A way out for co-owners of immovable property is the possibility of exchanging their share with other immovable property, when other co-owners do not agree to purchase the share, to joint development of the property or to its sale. The exchange of the share does not constitute a sale and consequently the provisions of article 25 of Cap. 224 do not apply, nor are they activated.

Consequently, there is no need to make publications and give co-owners the opportunity to exercise their right to choose to acquire the sold share. Otherwise, if the exchange were not allowed and this were equivalent to a sale, then we would have the phenomenon of people depriving co-owners of the opportunity to exchange their property with another.

When the immovable property is divided, because it is located in a residential or other area where its division is permitted, then it cannot be considered indivisible and sold at public auction. In this case, the co-owner or co-owners who own at least 25 per cent of the property may submit an application to the director of the Land Registry, requesting its division, in accordance with article 29 (9) of Cap.224.

Interpretation of article 25 of Cap. 224

No co-owner may compel the owner of a share to sell it, so as to enable the co-owner to purchase it by exercising the right of priority granted to them by the Law. Article 25, as interpreted by the case law, does not apply when an exchange between estates is carried out.

If the term “sale” included the exchange of properties, this would be equivalent to adding the term “exchange” to the wording of article 25 and introducing an expansion that is not found in the law.

The Supreme Court in C.A.11800 dated November 9, 2004 ruled that from reading the entire text of article 25, its entire spirit refers to and is based on the cases of sale of immovable property.

Various individual provisions thereof leave no doubt that the text and consequently the purpose of the legislator, was to regulate the sale of an indivisible ideal share to a third person for a monetary consideration and not the exchange of properties.

The court, interpreting article 25, added that in subsection 1 (a) reference is made to the phrase “price at which it is sold” in relation to the director’s satisfaction within 60 days from the date of the declaration for sale, that the other registered co-owners do not wish to purchase that portion.

Both the use of the phrase “price at which it is sold” and the word “purchase” cannot indicate anything other than a monetary consideration.

Similarly, in subsection 2, reference is made to a “price” which must be deposited with the Land Registry within 30 days of the publication of the intended sale or the service of the relevant notice.

In section 2 of the law, the word “value” means the amount which the immovable property would be expected to yield if sold in the open market and is essentially equivalent to the “price” which should be deposited with the Land Registry.

The court also added that it is evident that in the case of an exchange of properties there is no price or value with reference to the free market, nor any amount that should be deposited with the Land Registry.

The words used in article 25 of Cap. 224, as well as more generally the interpretation given to the word “sale” or the corresponding English “sale”, leave no doubt that article 25 should be given the interpretation mentioned above, thus excluding the exchange of immovable property.

Otherwise, there would be absolutely no point in the constant reference in the paragraphs of article 25 to words and phrases that effortlessly imply the purchase, sale, determination of a price based on market value and, more substantially, the deposit of the amount with the Land Registry, so that the co-owner can acquire the ideal share of the other co-owner.

Court conclusion

It concluded that, if article 25 were to be interpreted as meaning that the term sale also includes the exchange of properties, it would be tantamount to depriving a co-owner of the opportunity to exchange their property with another that for various reasons they may consider to be more advantageous, either in terms of its ownership details or in terms of its financial prospects.

George Coucounis is a lawyer specialising in Immovable Property Law, based in Larnaca. E-mail: [email protected], tel: 24818288