Dissolution of Co-Ownership in Land: How to Leave a Shared Property

The right to dissolve

Co-ownership in land is not a physical division. A co-owner registered in a third of a property does not own a particular wing of it, but a third of every centimetre of it. That is why co-ownership is stifling: nothing can be sold, built or let without coordination.

There is no limit on the possible number of co-owners, and the ownership is not physically divided: a co-owner holding 70 percent of the land owns 70 percent of every part of it, of every grain, what is known as ownership in musha. So provides section 27 of the Land Law 5729-1969: land belonging to several owners is owned by each of them, according to his share, throughout every part of the land, and no co-owner has a defined part of it.

This distinction cuts both ways. Managing the property is done by majority decision: without the consent of the owners of most of the shares, the property cannot be let and no building plan can be advanced. Selling one’s share, by contrast, is free: every co-owner may sell his own share to a third party unilaterally, without his partners’ consent. And so too the demand to dissolve, which requires neither a majority nor consent.

Hence the rule: every co-owner may demand dissolution at any time, unilaterally and without the agreement of the others. The right is a proprietary one, and it is subject mainly to the duty of good faith and to the prohibition on abuse of a right.

Justice Mishael Cheshin of the Supreme Court put this approach into words in RCA 1017/97 Ridlevitz v. Modai, quoted here at length (in free translation from the Hebrew):

“...Whatever the attitude of the law to co-ownership in land while it exists, once a partner asks for its dissolution the Law seeks to make the dissolution of the partnership as easy as possible: for the good of the partners and for the good of the development of the economy as a whole. ... Such is the law in a partnership governed by the Partnerships Ordinance (see sections 41(a)(3) and 41(b)), and such is the law in co-ownership of land. In the absence of an advance agreement for co-ownership for a fixed period (as provided in section 37(b) of the Law), co-ownership of land is like a partnership from day to day (de die in diem), and to dissolve it all that is required of a partner is to give notice that he wishes to untie the bundle. The law has no power to make peace between partners at loggerheads, or even between partners who find it hard to reach an understanding with one another, and having no tools with which to make peace between them, it grants each of the partners the right and the power to seek the dissolution of the co-ownership.

Here are Abram and Lot, his brother’s son, who lived together as one family, they, their households, their flocks and their herds, until the land could no longer bear them dwelling together and strife broke out between their herdsmen. “So they separated from each other” (Genesis 13:6-12): that is the way to dissolve a partnership that one of the partners no longer wants.

While the co-ownership lives, the democratic principle of majority rule governs the management and use of the common property. In the words of section 30(a) of the Land Law: “the owners of the majority of the shares in the common land may determine anything concerning the ordinary management of the land and its ordinary use”. So during the life of the co-ownership; not so in its dissolution: there no democracy reigns, and the minority may, and is entitled to, impose its view on the majority. Thus far, the overriding principle of untying the bond and dissolving co-ownership in land.

A second principle is that dissolution (absent agreement between the partners) is to be carried out, as far as possible, by partition in kind (section 39(a) of the Law). This concerns, of course, land capable of division (see section 38(a)), and where the land is so divided each partner takes a part equal to his share. Land is a limited and unique resource, and the Law treats with respect a person’s wish to go on holding at least part of the land he co-owned. Hence the mandatory provision of section 39(a) that in divisible land the dissolution “shall be” by partition in kind. Under section 39(b), the court may, as needed, fix “equalisation payments” to even out the partners’ separate parts.

A third principle, a qualification of the second if you will, appears in section 40(a): the court will not order partition in kind of land that cannot be divided (which is self-evident), nor will it order partition in kind if satisfied “that partition in kind would cause a significant loss to the partners, all or some of them”. In such cases the dissolution proceeds by sale of the land to the highest bidder. Even if partition in kind causes the partners some loss, the court must still order it; only where the loss would be significant does the dissolution proceed by sale and division of the proceeds.

A fourth principle is laid down in section 42: where the essence of the land is a building fit to be registered as a condominium, the court may order dissolution by registering the building in the condominium register and allocating apartments to the partners according to their shares. And finally: since the primacy lies with partition in kind, the rule is that whoever asks that there be no partition in kind bears the burden of persuasion. In the words of Justice H. Cohn in CA 587/78: “...he who contends that land cannot be divided, or that partition in kind would cause loss to any of the partners, bears the burden of proof. The rule is that co-ownership of land is dissolved by partition in kind; any other manner of dissolution is the exception”.”

RCA 1017/97 Ridlevitz v. Modai, per Justice Mishael Cheshin