When deciding on whether an undeveloped land plot is (in)divisible, the courts must take into account alternative ways in which the property in question may be utilized

The Czech Supreme Court quashed an appellate judgment concerning the indivisibility of an undeveloped land plot, calling the conclusions of the lower court “manifestly disproportionate”.

The Czech Supreme Court has quashed a judgment which was rendered by the Prague Regional Court and concerned the termination and settlement of shared co-ownership in a land plot forming part of the fields belonging to Airport Vodochody, calling the lower court’s conclusions as to the indivisibility of the land plot “manifestly disproportionate”.

As per the Czech Civil Code (Act No. 89/2012 Coll.), co-ownership may be settled in the following ways:
1) By dividing the co-owned thing;
2) By awarding the co-owned thing to one or several of the co-owners; and
3) By selling the co-owned thing in a public auction (or, as the case may be, in an auction strictly among the co-owners).

When deciding on how to settle a case of co-ownership, the court is bound by the above order, which must be observed when considering the various options.

In the case brought before the Supreme Court, a participant to the proceedings had acquired co-ownership shares in the land plot in question, anticipating that its value would appreciate in the future. In the course of proceedings, all participants agreed that the co-ownership should be terminated, but could not agree on the method for settling it. While the claimant demanded to be awarded exclusive ownership of the entire land plot, the defendants sought a subdivision of the land plot into smaller parcels and their prorated attribution to each co-owner.

Both the first-instance court and the appellate court found that the land plot was not divisible, and awarded exclusive ownership to the claimant. In the view of the courts, obstacles to the subdivision of the land plot included the fact that the defendants would have been restricted in their use and enjoyment of the newly created land plots (inside the perimeter of the Airport), and the fact that there would have been no access to these land plots from public roads and ways. The courts moreover expressed concern that it was unreasonable to create additional land plots within the Airport compound in the course of settling the co-ownership case, which would then be subject to different legal regimes.

By contrast, the Supreme Court found that when deciding on the (in-)divisibility of an undeveloped land plot, one must not confine oneself to considering the possibility of actual, physical use of the newly created subdivisions (or the lack thereof), but must moreover take into account other forms of use which may benefit the owner (such as a lease or usufructuary lease). This is why the subdivision of a land plot cannot be ruled out a priori just because there exists no access road to the newly created land plot. Given that the lower courts themselves had found that the subdivided land plot(s) could have been used for airport operations, and that their subdivision would not result in any material loss of value, the Supreme Court called their conclusion in favor of indivisibility manifestly disproportionate, and consequently quashed the decision and returned to the case to the first instance for a new hearing.

Judgment 22 Cdo 1338/2021 of the Supreme Court of 28 July 2021

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