Complete Guide to Partition of Co-Ownership of an Apartment Between Siblings

What is Partition of Co-Ownership of an Apartment Between Siblings?

When a person passes away and leaves behind an apartment or other property, and in certain cases there is no clear will or the will stipulates that the property passes to one or more heirs in co-ownership, a situation of legal co-ownership in the property arises. Each of the heirs is a holder of partial rights in the apartment and is entitled to his or her share in the value of the property or income derived from it. However, when one or more co-owners wish to continue living in the apartment while others wish to exit the co-ownership, or when there are disagreements regarding the management or sale of the property, a partition of co-ownership is required — a legal procedure aimed at dividing the property or its value among the co-owners in a fair manner.

Partition of co-ownership of an apartment between siblings is one of the most complex issues in real estate law and inheritance law in Israel. It involves not only precise legal calculations, but also dealing with family emotions, disputes over property valuation, and disagreements about each party's share in expenses or improvements made after the decedent's passing. At Mandelboim, Gor, Witzman-Gor & Co., we have over 18 years of experience representing holders of rights in jointly owned properties in such proceedings, and we assist each party in protecting their rights and reaching a fair and efficient resolution.

Why is it Important to Handle Partition of Co-Ownership Properly?

Delay in handling partition of co-ownership of a shared apartment can lead to high costs, family tensions, and even significant economic damage. When co-owners disagree on continuing joint management or on the sale of the property, the apartment may remain vacant (thus losing value), or its rental may cause disputes over division of rental income. Additionally, every year that passes without a clear legal resolution may lead to complete erosion of rights and legal obligations, further complicating the settlement going forward.

Furthermore, legal partition of co-ownership is protected under Israeli law, and there are defined and clear procedures for executing the process. If one does not proceed in the correct manner, the result may be unfair or may encounter legal problems in the future — for example, when attempting to sell the property or transfer it in the future.

Risks of Delay or Improper Management

• Decrease in Property Value: A vacant apartment or one managed improperly may be at high risk of damage, which in turn lowers its market value.
• Family Disputes: When there is no clear agreement on division of the property or on the rights of each party, a situation may arise where siblings stop communicating with each other.
• Tax Obligations and Management Fees: Each year that passes, there are tax obligations, municipal fees, insurance payments, and management costs that must be paid, and each co-owner is obligated to contribute according to his or her share — if this is not arranged, large debts may accumulate.
• Problems in Future Transfer: If one attempts to sell or transfer the property without the partition of co-ownership being properly settled, the buyer or recipient will object, and the transaction will encounter legal obstacles.

Main Methods for Dissolving Co-ownership of a Shared Apartment Among Siblings

There are several legal methods for dissolving co-ownership of a shared apartment, and choosing the correct method depends on the circumstances of the case, the agreement of the parties, and their objectives.

1. Settlement Agreement Among Co-owners

This is the simplest and most cost-effective method. When all co-owners agree on how to divide the property — whether through joint sale and division of proceeds, or by transferring the apartment to one of them in exchange for payment to the others — a legal settlement agreement can be signed that establishes the terms. Such an agreement saves significant time and money, and prevents lengthy and expensive litigation.

However, even a settlement agreement requires careful legal consultation to ensure that it is fair to all parties, that it reflects the law regarding heirs' rights, and that no party can later renounce it claiming they did not understand it or were forced to sign.

2. Sale of the Apartment and Division of Funds

If one or more co-owners wish to exit the co-ownership and are not interested in the apartment itself, the most common solution is selling the apartment on the open market. After the sale, the proceeds are divided among the co-owners according to their legal share in the property. This is a fair and clear method, but several points must be noted:

• Capital gains tax: When selling a property that has increased in value since the owner's death, there may be a capital gains tax liability on the income. Careful calculation of the tax base (the value at the date of death) and actual income (sale price) is required.
• Sales costs: Real estate agent commission, legal costs, taxes — all of these are deducted from the final price before division.
• Agreement on the sale price: If the co-owners do not agree on the expected price or sale terms, expert appraisal or legal intervention may be necessary.

3. Transfer of the Apartment to One of the Co-owners

In some cases, one of the siblings wishes to remain in the apartment or purchase the shares of the others. In this case, the entire apartment can be transferred to that sibling in exchange for payment to the others equal to their share in the property. This requires:

• Legal appraisal of the property: You need to know the value of the apartment to calculate how much should be paid to each sibling.
• Payment capacity review: The sibling wishing to purchase must demonstrate that they have funds or financing options to pay the others.
• Formal sales transaction: A legal purchase agreement must be signed and the transfer registered in the Land Registry (Tabu).

4. Legal Action for Dissolution of Co-ownership

If the co-owners do not agree on how to dissolve the co-ownership, any of them can file a lawsuit with the court for dissolution of co-ownership. The court examines the circumstances, the rights of each party, and makes a decision on how to dissolve the co-ownership. Typically, the court will order the sale of the property and division of proceeds, but in special circumstances may approve transfer to one of the co-owners or another arrangement.

Legal action is the longest and most expensive method, involving testimony, court proceedings, and high legal costs. However, it is sometimes the only option when there is no agreement among the co-owners.

Rights of Each Sibling in a Shared Apartment in Inheritance

When someone passes away and leaves an apartment divided among several heirs, each heir acquires a legal right in the property. These rights are defined in Israel's Inheritance Law and in real estate law, and it is important to understand them in order to know what rights each sibling has.

