Co-ownership and Joint Ownership of Real Estate – What You Need to Know

What is the difference?

When one property is owned by several people, we usually speak of co-ownership or joint ownership. Although these terms are often used in everyday language as if they meant the same thing, there is an important legal distinction between them.

The main difference concerns ownership shares. In co-ownership, each co-owner’s share is determined in advance, for example 1/2, 1/3 or 1/4 of the property, while in joint ownership the individual shares of the joint owners are not determined, although they may be determined later.

Distinguishing between these two forms of ownership is particularly important in real estate because it affects the way the property is managed, the possibility of disposing of an individual share, the sale of the property and the regulation of ownership relations.

What is co-ownership?

Co-ownership exists when several people have ownership rights over the same property, with each co-owner holding a defined ideal share.

For example, if two people are co-owners of a house, each with a 1/2 share, this does not mean that one owns the ground floor and the other the first floor. Each of them owns a 1/2 share in the ownership right over the entire property.

Specific physical parts of a property may be linked separately to individual co-ownership shares when condominium ownership has been established.

A co-owner may generally dispose of their own co-ownership share independently. For example, they may sell, gift or encumber it, provided that this does not interfere with the rights of other persons. If someone owns 1/3 of a house, they may dispose of that 1/3 share, but they cannot independently dispose of the entire property.

When managing the entire property, co-owners participate in proportion to their ownership shares, while the method of decision-making depends on the type of matter and the rules applicable to the specific property.

What is joint ownership?

Joint ownership also involves several owners of the same property, referred to as joint owners, but the size of their individual shares is not determined in advance.

For example, it cannot be said that one joint owner owns 1/2 and another owns 1/2 of the property until those shares have been formally determined.

Unlike co-ownership, joint ownership may exist only where it is provided for by law. If there is uncertainty as to whether a property is held in co-ownership or joint ownership, the Croatian Ownership and Other Real Rights Act presumes that co-ownership exists.

However, this legal presumption should not be relied upon in practice without further verification. For real estate, it is always important to check the land registry extract and the legal basis on which ownership was acquired and registered in order to determine with certainty which form of ownership applies.

Another important difference concerns disposal. Since a joint owner does not have a predetermined co-ownership share, they cannot dispose of their interest toward third parties in the same way as a co-owner can. As a rule, joint owners manage and dispose of the jointly owned property together.

Is marital property joint ownership?

The expression “joint property” often leads to the mistaken conclusion that marital property is an example of joint ownership.

Under the current Croatian Family Act, spouses are co-owners of marital property in equal shares unless they have agreed otherwise.

Therefore, under the current legal framework, marital property generally represents co-ownership between spouses rather than joint ownership with undetermined shares.

How is co-ownership shown in the land registry?

The difference can also be seen in the way ownership is registered in the land registry.

Co-ownership is registered by stating the respective ownership shares as fractions. For example, an individual owner may be registered as owning 1/2 or 1/3 of the property.

For this reason, when a property has several owners, it is important to check not only their names, but also the manner in which their ownership rights are registered.

Common parts of a building are not the same as joint ownership

Another common source of confusion arises with apartments in multi-unit residential buildings. The term “common parts of a building” does not mean that these parts are held in joint ownership in the legal sense.

Under condominium ownership, ownership of an apartment or another separate part of a property is inseparably linked to the corresponding co-ownership share in the entire property.

At the same time, a building contains parts that serve all or several co-owners. These common parts include, among other things, the load-bearing structure, roof, façade, common staircases and corridors, elevators and certain shared installations and equipment.

For example, the owner of an apartment on the first floor owns their separate part of the property – the apartment – while the staircase leading to it is not their separate property. It is a common part of the building.

Therefore, “common parts of a building” and “joint ownership” are not the same legal concepts. Owners of condominium apartments hold defined co-ownership shares in the entire property, while ownership of their apartment is linked to that respective co-ownership share.

Why is this distinction important when buying or selling real estate?

When a property has several owners, it is important before buying or selling to establish whether the property is held in co-ownership or joint ownership, who all the holders of the ownership rights are, and how they are entitled to dispose of the property.

In the case of co-ownership, the size of the individual ownership shares should be determined. In the case of joint ownership, it must be taken into account that individual shares have not yet been determined and that joint owners generally dispose of the property together.

This is why checking the land registry status and the legal basis for acquiring ownership is an important step before entering into a real estate purchase agreement.

Simply put, in co-ownership it is known what proportion of the ownership right belongs to each co-owner, while in joint ownership those individual shares have not yet been determined.

In practice, co-ownership is encountered far more often in real estate than joint ownership. Joint ownership arises only in situations specifically provided for by law, while co-ownership is the usual form of ownership when a property belongs to several people. Understanding the distinction is therefore particularly important for correctly identifying the ownership status and checking the relevant documentation before buying or selling a property.

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