Where more than one person is entitled in respect of an immovable property, there is always the possibility that one of the co-owners will not wish to continue that co-ownership. The dissolution of co-ownership, known in practice as izale-i şuyu, is one of the judicial means serving to bring to an end the relationship of joint entitlement carried by co-ownership or by joint ownership.
The provision introduced by Act No. 7445 has added a compulsory stopping point before this request may be taken to court: the parties must first sit down at the mediation table. Actions brought without this preliminary stage having been completed are dismissed on procedural grounds for want of a procedural requirement, without the merits being reached.
Below we examine the legal basis on which mediation in disputes concerning the dissolution of co-ownership (izale-i şuyu) rests, how and where the application is made, the conduct of the meetings and the legal consequences of the two different outcomes that emerge at the end of the process.
Is Mediation a Compulsory Stage in the Dissolution of Co-ownership?
The answer to this question has been clear since 1 September 2023. Following the entry into force of the amendment introduced by Act No. 7445, mediation has acquired the status of a procedural requirement as regards a request for the ending of co-ownership in immovable property subject to co-ownership or to joint ownership. The ability of the co-owners to apply to the court depends on their having exhausted this process beforehand.
Where this stage is omitted and an action is brought directly, the court may give a decision dismissing the action on procedural grounds for want of a procedural requirement, without examining the merits of the dispute at all. Mediation is therefore not an optional course preceding a request for the dissolution of co-ownership, but a threshold that must be crossed.
Legal Basis of the Provision
The source of the requirement lies in the amendments made by Act No. 7445 to the Mediation in Civil Disputes Act No. 6325.
By that provision, disputes arising from the division of property and from the dissolution of co-ownership, whether movable or immovable property is in question, have been brought within the scope of pre-action mediation. The legislature’s aim here is that the parties should assess the possibility of meeting on the ground of settlement before coming before the courts.
The Practical Meaning of a Procedural Requirement
The characterisation of mediation as a procedural requirement produces a concrete consequence in terms of procedural law: unless this process is completed, the judge cannot go into the substance of the dispute and conduct an examination.
The natural extension of this is the obligation to annex to the file, when the statement of claim is being prepared, the final record showing that the process has been completed. In an action brought without such a document being submitted, the decision the court will give is not a judgment on the merits but a dismissal on procedural grounds for want of a procedural requirement.
How Is an Application for Mediation Made?
The process is set in motion by an application addressed to the mediation office. This application is a compulsory procedural step that must be completed before the statement of claim is filed.
At the time of the application, the information relating to the immovable property forming the subject of the dispute, the identity and address details of the parties and the subject matter of the request are expected to be set out in a manner leaving no room for hesitation. In files in which the number of co-owners is high, the complete transmission of the party details is decisive if difficulties are to be avoided at the later stages of the process.
Who Is Entitled to Apply?
The co-owner or co-owners seeking the ending of the co-ownership are entitled to make the application for mediation.
In immovable property subject to joint ownership, as in co-ownership, it is sufficient for only one of the co-owners to make the application; a common expression of will by all those entitled is not required.
The application may be made by the entitled person in person, and there is likewise no impediment to its being made through a representative.
Determining the Office With Jurisdiction
The office to which the application is to be made varies according to the nature of the assets whose division is sought. Where the subject of the division is an immovable property, the mediation office of the place in which the property is situated has jurisdiction. Where an asset other than immovable property is to be divided, it is instead the office of the domicile of the opposing party that comes into play. Where there is more than one person on the opposing side, it is also possible to apply to the office at the domicile of any one of them.
In places where no mediation office has been established, applications are accepted by the registry of the civil court of peace assigned for that purpose. Correctly identifying the office with jurisdiction is a detail that must not be neglected if the process is to be conducted soundly.
Application Where the Co-owners Are Numerous
In files for the dissolution of co-ownership it is not unusual for a large number of persons to be entitled in respect of the immovable property. In such cases the participation of all the co-owners in the mediation process must be secured.
For this reason the identity and address details of all the co-owners are expected to be notified in full at the time of the application, so far as they can be obtained. In disputes arising from a community of heirs, the large number of heirs is one of the headings requiring particular care if the process is to be conducted in accordance with the proper procedure.
How Is the Mediation Process Conducted?
In disputes concerning the dissolution of co-ownership, the process begins to operate with the arrival of the application at the office and the subsequent appointment of a mediator. What is sought throughout the meetings is to gauge the possibility of settlement between the parties, to discuss the method by which the immovable property is to be divided and, where possible, to bring the dispute to a conclusion without its being taken to court.
Appointment of the Mediator
Following the making of the application, the office makes an appointment from among the mediators entered on the register.
Where the parties have agreed upon a particular mediator, the process may also be conducted by the person chosen by that common will. Once the appointment has been completed and the file delivered to the mediator, the process is regarded as having formally begun.
