How can the residential property ownership relationship end? The residential property ownership relationship ends either when the separate property is converted into ordinary property or when the property is destroyed.Section 23 LPH describes the cases in which the residential property ownership relationship may be terminated. A fundamental distinction must be made between two scenarios. On the one hand, it can be terminated by conversion into ordinary ownership or co-ownership, and on the other hand, by destruction of the property. The conversion to ordinary ownership usually takes place by means of a single owner combining all elements of separate ownership and, in connection with this, all shares in the common property (e.g. through purchase or inheritance) and passing a corresponding formal resolution. Only then does the termination of the residential property ownership relationship take effect, so that after its conclusion, only ordinary ownership of the entire property now exists. The transition from residential property to ordinary ownership is therefore by no means automatic. The situation in which a single owner owns the entire separate property is comparable to the situation in which the property is after the declaration of division has been executed by the builder. Here, too, there is only one owner and yet a residential property relationship exists. A corresponding resolution is therefore absolutely necessary. Similarly, several owners can decide to terminate the residential property ownership relationship and establish simple co-ownership. Following a corresponding resolution, which requires unanimity (some legal literature assumes that actual unanimity is required, i.e. the express consent of all owners must be obtained without allowing the consent of absent owners to be deemed sufficient – this even goes so far as to require the consent of both parties in the case of separate property held jointly by married couples) all co-owners own a share of the property without these shares being able to be individualised into separable, independent objects. The distinction between separate ownership and joint ownership is necessarily lost. However, it must be taken into account that, for this purpose, the property must be put to a use that no longer allows any actual distinction between separate ownership and joint elements. Otherwise, a de facto residential property ownership relationship could be assumed or the possibility could arise that the co-owners could demand the division of the co-ownership into individually usable elements of separate ownership on the basis of Article 401.2 of the Civil Code, and consequently the restoration of the residential property ownership relationship would occur.
Not every significant damage to the building leads to the assumption that the property has been destroyed. The restoration costs must exceed an amount that is more than half of the value of the property.On the other hand, as already explained, the dissolution of the residential property ownership relationship pursuant to Article 23 No. 1 LPH may also result from the destruction of the property. The law assumes that the property has been destroyed if the costs associated with its reconstruction exceed an amount corresponding to half of the value of the property immediately before the damage occurred. An exception applies if the amount exceeding half of the value is covered by insurance. However, this must be insurance taken out in favour of the community. Individual insurance policies taken out by owners at an individual level are not to be taken into account for this calculation. The damage justifying the legal assumption of destruction may, of course, vary from case to case. From the complete collapse of the building to significant damage, a wide variety of situations are conceivable which, under the above-mentioned conditions, may nevertheless lead to the same classification and to the termination of the residential property ownership relationship. However, extensive construction defects are not sufficient in themselves.
[pullquote]In exceptional cases, destruction may also be assumed if the competent authority determines this.[/pullquote]
The destruction described in Article 23 LPH is equivalent to cases in which an authority declares the property to be in ruins. Although this is always based on extensive damage determined by the building authority, the relevant Spanish regulations further distinguish between four situations.
A distinction is made between: ‘ruina física’, ‘ruina técnica’, ‘ruina urbanística’ and ‘ruina económica’.
A ruin can be a ruina física (physical ruin due to collapse), a ruina técnica (structural ruin due to weaknesses in the load-bearing elements that require at least partial demolition) an ruina urbanística (ruin to be assessed from a building law perspective), or an ruina económica (economic ruin) if the cost of the necessary repairs exceeds half the value of the property, excluding the value of the land. Only in the latter case is there therefore compliance with the conditions laid down in Article 23 LPH. Even if no official action in the sense of a determination of ruinous condition is necessary in order to assume the case of Article 23 No. 1 LPH – Article 23 LPH does not require any official action – individual owners will often apply for the issuance of a corresponding administrative act if they wish to terminate the residential property ownership relationship but there is no agreement within the community as to whether the property is considered destroyed or not. Since the official decision is made at the end of an administrative procedure in which the local building authority is responsible for the assessment and evaluation, the applicant can thus avoid having to obtain expensive private expert opinions. Despite the destruction of the property or the declaration that it is a ruin, the residential property ownership relationship does not automatically end. The deed of foundation or the articles of association may contain a provision to the contrary, or the continuation of the residential property ownership relationship may be agreed by unanimous resolution before or after the destruction or the declaration that the property is a ruin.
