Co-Ownership

Co-ownership is the ownership of a single property by two or more persons, either in undivided shares (shuyu') or as separately owned units sharing common parts, as in apartment buildings and compounds, with each partner holding a defined proportional share. The Civil Transactions Law regulates undivided ownership in Articles 619–639. Shares are presumed equal unless proven otherwise (Art. 619), and each partner may dispose of, exploit and use his share without the others' permission provided he does not harm their rights (Art. 620). This corrects the common belief that any disposition needs everyone's consent: unanimity is required only to dispose of the whole property or of a specific separated part of it. Ordinary management is decided by a majority calculated by the value of shares (Art. 622), while fundamental changes or a change of purpose require owners of at least three-quarters of the property, with any dissenter entitled to object before the court within 30 days (Art. 623); expenses are shared pro rata (Art. 625). A partner wishing to exit may seek consensual or judicial partition, and if the property cannot be divided in kind the court orders a sale by auction (Arts. 627–628). Separately owned units are governed by the Law of Ownership, Partition and Management of Real Estate Units (Royal Decree M/85 dated 2/7/1441H), which requires an owners' association registered with REGA once there are three or more owners. In practice co-ownership usually arises from inheritance, joint purchase or family investment, and disputes mostly concern management, leasing and partition. Partners are well advised to sign a written agreement on management, distribution of rent and expenses, and exit mechanisms. The RETT Implementing Regulations do not treat the partition of a property held under one deed among its owners according to their shares, without consideration, as a taxable disposition, whereas the sale of a share to another person is taxable at 5% and triggers the other partners' pre-emption right.