Division of jointly owned property for use (quoad usum): what it is and how to draft an agreement

What is a division of jointly owned property for use (quoad usum)?

A quoad usum division consists in determining, by agreement or by court order, how the jointly owned property is to be used. Physically identifiable parts of the property are allocated for the exclusive use of particular co-owners. Once the division has been established, each co-owner should respect the right of the others to use exclusively the parts allocated to them.

The co-owners have considerable freedom to determine the contractual division of the property for use. The arrangement does not have to correspond to the size of their respective shares. If all co-owners agree, a person holding a smaller share may therefore be allocated a larger part of the property for exclusive use.

The division may be spatial, functional or time-based. The parties may allocate particular rooms, buildings or parts of the plot for their exclusive use, leave certain parts for common use, or even agree to use the property alternately on specified days, weeks or months.

For example, the co-owners may agree that:

• person A has the exclusive use of the ground floor, while person B occupies the upper floor,
• person A uses the garage and part of the garden, while person B uses an outbuilding,
• the driveway, entrance or staircase remains available for common use,
• person A uses the front part of the plot, while person B uses the part situated behind the building,
• person A uses the terrace, while person B uses the balcony and the adjoining part of the garden,

Quoad usum division and dissolution of co-ownership of real estate

A division for use is not the same as the dissolution of co-ownership. A quoad usum division does not affect title to the property. Each co-owner continues to hold a share in the whole property, and ownership of its individual parts is not transferred. No new cadastral plots or separate properties are created.

A quoad usum division is therefore an intermediate solution. It does not terminate co-ownership, but it may reduce conflicts connected with the day-to-day use of the property. It is also frequently used while proceedings for the dissolution of co-ownership are pending, as such proceedings may be lengthy.

When is a quoad usum agreement useful?

An agreement dividing jointly owned property for use may be particularly useful where a physical or legal division of the property is impossible or does not serve the interests of the co-owners. Contrary to what might be assumed, such situations are relatively common.

In practice, this may result, among other things, from:

• the provisions of the local spatial development plan,
• a prohibition on subdividing the existing plot,
• the property being subject to heritage protection,
• the plot being too small,
• the positioning of buildings on the property,
• the inability to provide each newly created plot with access to a public road,
• a lack of funds to buy out the other co-owners,
• a lack of agreement to sell the property.

What form should a quoad usum agreement take?

An agreement dividing jointly owned property for use does not require any particular form, including the form of a notarial deed. Case law also recognises that such an agreement may be concluded by implication through a settled and accepted pattern of using the property (see, for example, the judgment of the Polish Supreme Court of 10 February 2004, case no. IV CK 17/03, and the judgment of the Polish Supreme Court of 16 September 2015, case no. III CSK 446/14).

In practice, this may involve a situation in which, for many years, one co-owner has used the upper floor of a building exclusively, another has occupied the ground floor, while the garden, staircase and driveway have remained in common use. If all co-owners accept this arrangement, organise their use of the property accordingly and do not challenge it over a prolonged period, their conduct may indicate that a quoad usum agreement has been concluded by implication.

This does not mean, however, that every established pattern of using the property automatically proves the existence of a quoad usum agreement. It must be established in each case that the conduct of all co-owners sufficiently clearly demonstrates their consent to a particular division. The mere fact that one co-owner has occupied a specified part of the property for many years may be insufficient if the others have merely tolerated that situation or if it has remained the subject of an ongoing dispute.

Can a quoad usum agreement be amended by implication?

A change in the circumstances and in the manner in which the property is used may lead to the conclusion that the agreement has been amended or terminated, including by implication. In practice, the co-owners may use the property in a particular way for many years, for example with one person occupying the upper floor and another the ground floor, and subsequently adopt a different arrangement. If the new pattern of use is accepted by all co-owners and becomes established in practice, this may indicate an implied amendment of the previous quoad usum agreement.

A unilateral decision by one co-owner to start using a different part of the property does not, however, automatically amend or terminate the previous agreement. If the other co-owners object, the conduct is more likely to constitute a breach of the existing arrangement than the conclusion of a new agreement. An implied amendment may arise only where the overall conduct of the co-owners demonstrates their common and sufficiently clear acceptance of the new manner of use.

