Extinction of condominium | Jesús Benavides Notary's Office
Real estate and mortgage

Extinction of condominium

Step 1

What is an extinguishment of condominium?

It is the notarial document by means of which a situation of shared ownership of a property among several persons, who are called co-owners, is put to an end, awarding part or all of it to only one of them.

Step 3

How much does a condominium extinguishment before a notary cost?

The following calculator offers the user/consumer the possibility of knowing with great accuracy the expenses that will have to be faced at the time of formalizing notarially the extinction of condominium or dissolution of community. This calculator has parameterized both the notary and registry fees as well as the regional regulations in force depending on the location of the property object of the dissolution or extinction.

We are currently developing this calculator. Please check back soon so that we can calculate your budget.
Step 4

More frequently asked questions

What does the extinction of condominium consist of?

In order to properly understand what is the so-called extinction of condominium, undoubtedly, the most reasonable thing seems to be to understand, first of all, what is a community and condominium, since only by understanding this concept, it will be possible to properly understand the extinction of the same.

Thus, on this basis, and in accordance with the provisions of the Catalan Civil Code, "community of property exists when two or more persons share jointly and concurrently the ownership of the property or of another real right over the same asset" (article 551-1 of Book V of the Civil Code of Catalonia).

<ejemplo>Por ejemplo, imaginemos la situación en la que Mireia y Anna, amigas desde la infancia, son muy aficionadas al esquí. A resultas de esta afición, ambas deciden adquirir, de forma conjunta, la propiedad de un apartamento en Puigcerdà, a los efectos de poder acudir al mismo los fines de semana de invierno, y así poder practicar ese deporte que tanto les gusta.<ejemplo>

<ejemplo>A la vista de lo indicado, Mireia y Anna, al adquirir cada una el 50% del pleno dominio de este apartamento, han creado una situación de comunidad o de condominio sobre ese bien inmueble (recordemos, un apartamento), que será necesario gestionar jurídicamente.<ejemplo>

This community or condominium situation being understood, its extinction will occur, as can be presumed, when the co-owners who form the community agree to put an end to this situation of shared ownership, so that one of them becomes the new owner of the whole of the property in question, whose ownership was previously shared.

<ejemplo>Siguiendo pues el ejemplo anterior, si Mireia, pasados los años, ya no desea seguir practicando el esquí, y por lo tanto, mantener la propiedad de ese 50% del apartamento en Puigcerdà ha perdido el sentido para ella, puede optar, en tal caso, y de común acuerdo con Anna (la cual está interesada en ser la propietaria de la totalidad del piso), proceder a la extinción del condominio de este piso que las une a ambas, de tal modo que Mireia dejará de ser la propietaria de dicho 50%, el cual se integrará en el patrimonio de Anna, convirtiéndose así en la propietaria del 100% del pleno dominio de la finca, abonando a cambio a Mireia el valor que corresponda a ese 50% del piso.<ejemplo>

What is the purpose of the condominium extinguishment?

As has just been explained in the preceding question, the extinction of a condominium is the legal figure that allows to put an end to a situation of shared ownership of several persons over a property, in such a way that one (or some) of them becomes the new owner of the totality of such property.

In view of the above concept, its usefulness is more than evident in those cases in which, for whatever reason, several persons who share the ownership of a property wish to put an end to this situation, so that the property becomes the property of only one of them.

In practice, recourse to the extinction of the condominium usually occurs in the following cases, among others:

  • In the case of couples that jointly acquire a property and that later, when the sentimental relationship ends, one of them wishes to acquire the entire property and the other to leave the community in view of the cessation of the cohabitation produced between both (let us think of cases of separations, divorces, extinctions of stable couples, etc.).
  • ~Julia and Vicente are a couple who have been in a romantic relationship for 10 years, during which they have acquired ownership of an apartment in Barcelona (50% each), to establish their habitual residence. After this time, due to personal differences, Julia and Vicente decide to put an end to their relationship, so that Julia leaves the common home and moves to live in another address.
  • ~As a result of this situation, as Julia and Vicente are no longer a couple and do not live together, Julia wishes to get rid of the 50% that she owns in that house, so that, after agreeing the appropriate with Vicente, both decide by common agreement to proceed to the extinction of the existing condominium, so that Vicente acquires 50% of the remaining property that previously belonged to Julia and, in exchange, he compensates her with the market value of that %, let's say for example 150.150,000 euros, so that the community situation is extinguished, leaving Vicente as the sole owner of 100% of the freehold.
  • It is also very common in the case of assets that have been acquired by inheritance by several siblings or nephews, who, after some time, in view of the difficulties of managing the community, agree to cease in this situation, in such a way that one of them will keep the whole of the property, compensating the rest in the corresponding monetary amount.
  • ~Let us imaginethat Óscar and Raquel, owners of a summer house in Calella de Palafrugell, are a married couple who have three daughters, named Belén, Andrea and Sara. Upon the death of Oscar and Raquel, their three daughters, as universal heirs, when accepting the inheritance of their deceased parents, become the owners of the full domain of the said property, each one having 33% of the property.
  • ~Overthe years, the three sisters come to the conclusion that sharing ownership of the house is not practical, because for example two of them do not use it, so finally, as Sara does enjoy it, they agree to extinguish the existing condominium, so that Sara acquires the remaining 66% (belonging to Belén and Andrea in 33% respectively), thus becoming Sara the owner of 100% of the freehold.
  • It can also be used to dissolve the existing community of property for any other reason(remember the example of the two friends who jointly acquire a second home, and later wish to put an end to this situation).

What is the difference between the extinction of condominium?

As can be observed, the sale and purchase and the extinction of condominium are very similar operations, since in both cases there is a transfer of part of the ownership of an asset to a third party, in exchange for an economic consideration (provided, of course, that the extinction of condominium is carried out for valuable consideration).

Thus, on the basis of this similarity between other operations, the fundamental differences between the two resources are, broadly speaking, as follows:

In the first place, as is evident, it is necessary to indicate that the extinction of the condominium can only be carried out if any of the co-owners is willing to acquire the remaining portions belonging to the other co-owners, since if all of them wish to abandon the community, and therefore the transfer to a third party proceeds, the only legal mechanism suitable for this purpose will be the sale and purchase.

<ejemplo>Así pues, recuperando el ejemplo inicialmente propuesto de Mireia y Anna que adquirieron conjuntamente una vivienda en Puigcerdà, si pasados los años, ambas ya no desean tener la propiedad de esta vivienda, lo que procederá es realizar una compraventa y vender la finca a un tercero que la adquiera, por el precio que se pacte.<ejemplo>

Having made this basic and evident precision, but at the same time necessary, if in the termination of the intended community, one of the co-owners is willing to acquire the remaining portions of the property that belong to the rest of the co-owners, in such case, it is necessary to indicate that the intervening parties, besides resorting to the extinction of the condominium, could also opt for the purchase and sale, however, this will have a higher tax cost, since in such case, it will be taxed by the Transfer Tax (in Catalonia, for example, at a rate of 10%).

<ejemplo>Así pues, recuperando el ejemplo inicialmente propuesto de Mireia y Anna que adquirieron conjuntamente una vivienda en Puigcerdà, si posteriormente Mireia desea abandonar la comunidad, puede plantear una compraventa a Anna, de modo que Anna adquiera el 50% de la propiedad restante mediante una escritura de compraventa, a cambio de, por ejemplo, 150.000 euros.<ejemplo>

<ejemplo>No obstante, como se indica, en este caso, al tratarse de una compraventa, la misma tributará por ITP al 10%, esto es, Anna deberá pagar 15.000 euros (el 10% de 150.000 euros) en concepto de ITP a la Agencia Tributaria catalana.<ejemplo>

On the other hand, if the termination of the community is proposed by means of the extinction of the condominium, so that one of the co-owners acquires the portions of the property that belong to the rest of the co-owners, all this through this figure of the extinction of the condominium, the operation will have a more favorable tax treatment, since in such case, it will only be taxed for the Stamp Duty (in Catalonia, for example, at a tax rate of 1.5%).