Contacting the Parties and the Invitation to Meet
The mediator who takes up the task contacts the parties and notifies them of the date, the time and the place of the meeting. In practice these notifications are mostly made by telephone, text message, electronic mail or similar channels of communication; the mediator is expected to show the care required in order to reach the parties.
A reasonable effort must be made to call the parties to the meeting. Since this point acquires still greater importance in files for the dissolution of co-ownership where the number of co-owners is high, the correct and complete notification of address and contact details is of great value.
Where one of the parties cannot be reached, the mediator attempts to establish contact again using the contact details available and records all the steps taken in the record. If, despite these efforts, the person cannot be reached, or if they do not take part in the meetings despite the invitation, the process continues with the parties who have been reached; the position as regards the persons who did not attend or could not be found is separately entered in the final record.
For a party who fails to attend the meeting despite a duly made invitation and without a valid excuse, adverse consequences may arise in the action subsequently brought as regards the costs of the proceedings and the attorney fee. This risk makes it necessary for invitations to mediation to be taken seriously and for participation in the process to be shown.
Matters That May Be Addressed at the Meetings
At the negotiating table the parties may freely discuss every kind of option relating to the resolution of the dispute.
Within this framework the division of the immovable property in kind, the transfer of the whole or of a part of it to particular co-owners, the method and the conditions by which a sale is to be carried out and the manner in which the price obtained is to be distributed among the co-owners may all be discussed. The option of dissolving the co-ownership by establishing condominium ownership may equally be brought to the table, and disputes relating to the determination of ownership of improvements and to compensation for use may also fall within the scope of the negotiation. If the parties meet on common ground under these headings, the dispute is resolved without the need to bring an action.
The Time Limits Laid Down for the Process
In mandatory mediation relating to the dissolution of co-ownership the rule is that a result must be reached within three weeks of the date on which the mediator is appointed.
In cases of necessity the mediator may extend this period by a maximum of one further week. Accordingly, the maximum period of time allowed for the completion of the process is four weeks.
Meetings Ending in Agreement
If at the end of the negotiations the parties are able to meet on common ground, the dispute over the dissolution of co-ownership is resolved without the door of the court being knocked upon. The understanding reached at the mediation table demonstrates the will of the co-owners to bring to an end the relationship of collective ownership over the immovable property and produces significant legal consequences.
Where a settlement is achieved, the method by which the co-ownership is to be dissolved, the person to whom the immovable property is to be left, the manner in which the sale is to be carried out, the manner in which the price arising from the sale is to be divided or the other financial obligations falling on the parties may be settled in the content of the agreement.
Drawing Up the Agreement Document
Where the negotiations end in a settlement, the mediator prepares an agreement document. The matters on which the parties have agreed must be set out in the document with a clarity leaving no room for doubt.
In disputes concerning the dissolution of co-ownership, entries may be inserted in this document relating to the division of the immovable property in kind, to its transfer to particular co-owners, to the method of sale to be adopted and to the division of the sale price. Matters concerning the settling of accounts between the co-owners and concerning improvements or compensation for use are also among the headings that may be regulated in the document.
The document becomes binding on the parties from the moment it is signed by them and by the mediator.
Annotation of Enforceability
For the agreement document drawn up at the end of the mediation to be regarded as a document in the nature of a court judgment and to be made the subject of enforced execution directly, an annotation of enforceability must in certain cases be obtained.
This annotation serves as a court approval permitting the document to be given effect through the use of the power of the State. In understandings involving the transfer of immovable property, land registry transactions or dispositions subject to an official form, the weight of the annotation in practice increases markedly.
The court that is to grant the annotation is the court that would have had subject-matter jurisdiction had the dispute been made the subject of an action. Since subject-matter jurisdiction in disputes concerning the dissolution of co-ownership lies as a rule with the Civil Court of Peace, the request for the annotation is likewise addressed to that court; the place with territorial jurisdiction is the court of the place where the immovable property is situated.
In its examination the court reviews whether the dispute is amenable to mediation and whether the understanding is contrary to public order and to mandatory rules of law. If the conditions are satisfied, the annotation of enforceability is placed on the document and the document acquires the character of a court judgment.
Meetings Ending Without Agreement
If at the end of the negotiations the parties are unable to meet on common ground, the process closes without agreement. That outcome does not remove the possibility for the co-owners of bringing an action for the dissolution of co-ownership.
The failure to reach a settlement in mandatory mediation does not produce a consequence limiting the right of access to the court; it merely demonstrates that the procedural condition required for an action to be brought has been fulfilled.
Where no settlement is reached, the mediator draws up a "final record of non-agreement". It is compulsory for this official document, which evidences that the process was conducted in accordance with the proper procedure and that no understanding could be reached between the parties, to be annexed to the statement of claim in the action for the dissolution of co-ownership to be brought.
Consequences of Failing to Attend the Meeting
Notable consequences await a party who, although duly invited, fails to attend the first meeting within the scope of mandatory mediation without advancing a valid excuse.
