In the realm of property law, community of property is an evident reality within Malta. As stated in Article 489(1) of the Civil Code (Chapter 16 of the Laws of Malta), ‘community of property exists where the ownership of one and the same thing, or of one and the same right, is vested pro indiviso in two or more persons.’ However, this co-ownership of property presents challenges, particularly when co-owners disagree on the disposition of the property held in common or else when not all co-owners can be traced and contacted. Consequently, through Act XVIII of 2004, the Maltese legislator introduced Article 495A of the Civil Code to address such impasses.
Article 495A bestows the right on majority co-owners (i.e. those with a share of at least 50% plus 1) to proceed to court and request the sale of a property held in common when the minority co-owners disagree. Therefore, an action is filed by the owners wanting to sell, namely the majority co-owners, against those who do not want to sell, namely the minority co-owners. However, prior to doing so, the following requisites must be satisfied, as stated in Jesus Mary Gatt et vs. Paul Gatt et (13th February 2025):
i. Co-ownership must have lasted for more than three years.
This time period was initially of ten years however, it was reduced to three years through Act XIV of 2016.
ii. There must be no judicial proceedings for the partition of the common property
iii. The co-owners have failed to agree on the sale of a common property
iv. The proposed sale will not seriously prejudice the dissident co-owners
Provided these cumulative requisites have been satisfied, then the majority co-owners may request the First Hall of the Civil Court by way of application to authorise the sale of the common property. These requisites have consistently been confirmed and abided with by the Court. Indeed, in Paul Caruana vs. Kuraturi Deputati et (25th April 2024), the Court stated that ‘the law obliges this Court to first ensure that, for the applicants’ action to succeed, they must have complied with the conditions and requirements mentioned in the law, which must exist and must also have been observed.’
The final requisite requires that the dissident co-owners do not suffer any serious prejudice by the proposed sale. Consequently, the Court has clarified in Richard Vella Laurenti vs. John Vella Laurenti (27th January 2017) that this means that the sale must not be ‘manifestly unfair’ to the dissident co-owners. Upon assessment to determine whether there has been a serious prejudice, Article 495A(6) states that ‘the court shall take into consideration all relevant factors including the value of the property and the price of the sale, and may for this purpose order that the property be appraised in accordance with the provisions of Article 306 of the Code of Organisation and Civil Procedure.’
Moreover, in the Vella Laurenti judgement, the Court went on to say that:
… to decide not to adhere to the request for sale, it is not enough for the defendant to present valuations showing a difference in the property’s value, which, if ultimately divided among the co-owners, would be relatively small. The purpose of Article 495A is not to precisely determine the market value of the property—which is ultimately subjective, even with the benefit of technical expertise—but rather to ensure a sale at a fair price (which is guaranteed because it is agreed upon in the contract) that does not prejudice any owner.
Once the Court ascertains that the dissident co-owners are not seriously prejudiced, then it will authorise the sale. However, there have been numerous instances whereby the Court did not accept the plea under Article 495A. For instance, in Charles Izzo et vs. Av. Dr. Maria Karlsson and P.L. Lindsey Ann Galea (3rd November 2022), the case involved the majority co-owners seeking court authorisation to sell a co-owned property in Paola for €200,000, as one-tenth belonged to unknown heirs of Emanuel Ascolese. The court questioned the applicants’ claim of 9/10 ownership due to missing heirs and omitted beneficiaries. An expert had valued the property at €220,000, raising concerns about the sale price, and the promise of sale agreement had expired with no proof of renewal. Additionally, not all legal requirements under Article 495A were met. As a result, the court rejected the request to authorise the sale.
Moreover, the Court may also adjust the price as it deems appropriate as seen in Philip Agius et vs. L-Avv Dr Josette Sultana et (10th July 2019). In this case, the property was jointly owned by seven siblings and their descendants. The applicants, who held a 5/7 majority share, requested court approval to sell the property for €26,000 as per a promise of sale agreement. However, a court-appointed expert estimated its value at €45,000 if tenanted and €70,000 if unoccupied. The court determined that selling at €26,000 would cause significant financial harm to the dissenting co-owners due to the substantial undervaluation. As a result, the court approved the sale only at the expert’s valuation, ensuring a fair outcome for all co-owners.
What is noteworthy is that the limitations imposed in the proviso of Article 495(3) are applicable to an Article 495A procedure. This proviso states that the rule in Article 495(3), i.e. that each co-owner is regarded as being the co-owner of each part held in common, does not apply in three particular instances. These are:
i.When the common property is subject to a right of usufruct, use or habituation
ii. The common property consists of property which by nature is required to continue indivisible
iii. The participants in the state of community agree otherwise
In terms of the procedure, this Article requires that the majority co-owners, i.e. at least 50% plus one of the owners, must enter into a promise of sale agreement with the prospective buyer which explicitly states that they are only selling the parts which pertain to their shares. The prospective buyer must be a third party and not one of the co-owners themselves as established by the Courts in Busy Bee Estates Ltd. vs. Anthony Formosa et (25th November 2011).
This promise of sale agreement is subject to a Court order which will issue the sale of the premises as a whole and therefore, forcing the sale of the shares of the dissident co-owners. Moreover, the applicants must file a declaration stipulating the details of all co-owners together with the respective pro indiviso share of each and every one of them. In cases where any of the co-owners are unknown, legal curators will be appointed by the Court.
Once the Court is satisfied that no prejudice will be suffered, Article 495A(7) requires the appointment of a notary to issue a date, time and place for the sale to take place. In cases where the minority co-owners persist on refusing to sign, the Court will appoint a curator to appear on their behalf. The Court may also order the sale by licitation if it deems fit. Once all this has been achieved, an Article 495A procedure would be finalised.
To conclude, Article 495A imposes a large threat on the right of co-ownership. However, this threat is considered as a legitimate limitation as it provides a solution to those majority co-owners that are at an impasse and therefore, cannot proceed with the sale of a property held in common due to the withholding of consent from the minority co-owners. Consequently, this solution was the ultimate aim of the introduction of Article 495A through Act XVIII of 2004.
Authored by Laia Mangion who is doing an internship with the firm.