Partition of Co-Owned Real Estate – Why Any Co-Owner Can Force a Sale, and How to Protect Yourself When It Happens

1. Any co-owner of real estate is entitled, at any time and without any special reason, to demand partition of the co-ownership – even if the other co-owners object. This right is enshrined in Section 37(a) of the Land Law, 5729-1969.
2. Partition cannot be blocked indefinitely – it is only possible to agree in advance to limit the right for a defined period (up to 5 years, which may be extended), and no longer.
3. If the property is divisible in kind – the court will prefer physical division among the co-owners over a sale. If not possible – it will order a sale and distribution of the proceeds.
4. Even a co-owner with a very small share can initiate partition proceedings that will force all other co-owners to contend with a sale they may not have wanted.
5. A partition action with a predetermined outcome – the property will be partitioned one way or another. The only question is how and at what price.

Why Partition Is One of the Most Powerful Tools in Real Estate Law

The Supreme Court stated clearly: “Co-ownership in real estate is like a day-to-day partnership. The law cannot impose peace among co-owners – and for partition of co-ownership, all that is required from a co-owner is to express their desire to dissolve the arrangement.” This was stated in CA 1017/97 Ridelwitz v. Moda’i.

The practical implications are far-reaching: an investor who purchased 10% of a property, an heir who received one-eighth of an apartment, a partner who entered a joint venture and now wishes to separate – all can initiate proceedings that will compel a sale. This is tremendous power that most property owners are unaware of.

Three Methods of Partition

Partition in Kind – When the property can be physically divided among the co-owners, such as land that can be divided into separate plots, a duplex that can be registered as two separate units, or a building that can be converted into a condominium with apartments for each co-owner. The law prefers this method, and the court will examine whether it causes “substantial loss” to the co-owners.

Registration as a Condominium – A building containing multiple residential units can be converted into a condominium, so that each co-owner receives defined apartments in their exclusive ownership, rather than a percentage of the whole.

Sale and Distribution of Proceeds – When partition in kind is not possible (a single apartment, a property that cannot be divided), the court orders a sale on the open market, appoints a receiver, and distributes the proceeds among the co-owners according to their shares.

Leading Precedent: Ridelwitz v. Moda’i – Preference for Partition in Kind

The Ridelwitz ruling (CA 1017/97, PD 52(4) 625, 1998) remains the leading precedent in this area to this day. A three-story building in Tel Aviv was jointly owned. Some of the co-owners (Moda’i) demanded a sale to the highest bidder – possibly in order to purchase the building themselves without partners. The other co-owners (Ridelwitz) wanted partition in kind: converting the building into a condominium and dividing the apartments.

The District Court ruled in favor of the sale. The Supreme Court reversed – and established the precedent: when partition in kind does not cause “substantial loss,” it should be preferred over a sale. A co-owner’s desire to remain alone does not constitute “substantial loss.” The property was converted into a condominium.

When an Action Is Filed in Bad Faith – The Court Dismisses It

In LCA (Magistrate’s Court Tel Aviv) 5832-01-18 Yehudanin Gershel v. Itai Chen (Nevo, September 24, 2019), two co-owners held a building that was in practice divided into two apartments – one large and one small. A co-ownership agreement between them established separate ownership for each in their respective apartment. The owner of the large apartment suddenly sought to partition the co-ownership and sell the entire building – a move that under the circumstances was an attempt to pressure the owner of the small apartment.

The court dismissed the action. It held that the right to partition, like any right, must be exercised in good faith. Using it as a pressure tool, when the co-owners had already arranged a practical separation by agreement – contradicts the principle of good faith in Section 14 of the Land Law.

Even a “Missing” Co-Owner Will Not Block Partition

A question that troubled courts for years: what do you do when one of the co-owners cannot be located? Five siblings inherited property, and one of them went abroad and has not been heard from in decades. Are the other four stuck?

The Supreme Court broke new ground in CA 6889/23 Ran Bera’az v. Land Registrar: partition can be ordered even when a co-owner cannot be located – provided that substantial efforts were made to locate them and the court is satisfied that the efforts were exhausted. The proceeds due to the missing co-owner will be deposited in trust until they are found.

What to Do Before Entering Co-Ownership – and After

Before: A well-drafted co-ownership agreement is the best tool. It can stipulate who is entitled to demand partition and when, what the priorities are for purchase among the co-owners, and how the joint holding is managed in the meantime. No such agreement? The property is exposed to partition the moment one of the co-owners decides on it.

After an action is filed: The first question is the method of partition – not the fact of partition itself. A co-owner attempting to prevent an outright sale and achieve partition in kind, or who wishes to purchase the shares of their co-owners before the property goes to market – must act quickly and efficiently.

Holding property in co-ownership with partners and want to understand the risks, or received notice of a partition action? It is advisable to know your options before the court decides.

© Tidhar Tzur Law Firm | This article is for general information purposes only and does not constitute individual legal advice.