The Mediation in Civil Disputes Act No. 6325 provides that a party who fails to attend the first meeting without an excuse may face two sanctions even where, in the action for the dissolution of co-ownership subsequently brought, they are found to be wholly or partly in the right:
- The costs of the proceedings may be imposed on that party,
- It is possible for no attorney fee to be awarded in their favour.
For example, where one of the co-owners has not responded to the invitation and has not attended the meeting, while the other co-owner has taken part in the process and an action has subsequently been brought, the court may impose the costs of the proceedings on the co-owner who did not participate even if that co-owner is successful at the conclusion of the proceedings.
Representation at the Mediation Meetings
The parties may take part in person in mediation meetings arising from the dissolution of co-ownership, and it is equally possible for them to be represented by their lawyers.
Participation Through a Lawyer
The parties may take part in the negotiations through their representatives. The representative sits at the table on behalf of the client, conducts the meetings, submits proposals and may sign the agreement document where a settlement is reached.
However, the ability of the representative to represent the party in the process and, in particular, to place their signature at the foot of the agreement document depends on the power of attorney containing the special authority relating to mediation activities. The requirement of special authority as regards settlement, the making of agreements and transactions directed at the transfer of immovable property is a point that frequently gives rise to difficulty in practice.
Difficulty of Representation in a Community of Heirs
One of the problems most frequently encountered in disputes of this kind is how representation is to be secured in communities of heirs. In immovable property subject to joint ownership, the high number of heirs may in practice make the conduct of the meetings difficult.
Each of the heirs may take part in the process separately, and they may equally be represented through their representatives. That said, differences of view among the heirs, or the complete non-involvement of some of them in the process, are among the factors weakening the possibility of settlement.
Representation of Legal Person Co-owners
Where one of the co-owners is a company, a cooperative, an association or another legal person, the persons authorised to represent and bind that legal person take part in the meetings.
In companies this task falls as a rule to the members of the management body or to persons granted the power of representation. It is also possible for the legal person to be represented through its lawyer.
The power of representation may be required to be established by trade registry records, signature circulars or certificates of authority. Transactions conducted, or agreement documents signed, by persons without authority may open the door to disputes as to validity at a later stage.
The Action for the Dissolution of Co-ownership to Be Brought After the Process
Where mandatory mediation closes without agreement, the co-owners’ right to bring an action continues to exist. The completion of the process is a procedural precondition that must be fulfilled if the action is to be heard.
For this reason, when the action for the dissolution of co-ownership is brought, the submission to the file of the documents demonstrating that the mediation was conducted and concluded in accordance with the proper procedure must not be neglected.
When the Action Is to Be Brought
No special preclusive period is laid down by law as regards the bringing of an action for the dissolution of co-ownership following meetings that have ended without agreement.
Accordingly, the co-owners may bring an action within the framework of the general provisions after the final record has been drawn up. Even so, it will be appropriate for the action to be brought within a reasonable time so that the dispute is not prolonged and the problems arising from the actual use of the immovable property do not grow.
Subject-Matter and Territorial Jurisdiction
In actions for the dissolution of co-ownership subject-matter jurisdiction lies as a rule with the Civil Court of Peace.
As regards territorial jurisdiction, the court of the place where the immovable property is situated is accepted as having exclusive jurisdiction. The action must therefore be brought before the civil court of peace of the place in which the immovable property is situated.
Submission of the Final Record to the File
It is compulsory for the final record of non-agreement drawn up at the end of the meetings held within the scope of mandatory mediation to be attached to the statement of claim.
That document is in the nature of an official document showing that the mediation procedural requirement has been satisfied. In actions brought without the final record being submitted, the court may give a decision dismissing the action on procedural grounds for want of a procedural requirement.
Independent Legal Assessment
In disputes concerning the dissolution of co-ownership, mediation is often regarded as a formality to be got past. The picture in practice is, however, different: in files in which the number of co-owners is high and in which arguments over improvements and compensation for use also come to the table, mediation can offer a genuine opportunity for resolution that forestalls a sale process capable of lasting years. The short three-week timetable, for its part, shows that this opportunity can only be taken advantage of where the parties come prepared.
Planning the following headings from the outset, while the process is being managed, prevents both procedural risks and losses of rights on the merits:
- Compiling in full, before the application, the identity and address details of all the co-owners and, where a community of heirs is in question, of the heirs
- Correctly identifying the office with jurisdiction according to whether the subject of the division is immovable property
- Reviewing whether the power of attorney contains the special authority as regards mediation, settlement and the transfer of immovable property
- Assessing the need for an annotation of enforceability in understandings involving the transfer of immovable property before the text of the agreement is written
- Attending the first meeting; failing that, accepting the risk that will arise as regards the costs of the proceedings and the attorney fee
- Confirming, before the file is delivered, that the final record of non-agreement has been annexed to the statement of claim
Independent Legal provides advisory services and conducts litigation at every stage in disputes arising from co-ownership and joint ownership, from the conduct of the mediation process through to the pursuit of the action for the dissolution of co-ownership.