Example
A married couple purchased a residential apartment held in joint ownership by the husband and wife. In time, the husband fell into financial difficulty, and a judgment was even given against him in favor of three creditors. Within the framework of an execution file opened against the husband, a receiver was appointed who sought to dissolve the co-ownership in the apartment in order to sell it and transfer to the creditors their money.
The wife, who holds half of the rights in the property, objected to the dissolution of the co-ownership and argued that if it were decided to dissolve the co-ownership, she would ultimately be forced to vacate the home through no fault of her own.
The Receiver’s Authority
The receiver is an officeholder appointed by the Registrar of Execution, and his powers are set out in Section 54 of the Execution Law: “The receiver shall take into his possession the asset for which he was appointed, manage it, sell it, realize it, and deal with it as the Head of Execution directs; and the receiver’s hand in all these is as the hand of the debtor.”
Well, upon examining the above section, one can see that the receiver’s role is to step into the shoes of the debtor (in our case, the husband) and to sell the apartment and return the funds to the creditors (the people to whom the husband owes the money).
Since, as noted, the receiver has the authority to bring about the termination of the co-ownership in the property, the court must, before issuing the order, weigh all the broad considerations and, among other things, balance the rights — that is, between the rights of the property owners and the rights of the creditors seeking to recover their money.
The problem that arises in our case is whether the receiver can bring about the dissolution of co-ownership in the land even though this authority was not expressly established in law. Moreover, the entire purpose of dissolving co-ownership, as noted in the introductory article — to stimulate the real estate market and prevent stagnation — is not fulfilled in our case, since the rights holders (the couple) do not wish to dissolve the co-ownership, and the action is being taken against their will.
Balancing Rights
The deeper we delve into the matter, the more we can see that there are notable advantages to preserving the co-ownership relationship, such as social and economic advantages. Beyond that, we can certainly determine that harm is likely to be caused to the wife, even though she has no direct connection to the debt — harm that infringes upon her property right.
In sum, the court will most likely lend its hand and permit the sale of the apartment to the highest bidder, but the central question on the matter will determine whether the apartment will be sold as “vacant” or “occupied” in accordance with the Tenant Protection Law, which will certainly affect the sale value and even the profitability of the transaction. To complete the picture, in most cases the value of an occupied apartment is generally 50% of its market value.
Since the Tenant Protection Law is a major subject in its own right, we will discuss it in the next article in the series on the dissolution of co-ownership in land.
The Amon Law Firm accompanies clients who wish to realize their rights in properties involving disputes, and assists by providing legal recommendations, especially in cases where there is a family relationship between the parties, in order to resolve the dispute amicably with the aim of avoiding unnecessary legal proceedings.
The above is general information only and does not constitute legal advice; each case is examined on its own merits.
