from such use, the expenses,
the profit made and the extent of the share will contribute to determining the
extent of the other co-owners’ claim.

b. Interdict

• A co-owner who exceeds his entitlements of use in terms of his share by using
the property unreasonably, can, by means of an interdict, be prohibited by the
other co-owners from continuing this use.
• The basis of the interdict is the co-owner’s right of veto regarding the use of the
thing (ius prohibendi) which is a common law principle.
• A co-owner cannot, however, prohibit the use of the thing by other co-owners
for any reason, since these co-owners are entitled to use the property because
they are co-owners.
• The interdict will thus be successful only if it can be proved that the use was
unreasonable.
c. Subdivision

• If the property is divisible any co-owner can at any time claim the subdivision
of the property in accordance with every co-owner’s share.
• It is a requirement that the co-owners must first attempt to divide the thing
amongst themselves in accordance with everyone’s share, but if such a division
is not achieved the court is asked, by means of the actio communi dividundo to
make such a division.
• Co-owners can agree not to subdivide the property for a period of time, but an
agreement that the co-ownership will be perpetual is not enforceable and
cannot prevent the introduction of the actio communi dividundo.
• If the co-owners do conclude an agreement of subdivision, one of the co-
owners cannot attack the agreement on the ground that it is not in accordance
with the sizes of the shares or that it is inequitable.
• Such an agreement can be enforced by means of a court order if some of the
co-owners refuse to honour it.
• If the court is approached with the actio communi dividundo to subdivide the
property, it is usually expected of the co-owners to submit a proposed
subdivision and in appropriate cases the court can postpone the application to
enable the co-owners to prepare such a proposal.
• If it is, however, absolutely impossible for the co-owners to agree on the division
of the property, the court will order a division.
• If it would be uneconomical or detrimental to physically divide the property or if
the thing is indivisible, the court may order that the property be sold and that
the proceeds be divided among the co-owners in accordance with their shares
(such a sale usually takes place by means of a public auction, unless a
substantiated request to the contrary is approved by the court) or the court may
order that one co-owner compensate another co-owner in accordance with
their shares after the property has been evaluated in the prescribed manner.
• If immediate division would be to the detriment of the co-owners, the court may
in appropriate cases postpone the division or sale of the property for a
determinate or indeterminate period.
• The actio communi dividundo is not only an application to divide the property,
but also an application that a final calculation of expenses and losses be
provided.
• The legal relationship between co-owners is terminated when the property is
delivered to the new owner(s) (in the case of movables) or when the registration
of transfer of an immovable thing to a new owner takes place in the deeds
registry.