<ejemplo>Así pues, recuperando el ejemplo inicialmente propuesto de Mireia y Anna que adquirieron conjuntamente una vivienda en Puigcerdà, si posteriormente Mireia desea abandonar la comunidad, si la operación se plantea como una extinción de condominio, Anna adquirirá el 50% restante de la propiedad, Mireia recibirá esos 150.000 euros igualmente como contraprestación, pero el coste fiscal será mucho menor, pues se tributará por AJD sólo 2.250 euros (esto es, el 1,5% de 150.000 euros).<ejemplo>

How is the undivided community regulated?

Before understanding how to proceed when extinguishing a condominium, I believe that, without a doubt, it is also very necessary to know what an undivided community is, as well as to know how it is regulated.

As regards the concept of undivided community property, as already indicated above, this is the legal reality in which two or more persons jointly and concurrently share the ownership of the property or of another real right over the same asset (in our case, real estate, i.e., an apartment, a house, a parking space, etc.), without there being a determination as to which specific and concrete part belongs to each of the co-owners.

<ejemplo>Así pues, recuperando el ejemplo inicialmente propuesto de Mireia y Anna que adquirieron conjuntamente, al 50%, una vivienda en Puigcerdà, como vemos, lo único que sabemos es que dicho piso pertenece al 50% a cada una, pero sin que sea posible determinar qué parte concreta del piso pertenece a cada una, de modo que, por ejemplo, no es posible saber si una habitación concreta, o un baño, o el pasillo, pertenecen a una u otra.<ejemplo>

Knowing then what an undivided community is, it is necessary to know that, as far as its regulation is concerned, it will be governed:

  • In the first place, by the autonomy of the will of the parties, that is to say, by the pacts or agreements reached by the co-owners(in the example of Mireia and Maria, they may have agreed that the apartment will be used indistinctly by both of them all the time, or for alternate weeks, among many other options).
  • And, in the absence of agreement between the parties, by the legal rules established by civil legislation (in the case of Catalonia, Articles 552-1 and following of Book V of the Civil Code of Catalonia).

Thus, in relation to this regulation, it is necessary to highlight the following main issues:

  • Each of the rights determines the share of participation in the use, enjoyment and yield of the property(so, for example, if Juan owns 25% of an apartment, he has the right to use it 3 months a year, that is, 25% of the time; Or, if for example that apartment is rented for an amount of 800 euros per month, Juan will receive 200 euros, that is, 25% of the rent obtained) .
  • Each co-owner can freely dispose of his right in the community, dispose of it and encumber it(i.e., in our example, John, if he wishes, can sell his 25% or even mortgage it).
  • Each co-owner may use the object of the community in accordance with its social and economic purpose and in a way that does not harm the interests of the community or of the other co-owners, who may not be prevented from using it.
  • No co-owner may modify the property which is the object of the community (i.e. carry out works, alterations, etc.), not even to improve it or make it more profitable, without the consent of the others. However, if a co-owner carries out works that improve the property without the express objection of the others within one year of their execution, he may demand compensation with the legal interest accrued from the time when he claims them in a reliable manner.
  • The administration of the community corresponds to all the co-owners, and for the adoption of agreements the following rules will be taken into account:
  • ~For acts of ordinary administration (such as minor repairs), resolutions shall be adopted by the majority of the co-owners, according to the value of their quota.
  • ~On the other hand, for acts of extraordinary administration(such as, for example, the installation of a swimming pool in the house at a cost of 40,000 euros), a majority of three quarters of the quotas will be necessary.
  • Each co-owner must contribute, in proportion to his share, to the expenses necessary for the conservation, use and performance of the object of the community, as well as to those of reform and improvement agreed upon by the majority(thus, if Juan is owner of 25% of the property, and an electrical appliance breaks down and its repair amounts to 1,000 euros, Juan must pay the 250 euros corresponding to his 25%).
  • In these cases, it should also be taken into account that the co-owners who have advanced expenses may demand from the others the reimbursement of the part that corresponds to them, plus the legal interest accrued from the moment in which they claim them in an irrefutable manner.

