What are the benefits of dissolution of joint ownership in Spain?
When relationships end or co-owners no longer wish to share ownership of a property, the process of dissolving joint ownership (extinción del condominio) becomes an important legal mechanism in Spain. Not all solicitors have experience in using this method.
Particularly in regions like Valencia, where property law offers specific advantages, this process can help resolve disputes. It can also make it easier to transfer shares of a property in an efficient and cost-effective manner. At Molina Solicitors, we have extensive experience assisting clients in the Valencia region. We are experts in the dissolution of joint ownership process, providing clear guidance to navigate this process effectively.
What is Dissolution of Joint Ownership?
Dissolution of joint ownership is a legal procedure that allows co-owners of a property to end their shared ownership. This typically occurs in situations such as:
- Divorce or Separation: When a married couple decides to end their relationship and must decide what to do with jointly owned property.
- Co-Ownership Disputes: When co-owners of a property—such as friends, family, or business partners no longer wish to remain co-owners. Through this process, the property is either transferred to one of the owners. Or sold, with the proceeds distributed among the co-owners according to their ownership shares.
Benefits of Dissolution of Joint Ownership
- Tax Advantages
One of the key benefits of this process in the Valencia region is the significant reduction in taxes compared to a regular sale. A usual property sale attracts a transfer tax (Impuesto de Transmisiones Patrimoniales or ITP) of 10% on buying a share of a property. Dissolving joint ownership is subject to a much lower tax. Just 1.5% of the property’s cadastral value in the Valencia region.
This huge difference makes the dissolution of joint ownership an attractive option for transferring property between co-owners. Capital Gains Tax is not paid on a dissolution of joint ownership.
- Cost-Effective Solution
In addition to reduced taxes, the dissolution process is cheaper for other expenses such as notary and registry fees. By opting for this procedure, parties can avoid the higher costs typically associated with selling the property on the open market. Plus if agreement can be reached, avoid litigation regarding ownership disputes.
- Efficient and Simple
The dissolution process is designed to be easy, particularly when both parties agree on the terms. With proper legal guidance, the procedure can be completed relatively quickly. This allows all parties to move forward without delays or stress.
- Fair Division of Assets
In cases of divorce or separation, dissolving joint ownership ensures that property assets are divided equitably. This prevent future disputes over property rights.
How Does the Dissolution of Joint Ownership Work in the Valencia region?
The process generally involves the following steps:
- Agreement Between Co-Owners: All parties must agree to dissolve the joint ownership and decide who will take ownership of the property or if it will be sold.
- Valuation of the Property: The property’s value must be determined to ensure a fair settlement. This can be done through an independent appraisal. We use the government tax value usually.
- Legal Representation: Engaging experienced solicitors, like Molina Solicitors, ensures the process is handled correctly, including the drafting of necessary agreements and legal documents.
- Execution Before a Notary: The dissolution is formalised before a notary, with the new ownership recorded in the property registry.
- Payment of Relevant Taxes: The reduced tax rate (1.5% in Valencia) is dealt with during the process, along with notary and registry fees.
- If agreement cannot be reached, we can assist with an enforced dissolution of joint ownership. Spanish law states that co-owners of a property do not need to remain co-owners if they do not wish to be. When one co-owner (or more) refuses to do anything or pay anything, we can assist. We would endeavour to negotiate and, in many cases are successful. If legal communications do not work, we can enforce a split through the Spanish Courts.
Why Choose Molina Solicitors?
At Molina Solicitors, we have extensive experience assisting clients in the Valencia region, particularly with the dissolution of joint ownership. We provide clear guidance to help navigate this process effectively.
In regions like Valencia, where property law offers specific advantages, this method can help resolve disputes efficiently. It also simplifies the transfer of property shares in a cost-effective manner.
Dissolution of joint ownership is a practical and cost-effective solution for resolving property ownership issues in cases of divorce or changing co-owners. It has tax advantages and it is straightforward, offering an efficient way to transfer property. If you are considering dissolving joint ownership in the Valencia region, contact Molina Solicitors for expert advice and support. Follow us on Instagram @molinasolicitors and facebook (Molina Solicitors) for more updates and tips.
