How Do Co-owners Settle Costs They Incurred for Repairs, Maintenance and Investments in the Shared Property?
We described the termination and settlement of co-ownership as a whole in detail in the article Settlement of Co-ownership between Co-owners in the Czech Republic. This article addresses the settlement of costs and proceeds from co-owned real estate between the co-owners while the co-ownership continues, and covers unequal financing of the property's acquisition, costs incurred for its maintenance and repairs, and exclusive use of the property by one of the co-owners. The discussion is based on the regulation of co-ownership in Section 1115 et seq. of Act No. 89/2012 Coll., the Civil Code (the "Civil Code") and on the case law of the Supreme Court.
Unequal Financing of the Property's Acquisition
Co-owners are often entered in the land register in equal shares, even though only one of them contributed significantly more to financing the property's acquisition. Section 1122(2) of the Civil Code provides that: "The size of a share follows from the legal fact on which the co-ownership or the co-owner's participation in the co-ownership is based. This does not prevent the co-owners from agreeing on the size of the shares otherwise; such an agreement must meet the requirements set for the transfer of a share." Moreover, Section 1122(3) of the Civil Code establishes a legal presumption: "The shares are presumed to be equal." Unequal financing does not by itself alter the size of the registered share. This distinguishes the regime from the settlement of community property between spouses, where Section 742 of the Civil Code directly requires the court to take into account how each spouse contributed to acquiring and maintaining the assets. No such correction exists for co-ownership by shares.
A co-owner who contributed more funds toward the property's acquisition is nevertheless not entirely without protection. What matters is the legal basis of the excess payment:
- If it was a conscious gratuitous performance, it constitutes a gift under Section 2055(1) of the Civil Code, and no claim for repayment arises.
- If it was agreed from the outset, even informally, that the funds were to be repaid, it constitutes a loan under Section 2390 of the Civil Code, i.e. a separate obligational claim independent of the settlement of co-ownership.
- If none of the preceding situations applies, meaning there was neither intent to gift nor an agreement to repay, and it was not a sham transaction either, the excess payment constitutes unjust enrichment of the other co-owner under Section 2991 of the Civil Code: "A person who becomes enriched at another's expense without just cause must surrender to the impoverished party what was so gained. A person is unjustly enriched in particular if they obtain a pecuniary benefit through performance without legal cause, through performance under a legal cause that has ceased to exist, through the unlawful use of another's asset, or because something was performed on their behalf that they themselves were obliged to perform." If the first co-owner paid the seller even that part of the purchase price which, according to his share, the second co-owner was supposed to pay, he performed on the other's behalf what the other was legally obliged to perform himself, within the meaning of Section 2991(2) of the Civil Code.
If an unequal contribution is to affect the ownership share itself, the parties must record this at the time the property is acquired. Otherwise, the investing co-owner is left only with a potential claim based on a loan or unjust enrichment, provided he can prove it exists.
Costs of Repairs, Maintenance and Investments in the Shared Property
A further question concerns the financing of costs incurred on the property while the co-ownership continues. Under Section 1136 of the Civil Code: "A co-owner who has incurred a cost on the shared thing in the interest of the other co-owners without their notification and consent may claim a) a proportional part of compensation to the extent the thing was enhanced in value, if the cost benefited the co-owners, or b) compensation for necessary costs, if the cost was one that had to be incurred to save the thing." This provision applies when a co-owner acts in the interest of the others and invests in the shared property while the other co-owners are unaware of it or do not consent to it. A claim then arises for the investing co-owner only in two cases, which the law strictly distinguishes.
The Supreme Court examined this distinction in detail in its judgment of 30 November 2011, case no. 22 Cdo 3766/2011. The decision interpreted the earlier regulation in Section 139(2) of Act No. 40/1964 Coll., the former Civil Code; the principles the court derived correspond in substance to the concept of the current Section 1136 of the Civil Code, and they continue to be applied in practice today.
Compensation Based on the Enhancement in Value
What matters for costs under Section 1136(a) of the Civil Code is not automatically the amount the investing co-owner actually paid, but rather the extent to which the value of the shared property objectively increased. The two amounts may differ, and the court may determine the extent of the enhancement in value by means of an expert opinion. This provision concerns an ordinary investment, such as a renovation, extension or alteration, that is not necessary but enhances the value of the property. What matters is not how much the investment cost, but how much the value of the property objectively increased. A co-owner may therefore claim only a proportional part of this enhancement. This can be illustrated with an example of two co-owners, each owning one half:
- Small investment, large enhancement: Co-owner A pays CZK 100,000 and the value of the property increases by CZK 1,000,000 as a result. Co-owner B must reimburse him for his half of the enhancement, i.e. CZK 500,000, even though A spent only CZK 100,000.