What happens if one of the members of the undivided community wants to divest himself of his share?

In accordance with the Catalan civil regulations, it is necessary to know that, as already indicated, any of the co-owners who wishes to leave the community, has the right to do so, without the need to allege or justify any reason, being able in such case to sell his participation to a third party outside the community.

<ejemplo>Así pues, siguiendo con nuestro ejemplo inicial de Mireia y Anna que poseen cada una el 50% de ese piso en Puigcerdà, si Mireia desea desprenderse de su 50%, tiene todo el derecho a hacerlo, de modo que podrá venderlo a un tercero distinto a Anna, por ejemplo, a su amigo Francisco, que desea comprar ese 50%, a cambio de 100.000 euros.<ejemplo>

However, in these cases, the law establishes that the other co-proprietors will have a right of first refusal in order to acquire that % of the property that the co-proprietor wishes to dispose of (unless otherwise expressly agreed in the deed of incorporation). In order to exercise this right of first refusal, the co-proprietor who wishes to acquire that % of the property must pay the same price and with the same conditions that had been agreed with the third party.

<ejemplo>En nuestro ejemplo, como Anna no quiere compartir ese piso con Francisco, porque no tienen buena relación, si Anna lo desea, puede “igualar” la oferta de Francisco, de modo que si ella abona los 100.000 euros a Mireia, podrá adquirir ese 50% de Mireia y hacerse con el 100% de la propiedad, “pasando por delante” de Francisco, pues como este es un tercero ajeno a la comunidad, ella tendrá este derecho de tanteo.<ejemplo>

To exercise this right, the co-owners who intend to make the transfer must notify the other co-owners, reliably (by means of a burofax, for example), of the decision to sell and the circumstances of the transfer.

  • In such a case, the right of first refusal may be exercised within a period of one month from the time of notification.

Likewise, in order to avoid that the co-owner who wishes to sell does not respect this right, the law determines that, if the notification does not exist or if the transfer is made for a price or in circumstances different from those stated therein, the pre-emption will entail the withdrawal, that is to say, the possibility of bringing a legal action to invalidate this sale to a third party, so that the other co-owners are the ones who finally acquire the % sold to someone outside the community.

  • In such a case, this right of withdrawal may be exercised within a period of three months from the time the other co-owners become aware of the transfer and its circumstances or from the date on which the transfer is recorded in the Land Registry.

Finally, it should be noted that if there are more than two co-owners who wish to exercise the right of first refusal, each of them will be entitled to a percentage in proportion to their respective rights in the community.

<ejemplo>Así pues, siguiendo con nuestro ejemplo inicial, si este piso en Puigcerdà lo compraron Mireia, Anna y Paula, cada una un 33%, y posteriormente Mireia desea vender su 33% y Anna y Paula lo desean comprar, dicho 33% se dividirá entre ambas, correspondiendo un 16,5% a cada una, de modo que Anna y Paula se convertirán en propietarias del 50% cada una.<ejemplo>

See more frequently asked questions

Can a co-owner renounce to be part of a jointly owned property?

In fact, it is possible for an owner of a property in a situation of joint ownership, for whatever reason, to renounce the ownership of the property.

