Valuing a co-ownership share in residential property is often the central question in the division of family relationships, inheritance or a joint investment. The Georgian Civil Code regulates common ownership within a clear framework: common ownership — both joint and shared — arises by force of law or on the basis of a transaction. Each co-owner may present claims to third parties in respect of property held in common ownership, although the right to reclaim a thing belongs to each co-owner only for the benefit of all co-owners. The correct determination of the share's value decides what each participant receives on division, how fair the compensation is and how the proceeds of a sale are distributed.
Equality of Shares and the Rules of Disposal
Unless specially otherwise provided, each participant owns an equal share — the general rule from which the starting basis of valuation follows: with two participants, each share is half the value of the object. Each participant may dispose of their own share, while the common object may be disposed of only jointly. On the sale of a share, the remaining participants' right of pre-emptive purchase may be determined by agreement of the parties, unless Georgian legislation directly provides otherwise. The costs of maintaining and preserving an item held in common ownership are also borne by the co-owners equally, unless law or contract provides otherwise, and the pledging or other encumbering of the item is possible only by agreement of the co-owners.
Division in Kind and the Drawing of Lots
The joint right is terminated upon division in kind, if the common object can be divided into homogeneous parts without reducing its value. For residential property, the building must objectively lend itself to division into parts similar in area and value; where one part exceeds a co-owner's share, the balance is restored through compensation. The distribution of equal shares among the participants takes place by the drawing of lots — a rule giving each participant an equal chance and excluding preference at allocation. Whether division in kind is possible is itself a question of valuation: it is precisely the risk of a reduction in value that decides whether such a division is admissible.
Sale of the Object and the Auction
If division in kind is excluded, the joint right is terminated by the sale of the common object, the pledged item or the land plot, and the distribution of the proceeds. In the case of a land plot, the rules of forced sale of real estate at auction apply. If the alienation of the common object to a third party is inadmissible, the object must be sold at auction among the participants. If the object is not sold, each participant may demand a repeat auction; however, that participant must bear the costs if the repeat attempt ends without result. The proceeds are distributed by shares, so the sale price and cost structure directly determine each participant's outcome.
Compensation of the Share on Division
On the division of common property, one party often receives items whose value exceeds that party's share — for example, where one part of a house is objectively more valuable. In such a case the other party receives corresponding monetary or other compensation. Here valuation becomes decisive: compensation is determined by the difference between the property transferred and the share, and a fair calculation of that difference balances the parties' interests. The methodological details of valuation are not directly established by the Civil Code — they are determined by other provisions and by valuation practice.
The legal background of the valuation matters too: unless specially provided otherwise, each participant holds an equal share; a participant disposes of his own share individually, but the common thing is disposed of only jointly. Joint ownership terminates upon division in kind where the thing can be divided into homogeneous parts without diminishing its value; otherwise — by sale and distribution of the proceeds.
Frequently Asked Questions
Questions connected with the valuation of a share most often concern the size of shares, the routes of division and the logic of compensation. Short answers on these topics are collected below.
What is the size of co-owners' shares?
Unless specially otherwise provided, each participant owns an equal share. Different shares may also be determined by agreement.
May a residence be divided in kind?
Yes, if the object can be divided into homogeneous parts without reducing its value. Equal shares are distributed among the participants by the drawing of lots.
What happens if division in kind is impossible?
The object is sold and the proceeds are distributed according to the shares. For a land plot the rules of forced sale at auction apply, and where alienation to a third party is inadmissible — an auction among the participants.
How is compensation determined on division?
Where one party receives items whose value exceeds that party's share, the other party receives corresponding monetary or other compensation.
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