This article analyses the decision-making rules among fractional co-owners when leasing their common property. It explains the difference between "ordinary management" and an "important change to the common thing" on the basis of Slovak case law. The author highlights a fundamental and frequently repeated mistake in practice: although a majority co-owner (e.g. holding a 60% share) may lawfully outvote the minority, they may not act entirely on their own. If the minority co-owner is not invited to the decision-making in advance and given the opportunity to comment, the signing of a lease agreement or a notice of termination may be held absolutely invalid.
If you own real estate together with other people, sooner or later you will face the question of how to deal with it jointly. A specific area co-owners must address when managing their property is lease relationships – in particular concluding lease agreements, choosing a specific tenant, increasing the rent, or serving notices of termination.
The legal framework in § 139 of the Slovak Civil Code distinguishes two fundamental decision-making regimes for co-owners: ordinary management of the common thing and an important change to the common thing. The problem is that the statute does not define these terms precisely. The boundary between them therefore had to be drawn by the decision-making practice of the Slovak courts and by legal theory.
Why does this distinction matter? It determines whether the other co-owners can lawfully outvote you, or whether you hold the right to overturn their decision in court. In this article, we look at how the courts assess individual situations when leasing common flats, houses, or land.
To understand the rules of the game properly, we must first clarify what is subject to the decision-making. The Supreme Court of the Slovak Republic reminds us that the "common thing" means . A fractional co-owner does not own a specific room in a flat or an exact half of a plot of land. Their share expresses only a notional participation in the entire property. When dealing with this "whole thing", different rules apply under the two regimes mentioned:
This covers ordinary administration, maintenance, repairs, as well as ordinary use of the property. Decisions here are taken on the basis of the majority principle. If the co-owners do not agree, the majority calculated according to the size of the shares decides. An outvoted minority co-owner generally cannot successfully seek a change in court and must comply. The court may decide on application only where the vote is deadlocked (a tie, or no majority is reached).
This concerns fundamental interventions that change the legal or material substance of the property, or its overall function and economic purpose. For an important change, the pure majority principle does not apply in the sense that the minority would have no defence. If the majority decides on an important change, the outvoted minority co-owner has a statutory right to bring an action and ask the court to decide on that change.
Let us now look at specific acts in the field of property leasing through the lens of established case law.
Concluding a lease agreement changes neither the physical substance of the building or flat, nor does it transfer ownership. It is merely a temporary transfer of the property's use value to a third party. The courts therefore consistently hold that leasing a property (e.g. a vacated flat) falls under management of the common thing. A simple majority of votes (by shares) is sufficient to approve and sign the lease agreement.
The same logic applies when deciding who specifically the property will be leased to, or when consenting to an exchange of flats between tenants. The courts confirm that determining the person of the tenant is a decision on the management of the common thing. It is not an important change, provided the purpose of use of the property remains the same.
The regime of ordinary management of the common thing (where a simple majority decides after due deliberation) also covers the following acts: changing the amount of the rent: deciding on an increase or adjustment of the rent is part of the economic handling of the property and requires a majority of shares, and terminating the lease relationship and giving notice: whether this involves concluding an agreement to end the lease or serving a unilateral notice of termination of the lease of a flat or non-residential premises, the case law consistently classifies these steps as management of the common thing.
The key criterion is the purpose of use determined by the occupancy permit issued by the building authority. If the majority of co-owners lease premises approved for use as a flat to a new tenant for residential purposes, this is ordinary management. If, however, leasing to a particular tenant would require a change to the approved use of the building in the occupancy permit (for example, converting a family house into an industrial operation or a restaurant), it is no longer ordinary management. Such a step changes the function of the thing and constitutes an important change, in respect of which the outvoted co-owner has the right to turn to the court.
In practice, it often happens that a majority co-owner (e.g. with a 60% share) acts entirely alone – signs a lease agreement, unilaterally increases the rent, or gives the tenant notice without informing the minority co-owner at all. Although they formally hold the majority of shares, such a course of action leads towards the absolute invalidity of the legal act under § 39 of the Slovak Civil Code.
The vast majority of acts in the field of lease relationships – from signing the agreement through changing the rent to giving notice – is legally classified as management of the common thing. An outvoted co-owner has limited means of defence in these cases, provided the voting process was formally observed. If, however, the co-owners cannot reach agreement and the result is a tied vote (for example, two co-owners each holding a 50% share), the court must decide, on application, whether and to whom the property will be leased.
If you are the majority co-owner: Never act on your own. Always demonstrably invite the other party to the decision-making, otherwise you risk the court holding your agreements and notices absolutely invalid.
If you are a minority co-owner: Insist on your right to participate in decisions and watch carefully whether a lease of the property conceals a change to its approved use, which would open the door to judicial protection for you.
Where relations between co-owners are complicated, it is important to hold evidence of the course of communication and voting. Our law firm will help you set up the decision-making processes correctly, prepare valid contractual documents, or represent you in any court dispute over the management of common property.
Contact us for a no-obligation consultation.