<ejemplo>Así pues, por ejemplo, si Juan y Antonio son propietarios, al 50%, de un terreno que han heredado, el cual origina unos gastos de mantenimiento elevados, pero que no es posible venderlo por su escaso valor o por las condiciones de mercado, si por ejemplo Juan no tiene dinero para afrontar dichos gastos, como no puede venderlo (porque ni Antonio ni un tercero ajeno lo quiere comprar) puede optar por renunciar a su derecho de propiedad.<ejemplo>

In any case, in these waivers, it will be necessary to take into account the following issues:

  • In the case of real estate, the waiver will only be possible if it is formalized in a public deed.
  • Renunciation shall entail the crediting of the other co-owners, in proportion to their rights.
  • It is not necessary for the other co-owners to accept the waiver in order to increase their ownership percentage.
  • The other co-owners, if any, if they do not wish to acquire that additional % of the property intended to be renounced by the other co-owner, are entitled to reject or renounce it.
  • In the event that the co-owner who intends to renounce has prior obligations pending payment to the community (such as, for example, extraordinary repair expenses), the renunciation will not exempt him/her from their payment.

Is it possible to extinguish a condominium without paying consideration in exchange?

In fact, what is reasonable is that in the extinction of the condominium, the condominium owner who abandons the community, in exchange, receives as consideration the money in which his participation in the real estate is valued, at market price.

<ejemplo>Así pues, siguiendo con nuestro ejemplo inicial de Mireia y Anna que poseen cada una el 50% de ese piso en Puigcerdà, Mireia, al abandonar la comunidad, recibirá a cambio, la cantidad de 150.000 euros, esto es, el valor de mercado de su 50% que es adquirido por Anna.<ejemplo>

However, it may very well happen that, for whatever reasons, the termination of the condominium is carried out without receiving any consideration from the condominium owner who leaves the community.

<ejemplo>Siguiendo nuestro ejemplo, podría suceder que Mireia sufra una grave enfermedad, ante la cual, su amiga Anna la ayuda a sobreponerse de la situación, la cuida, etc., de modo que, una vez recuperada, Mireia, como muestra de gratitud, procede a extinguir el condominio existente en la vivienda de Puigcerdà pero sin pedir nada a cambio a Anna (o en su caso, un importe inferior al valor de mercado, por ejemplo, 50.000 euros).<ejemplo>

This is perfectly possible, but nevertheless, in such a case this procedure will have tax consequences, since it is considered that in such a case a donation has taken place, so that tax will have to be paid for it.

How are condominium extinguishments formalized in practice?

If two or more persons share the ownership of a property, and one of them wishes to extinguish the condominium and leave the community, he/she must proceed as follows:

First of all, this co-owner must communicate his will to abandon the shared property, so that the other co-owner or co-owners, if they so wish, can acquire his or her share. From here on, it can happen:

  • If there is only one other co-owner, if the latter is interested in the acquisition and the parties agree on the corresponding consideration, the condominium will be extinguished under the agreed terms.

On the other hand, if there is more than one co-owner, this may happen:

  • If only one of them shows interest, there will be no problem, since if the parties reach an agreement, it will be that condominium owner who will be awarded the corresponding participation.
  • However, if more than one of the remaining condominium owners show interest, in such a case, the Catalan Civil Code (article 552-11 of Book V) determines that the successful bidder will be the co-owner with the largest share.
  • ~Thus, for example, if Juan (20%), Laura (30%) and Mar (50%) share the ownership of a house, if Juan wishes to get rid of his 20%, and both Laura and Mar wish to award themselves that share, as Mar has more % of ownership than Laura, this award in the extinction will correspond to Mar.
  • In the event that the remaining condominium owners have the same participation, the adjudication shall be decided by lot (Article 552-11 of Book V).
  • ~Followingthe previous example, if the apartment is shared by Juan (20%), Laura (40%) and Mar (40%), if Juan wants to get rid of his 20% and Laura and Mar want to award it to him and they do not agree on the distribution, they must draw lots to decide which of the two is the beneficiary.

On the other hand, if none of the current condominium owners is interested in acquiring this participation, the co-owner who wishes to leave the community may sell it to a third party, for the price and conditions agreed upon, but always respecting the right of first refusal of the other co-owners, in the terms set forth in a previous question.

