A co-owner leaving joint ownership of indivisible property: valuation, offer to co-owners, then sale of the whole by auction

The principle

Where jointly owned real property cannot be divided in kind without serious loss, a co-owner who wants to exit may ask for sale of his share or of the whole property. In either case the trial judge appoints an expert to value the share by reference to the value of the whole, notifies the other co-owners and invites them to buy it or offer a buyer at that value; if a sale is agreed, the judge approves it; otherwise he orders the whole property sold at auction under the compulsory-sale rules, unless Article 1166 of the Civil Transactions Law prevents it. A co-owner need not first try, and fail, to auction his share alone.

The case and the decision

A co-owner of an inherited property in Abu Dhabi, which could not be divided in kind, asked the courts to end the co-ownership by sale. The first-instance court ordered the auction of only his share and that of one other co-owner. On appeal he argued that his final request had been sale of the whole property, because his share could not realistically be auctioned alone; the Court of Appeal applied the civil chamber's line of authority that a co-owner must first obtain an order to sell his undivided share and may seek sale of the whole only after that sale fails. Cross-appeals were lodged (Nos. 136 and 143 of 2023, civil), and the chamber referred the question to the General Assembly.

The General Assembly reviewed Articles 1152 and 1160 to 1166 of the Civil Transactions Law, which regulate co-ownership, consensual and judicial partition, and partition by liquidation (sale by auction) where division in kind is impossible or would greatly reduce value. It noted that the 2020 amendment (Decree-Law No. 30 of 2020) to Article 1166 allows the auction to be limited to co-owners at the request of one of them, no longer requiring unanimity. A request by an exiting co-owner to sell his share is in substance a request for partition by liquidation, and the court rules on the true nature of a request rather than its wording. Because Article 1166 gives the judge broad discretion in the interest of all co-owners, and auctioning an undivided share is complicated, the judge should value the share against the whole, invite the other co-owners to buy it or propose a buyer, approve any agreed sale and, failing that, order the whole property sold at auction. By the majority required under Article 10 bis (3) of Law No. 23 of 2006, the General Assembly adopted this principle and departed from the contrary one.

It also confirmed that a co-owner may recover rent for his share from co-owners occupying more than their share if they prevent his use, that the title deed issued from the real estate register is the only proof of ownership, and that sale after a final partition judgment belongs to the execution judge. It partly quashed the judgment in appeal 136, remitted the case to the Court of Appeal, and dismissed appeal 143.

Laws applied

In the court’s words

“يحكم ببيع العقار كاملاً بطريق المزايدة متى انتفت موانعه”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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