In Latvia, there is a significant volume of residential real estate that is privately owned but under co-ownership rights.

What does co-ownership of a home mean in practice?

If an owner has a specific apartment in a residential building under co-ownership rights, the Land Register indicates the proportion of the building that belongs to the owner, corresponding to the apartment’s area relative to the total area of the building. If the co-owners have agreed on the use of the co-ownership, a specific apartment assigned to the owner is indicated.

What difficulties can arise in co-ownership?

The main difficulties arise when selling a property (e.g., an apartment) in a building where apartments are under co-ownership rights.

Thus, when selling such an apartment to a third party, the other co-owners must be given pre-emption rights. If the owner (seller) fails to do so, the other co-owners have the right to buy the property from the third party at the sale price offered to the third party. This right can be exercised within one year from the date the buyer’s ownership rights are registered in the Land Register.

Therefore, the initial transaction with the third party can be contested in court by any co-owner of the building where the sold apartment is located if the pre-emption rights of the other co-owners were violated. In such a case, the third party (initial buyer) will receive back the money paid for the apartment, and the apartment will become the property of the co-owner who contested the transaction and whose pre-emption rights were violated and restored by the court.

How to ensure compliance with co-owners’ pre-emption rights in a co-owned building?

When selling a co-owned home, written notices must be sent to all co-owners of such a building two months before the transaction date. If these notices (prepared in writing and sent to the declared address or email or in another provable way) are not sent to all property owners within the specified period, the pre-emption rights of the unnotified owners are violated. It should be noted that even if there are violations in sending such notices, the pre-emption rights will be considered violated, and the risk of contesting the transaction will remain.

As a rule, no one wants to wait TWO months to send notices, especially since even sending notices does not provide a 100% guarantee that the risk will be eliminated.

How to reduce risks?

When selling an apartment in a co-owned building or other co-owned property (e.g., a parking space in an underground garage), the purchase agreement should indicate the real market price of the transaction - the value of the apartment or other property. After all, the owner with pre-emption rights must go to court to contest the transaction, cover legal costs, and then pay for the apartment/other property at a price not less than the price at which such property was initially sold. Typically, co-owners are “interested” in contesting such transactions only if the price was lowered and the apartment/property was sold below market value.