- Large investment, no enhancement: Co-owner A pays CZK 1,000,000, but the value of the property does not increase. No claim arises under point (a), and he cannot demand CZK 500,000 from B, i.e. half of what he paid.
- Investment that decreases value: If the investment devalued or damaged the property, this is a different situation. Here, an interference with the rights of the other co-owners and a potential claim for damages may come into consideration.
The extent of the enhancement, and thus of the claim, may be determined by the court in proceedings, for which it may obtain an expert opinion. Accounting records of the investment are important, but do not on their own determine the amount of the claim. In practice, the enhancement often comes close to the costs incurred, but this is not a rule, and a co-owner should therefore not automatically count on it.
Compensation for Necessary Costs
Section 1136(b) of the Civil Code concerns costs that had to be incurred to save the property, for example a repair without which the property would be at risk of destruction or damage. For these costs, it is not examined whether the value of the property increased. What matters is that the cost had to be incurred.
With the Consent of the Other Co-owners
If the other co-owners consented to the cost in advance, whether by agreement or by majority decision under Section 1128 or Section 1129 of the Civil Code, this constitutes fulfilment of the statutory obligation to contribute to costs in proportion to the size of the share, and the claim for reimbursement is due immediately, regardless of the nature of the cost. Where such consent was lacking, the matter concerns unjust enrichment, for which the type of cost is decisive:
- For necessary costs incurred to save the property, the claim arises when the cost is incurred.
- For other, value-enhancing costs, the claim arises only upon termination of the co-ownership.
Under Section 629(1) of the Civil Code, "the limitation period is three years", and it runs from the moment the claim becomes due. Between spouses, however, under Section 646 of the Civil Code, the limitation period does not begin to run, nor does it run, for as long as the marriage lasts. The same applies by analogy to rights between persons living in a shared household.
If one of the co-owners builds a house on the shared land, the building, under Section 506(1) of the Civil Code, forms part of the land and is therefore subject to the same co-ownership in the same proportion as the land, regardless of who paid for it. The investing co-owner acquires a claim for compensation under the rules described above.
This situation under Section 1136 of the Civil Code must be distinguished from the costs described in the previous chapter. Section 1136 of the Civil Code applies to costs incurred on a thing that is already co-owned; financing of the acquisition of the property itself is therefore not subject to it and is instead governed by the general rules on unjust enrichment. Accordingly, under the general principles, the claim arises already at the moment the purchase price is paid on behalf of the other co-owner, not only upon termination of the co-ownership. The Supreme Court reached a similar conclusion, albeit in a factually related situation involving investments in property owned exclusively by another person, in its judgment of 16 July 2018, case no. 28 Cdo 1374/2018, in which it distinguished performance without legal cause, where enrichment arises already upon the expenditure of funds, from performance made on the basis of a cause that only later ceased to exist, where enrichment arises only at the moment that cause loses effect, for example when the parties' agreement on shared housing, on the basis of which the investment was made, comes to an end. Thus, even in the case of unequal financing of a property's acquisition, the limitation period under Section 629(1) of the Civil Code may begin to run later, if it is shown that the payment had its own, even if informal, legal cause that only subsequently ceased to exist.
This gives rise to a practical recommendation for a co-owner who is planning an investment. He should notify the other co-owner of his intention in writing and obtain his consent. For costs already incurred, it is advisable to keep invoices, bank statements and a description of the work carried out, since the classification of the cost into the relevant category determines when the limitation period begins to run. The other co-owner's consent need not be in writing; it can also be inferred from the circumstances and conduct of the co-owners. Evidence of consent may include, in particular, emails, text messages and other communications showing that the investment was jointly planned, project documentation, dealings with a designer or construction company, the other co-owner's involvement in selecting solutions or fittings, or witness testimony. It may also be significant that the other co-owner accepted the investment throughout its implementation and subsequently made use of its result.
