Apartment in Co-ownership – More Affordable Than Usual, But With Some Nuances

On real estate portals, you occasionally come across listings for properties that are sold not in the usual apartment ownership format, but rather as co-ownership. Such apartments are most common in older buildings, for example in Kristiine in Tallinn, but especially in Nõmme.

Many co-ownerships in Nõmme have arisen through inheritance or land reform. There are also a number of houses that were built in such a way that two households live together – one on the lower floor and another on the upper floor. There are also former villas that were divided into apartments during the Soviet era and after regaining independence remained unregistered as real estate.

There are also newer buildings where, for various reasons, it has not been possible to establish apartment ownership.

For apartments in co-ownership, it is estimated that their price is on average 5-10% lower than the usual level. However, this is not always the rule, as much depends on the nature of the building, its condition, surroundings, and sometimes also on the neighbors. When selling or planning to purchase such an apartment, you must always take into account that the neighbors have first right of refusal.

What you need to know about co-ownership:

1. The most important thing to keep in mind with co-ownership is that it is property that is used on the basis of an agreement or notarial usage agreement. That is, this property has more than one owner.
2. For jointly used spaces and areas (yard, attic, basement, stairwell, etc.), there must be a usage agreement. If the usage agreement has not been executed by notary and registered in the land register, it is not binding on new owners.
3. Banks that provide loans for the acquisition of co-ownership also consider a notarial agreement important. Its absence may become an obstacle to obtaining financing.
4. Each co-owner has the right to sell their property, but other co-owners have first right of refusal. It is advisable to inquire before starting the sale whether any of the neighbors would be interested in purchasing.
5. The right of first refusal can be exercised within two months of receiving the aforementioned notice. A person who has the right of first refusal can acquire the property on exactly the same terms as agreed in the purchase and sale agreement. If the co-owner exercises their right of first refusal, the original buyer gets their money back.

Therefore, with apartments in co-ownership, you must take into account the possibility of greater administrative work and the importance of relationships between neighbors.

Article source: Uus Maa Real Estate Bureau