Finally, in the event that all the condominium owners wish to leave the community, the property can simply be put up for sale, and the sale price obtained will be distributed according to the % of participation of each one of them.

What happens if a home is owned 50/50 by two co-owners and both wish to acquire the other's half?

In practice, it is very common that, especially in the case of couples who acquire homes jointly (usually 50-50%), later, when the relationship breaks up, the need arises to determine what to do with the home that is no longer the common domicile of both parties.

If the parties reach an agreement on which of the two will be awarded the property, as well as the compensation that the other co-owner will receive in exchange, there is no problem, since the extinction will be formalized without further impediments.

On the other hand, if both co-owners are interested in acquiring the whole of the property, and do not agree, the aforementioned rule of the Catalan Civil Code will be applied, in which case the award will be made by lots (as long as the property belongs 50-50% to each co-owner).

If the parties do not agree on how this lottery is conducted, the matter should be brought to court for resolution by the judicial authority as appropriate.

What happens if the property in respect of which the condominium is to be extinguished is mortgaged?

In practice, it is also very common that, when the extinction of the condominium is proposed, the property in question is mortgaged, so this is also a situation to be managed. This usually happens in many occasions in couples that jointly buy a house (50-50%) and later put an end to their relationship, wanting one of them to be awarded half of the property.

In these cases, it is necessary to understand that, from an ideal point of view, it will be necessary, in addition to extinguishing the condominium, to proceed to grant a mortgage novation deed, so that the former co-owner who now owns 100% of the property (i.e., the one who keeps the apartment) remains the sole debtor of the secured loan, thus releasing the other co-owner who has left the community.

However, for this to be the case, it is necessary for the bank to consent to this novation, since in short, before it had two debtors to guarantee the repayment of the loan, whereas now it will only have one debtor to face the debt, with which, this debtor (the new owner of the entire apartment exclusively) will have to present sufficient economic capacity to assume exclusively the payment of the loan.

Therefore, it may happen that if the co-owner who will keep the entire property does not have sufficient income to pay the loan exclusively, the bank rejects the novation, with which, the extinction of the condominium will be very difficult, because although the co-owner who leaves the community is no longer the owner of the property, he will continue to be the holder of a loan in his name that he must pay and that, in case of non-payment, will generate serious consequences for his patrimony.

In these cases, in practice, the extinction of the condominium is either ruled out or, if it is carried out, the co-owners sign a private document in which one of them agrees to assume the loan installments exclusively, but as we indicated, this is not a good solution, since this private agreement is not enforceable against the creditor, so that if the new owner of the entire apartment does not pay the loan, the bank may claim jointly and severally to the two debtors, with all that this will entail.

How is the extinction of a condominium taxed?

In general terms (and without prejudice to the specific particularities of certain singular operations), the extinctions of condominiums will be subject to the following taxation:

  • As already indicated in a previous question, the main advantage of these is that, since they are not considered to be a transfer of assets (since the property is an indivisible asset), as long as there is the corresponding compensation, they will not be taxed under the Transfer of Assets Tax (ITP).
  • On the contrary, they will be subject to the Transfer Tax and Stamp Duty, in its modality of Stamp Duty, with the following particularities:
  • ~The taxpayer of the tax will be the co-owner who is awarded the undivided share (the new owner of the % awarded).
  • ~The taxable base will be the value of the awarded share.
  • ~The taxable rate will be 1.5% (in Catalonia).
  • ~The liquidation period will be one month from the accrual of the taxable event, i.e., the signing of the deed of extinction of the condominium.
  • If there is no compensation by the co-owner who leaves the community, it will be considered as a donation, in which case it will be subject to Inheritance and Gift Tax.
  • Similarly, another great advantage of condominium extinguishments is that, since it is again considered that there is no transfer of assets (since the properties are indivisible), the operation will not be subject to the "municipal capital gains tax" (the Tax on the Increase in Value of Urban Land).

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