Exclusive Use of the Property by One Co-owner
Under Section 1120(1) of the Civil Code: "Fruits and proceeds from the shared thing are divided in proportion to the shares." The question arose as to how this applies where one of the co-owners uses the property exclusively. This was addressed by the Grand Chamber of the Civil and Commercial Division of the Supreme Court in its judgment of 10 October 2012, case no. 31 Cdo 503/2011, which distinguished two situations depending on whether the exclusion from use had a legal basis.
Where the exclusion is based on an agreement of the co-owners, a majority decision, or a court decision, the excluded co-owner is entitled to compensation corresponding to the extent of his detriment, because "a co-owner's right to compensation for not using the shared thing to the extent corresponding to his co-ownership share is established by law and follows from the co-owner's right to participate in the use of the shared thing to the extent corresponding to his share." Where no such legal basis exists, the matter concerns unjust enrichment: "If a co-owner uses... the shared thing beyond the scope of his co-ownership share without legal cause, he is obliged to surrender to the other co-owners what he gained through such use, in accordance with the rules on the surrender of unjust enrichment."
The basic amount of compensation corresponds to the sum of money ordinarily paid at the given place and time for the use of a comparable property, i.e. generally the usual rent. The Supreme Court established this standard already under the former regulation in its judgment of 15 June 1999, case no. 25 Cdo 2578/98, and confirmed its applicability under the Civil Code regime, for example, in its judgment of 31 October 2018, case no. 28 Cdo 3090/2018. If the enriched co-owner acted in good faith, compensation determined in this way is generally sufficient. If he did not act in good faith, under Section 3004(1) of the Civil Code he may also be obliged to compensate the impoverished co-owner, beyond the usual rent, for lost profit, i.e. the economic returns the impoverished co-owner would himself have obtained from dealing with his property; the Supreme Court addressed this question in its judgment of 18 January 2023, case no. 28 Cdo 1897/2022. The extent and nature of the exclusive use must be proven in the proceedings, as confirmed by the Supreme Court in its judgment of 4 July 2013, case no. 22 Cdo 1645/2013.
A claim for the surrender of unjust enrichment must be distinguished from a situation in which the other co-owner has validly leased the shared property to a third party on the basis of an agreement of the co-owners or a majority decision under Section 1128 of the Civil Code. In such a case, he is not using the property without legal cause, and the excluded co-owner is therefore not entitled to compensation on the basis of unjust enrichment, but rather, where applicable, to a share of the proceeds actually obtained from the lease, if he himself became a party to the lease relationship. The Supreme Court addressed this distinction in its judgment of 13 January 2016, case no. 22 Cdo 3983/2015, and most recently confirmed it in its judgment of 24 September 2025, case no. 28 Cdo 843/2025, in which it also explicitly stated that the conclusions of the decision in case no. 31 Cdo 503/2011 remain fully applicable today, and that the restriction of the use of a shared thing by agreement of the co-owners or by majority decision, formerly regulated in Section 139(2) of Act No. 40/1964 Coll., now corresponds to Section 1128 of the Civil Code.
In connection with this regulation, it should be added that an agreement on use can also arise tacitly; long term tolerance of exclusive use by the other co-owner may therefore weaken the claim, at least for the period preceding any expressed objection. Moreover, where another legal relationship exists simultaneously between the co-owners giving rise to a claim for performance corresponding to the value of housing, for example a maintenance obligation between spouses under Section 697 of the Civil Code, care should be taken to ensure that the same economic benefit is not claimed simultaneously under two mutually competing claims.
Conclusion
An unequal contribution to the acquisition of shared property does not by itself alter the registered co-ownership shares; these are governed by the title of acquisition and can be challenged only by proving that the contribution constituted a loan or unjust enrichment. Costs of repair or maintenance incurred by one co-owner without the consent of the others are divided into necessary costs, due immediately, and other, value-enhancing costs, due only upon termination of the co-ownership. Proceeds from the shared property, including the economic value of its exclusive use by one co-owner, are divided according to the shares, and where the exclusion of the other co-owner did not result from an agreement, a majority decision, or a court decision, he is entitled to a claim for the surrender of unjust enrichment in the amount of the usual rent, potentially increased by lost profit if the enriched co-owner did not act in good faith.
The assessment of a specific case always depends on how the property was financed, what agreements were actually reached between the co-owners, and what evidence can be produced. We recommend discussing the specific circumstances with an attorney, ideally before the matter develops into a court dispute.
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