Each Heir's Share in the Property

Generally, when there is no will or when the will does not define otherwise, the apartment is divided among the heirs according to the approach accepted in Israeli inheritance law. Generally, this means:

• Spouse: Received half of the property (or more, depending on circumstances).
• Children: Divide the other half equally (each child receives an equal share).
• Parents (if there is no spouse or children): Divide the property equally.
• Siblings (if there is no spouse, children, or parents): Divide the property equally.

Each sibling who received a share in the property is a holder of equal legal rights in the property, and is entitled to:

• His share in the property value: If the apartment is sold, he is entitled to an equal share of the proceeds (after deduction of costs and taxes).
• His share in income from the property: If the apartment is leased, he is entitled to a share of the rental fees.
• His share in expenses: He must contribute to the payment of municipal taxes, insurance, and maintenance according to his share.
• Right to participate in decisions: Each sibling can participate in decisions regarding the property (for example, whether to sell or lease).

What Happens When One of the Siblings Wants to Exit the Co-ownership?

If one of the siblings wants to exit the co-ownership of the apartment (for example, because he needs money or because he is not interested in the property), he can:

• Sell his share to one of the other siblings: If another sibling is interested in purchasing his share, they can conduct a private transaction.
• Sell his share to a third party: Generally, there is a right of first refusal for the other siblings, but if they are not interested, he can sell to any other person.
• Request sale of the entire property: If he is not willing to sell only his share, he can file a lawsuit for partition of the co-ownership, and this will force the entire property to be sold.

Obligations and Rights Regarding Property Management

Each sibling in a shared apartment must contribute to the management and expenses of the property. This includes:

• Municipal taxes: Each sibling must contribute according to his share.
• Property insurance: Joint obligation on all co-owners.
• Basic maintenance: If the apartment is leased, each sibling must contribute to maintenance.
• Improvements: If one of the siblings wants to improve the apartment (for example, to repair a wall or update air conditioning), he needs the consent of the other siblings, and the expense is deducted from his share in the property or from his share in the income.

Costs and Financial Ranges in Partition of Co-Ownership

When beginning the process of partition of co-ownership in an apartment, it is important to understand what the expected costs are. These vary depending on the type of solution (agreement or litigation), the value of the property, and its geographical location.

Legal Costs

In an agreement case (without litigation): Legal costs are generally lower. An attorney will assist in preparing documents, legal consultation, and managing the settlement. In a general range, these costs can be between several thousand shekels to tens of thousands of shekels, depending on complexity.

In a litigation case (court claim): Legal costs are significantly higher. A court claim requires filing of pleadings, evidence, and lengthy court proceedings. These costs can reach tens or even hundreds of thousands of shekels, depending on the complexity of the case and the value of the property.

Sale Costs (if the apartment is sold)

• Real estate agent commission: Usually between 2% to 3% of the property value (if an agent is used).
• Legal costs for sale transaction: Between 1% to 2% of the property value.
• Land Registry (Tabu) registration costs: Small costs, usually a few hundred shekels.

Capital Gains Tax

When selling an apartment that has increased in value since the death, there may be a capital gains tax liability on the income. The tax basis is the value at the date of death, and the income is the difference between the sale price and the basis. The tax rate varies depending on the type of property and location, but is generally between 10% to 25% of the income. This should be carefully calculated with an accountant or tax advisor.

Management Expenses and Accumulated Liabilities

Each year that passes without a legal resolution, liabilities accumulate:

• Municipal taxes: Usually between 100 to 300 shekels per month (depending on the city and apartment size).
• Insurance: Usually between 50 to 150 shekels per month.
• Electricity and water (if the apartment is connected): Usually between 50 to 150 shekels per month.

These accumulate quickly, and each sibling is liable to contribute according to their share. If not paid, they may become legal liabilities accumulated in the Land Registry, and this will become a problem at the time of sale or transfer of the property.

Comparison Table — Costs in Different Scenarios

Note: The following ranges are general estimates only and depend on the circumstances of the specific case.

Why Is It Important to Receive Professional Legal Advice in Property Partition?

The dissolution of co-ownership in a property between siblings is a complex legal process that requires a deep understanding of real estate law, inheritance law, and taxation. Errors or gaps in the process can lead to high costs, family disputes, and legal consequences that may affect all parties involved.

An attorney with experience in this field can:

• Ensure that each sibling's rights are protected: Each sibling in a co-owned property has specific legal rights, and it is important that they are understood and protected properly.
• Mediate between the siblings: Typically, an experienced attorney can help reach an agreement between the parties while preserving family relationships.
• Accurately calculate each sibling's entitlements: Property valuation, capital gains tax calculation, cost deductions — all of this requires legal and financial precision.
• Handle litigation if necessary: If no agreement is reached, an attorney can file a claim in court and represent you throughout the entire process.
• Update the land registry correctly: Upon completion of the process, it is important that the registry is updated accurately to avoid future issues.

How Mendelboim, Gor, Witzman-Gor and Partners Can Help

At our office in Ramat Gan, we work with each party in a property partition case to ensure that their rights are protected and that the process proceeds fairly and efficiently. We believe in a personal and dedicated approach, and we listen to the needs of each client. Furthermore, we offer a free initial consultation, during which you can discuss the unique circumstances of your case, your rights, and the various options available to you.

Our experience since 2008 means that we have handled all types of property partition cases — from the simplest to the most complex. We know how to navigate the law, how to mediate between parties, and how to reach a solution that works for all sides.