Definition of fractional community according to BGB

Such a community is created either through a legal transaction or by law. A corresponding legal transaction exists if several persons acquire ownership of a property, but there is no community of joint ownership. In the case of statutory regulations, it is created by combining or mixing movable property, as a result of a treasure hunt or – in the case of real estate – by the homeowners’ association. Letting and selling the property by the community is possible without further ado. However, in the case of a fractional community and letting, care must be taken to ensure that it is carried out by all members of the community together.

The sale of the entire property is also only possible jointly, but each partner can sell their share independently. In addition, each fractional owner may use the joint assets or the property, provided that this does not impair the use by the other partners. The management of the common property is the joint responsibility of all members of the community. Decisions on management and use are made by majority vote. In the case of a condominium owners’ association, the owners’ meeting is the decision-making body.

The two forms of community property have some similarities and are often confused with each other, but there are some important differences. In some respects, they even contradict each other. In the case of joint ownership, all persons have joint ownership of the property, but the individual owners do not have a share right. For example, a community of heirs is a community of joint owners, as the heirs are obliged to manage the estate jointly. In so-called co-ownership by fraction, each partner has the right to freely dispose of their own share and can, for example, sell their share of the property independently without having to agree this with the other partners. However, it is possible to convert a community of heirs into a fractional community. The latter offers the individual heirs more flexibility and room for maneuver. It can therefore help to prevent possible disagreements and disputes. The conversion is carried out by a notary, requires the presence of all members of the community of heirs and must be entered in the land register.

The dissolution of a fractional community can be initiated by any individual member. To do so, the dissolution of the community must be applied for. This is possible via various procedures. For example, the community is dissolved if the property is sold to a third party and each member receives the proportionate proceeds of the sale. The fractional community is also dissolved if one member takes over the share of the other member(s) and thus becomes the sole owner of the property. If the members cannot agree on a uniform course of action and a partition auction has to be held, the community is also deemed to be dissolved. However, this is always the worst of all solutions, as in such cases sale prices are usually achieved that are significantly below the market value of the property.