What should a quoad usum agreement include?

A properly drafted quoad usum agreement should specify at least:

1. the details of all co-owners,
2. a precise description of the property, including its address, plot number, cadastral district, area and land and mortgage register number,
3. the shares held by the individual co-owners in the property,
4. the parts of the property allocated to particular persons for exclusive use,
5. the parts remaining in common use,
6. the rules governing access to buildings, installations and technical equipment,
7. the allocation of property maintenance costs,
8. the rules governing repairs and investments,
9. the allocation of rent and other income derived from the property,
10. the settlement of expenditure already incurred,
11. liability for damage,
12. the conditions for amending or terminating the agreement,
13. the procedure to be followed if a share is sold,
14. the method of resolving disputes,
15. a list of annexes, in particular maps and plans.

The more complex the layout of the property and the greater the number of co-owners, the more detailed the agreement dividing the property for use should be. A precise definition of the rights and obligations of individual co-owners reduces the risk of conflict, differing interpretations of the agreement, particularly provisions concerning obligations connected with the property, and disputes over its use.

Although a quoad usum agreement may also be concluded by implication, it is advisable to record it in writing and regulate all material issues as precisely as possible. This applies in particular to identifying the parts intended for exclusive and common use, allocating costs, arranging repairs, using utilities, collecting income from the property and amending the adopted manner of use.

It should nevertheless be recognised that, in practice, it is not always possible to regulate every future situation in detail. The manner in which the property is used may change over time as a result of a change in its purpose, the composition of the co-owners or their needs. The agreement should therefore also set out the procedure for its amendment and for resolving matters that the parties did not anticipate when it was concluded.

Maps and plans as annexes to a quoad usum agreement

Real estate may cover a substantial area or comprise numerous buildings, rooms and other constituent parts. Consequently, describing a part of the property merely as the “left-hand side of the plot” or the “part of the garden behind the house” may be insufficient. Such descriptions are imprecise and may give rise to disputes over the exact boundaries of use.

In such cases, the agreement should be accompanied by a map, floor plan or site sketch on which the individual parts of the property are clearly marked, for example using different colours or symbols. The agreement should then refer expressly to the annex and identify:

• the parts intended for exclusive use,
• the parts intended for common use,
• the route of the driveway or internal road,
• the entrances to the buildings,
• parking spaces,
• technical equipment and utility connections.

The plan should be legible, signed by all co-owners and clearly linked to the agreement. In more complex cases, it is advisable to use a map prepared by a licensed surveyor.

Care should also be taken to avoid overlapping designated areas. If a driveway crosses a part allocated to one co-owner, the agreement should make clear that, to the specified extent, it remains accessible to the other persons as well.

How should utilities, taxes and costs be allocated following a quoad usum division?

A quoad usum agreement should state precisely who bears the costs associated with the individual parts of the property.

In practice, the agreement may provide that each co-owner bears:

• electricity, gas and water charges measured by sub-meters,
• waste collection charges connected with the part used by that co-owner,
• the cost of routine repairs and maintenance,
• expenses relating to buildings allocated to that co-owner for exclusive use.

The costs of common elements, such as a gate, internal road, main utility connection, the roof of a jointly used building or a fence, may be divided according to the shares, equally, or in another agreed proportion.

The Polish Supreme Court has held that, following a quoad usum division, a co-owner generally bears the expenses associated with the part allocated to that co-owner for exclusive use. The agreement may provide otherwise, which is why the rules for allocating costs should be stated expressly.

Expenditure and repairs following a quoad usum division

The rules governing repairs and expenditure on the property also require detailed regulation. This is particularly important in the case of tenement buildings, farms and older buildings, where a quoad usum division may have operated for many years and the technical condition of the property requires regular and costly work.

In our experience, the settlement of repair costs is one of the most frequent sources of disputes between co-owners. Disputes concern, among other matters, whether particular building works were necessary, who should have consented to them, the proportion in which the individual co-owners should participate in the costs, and whether a person who financed the repairs independently may seek reimbursement of the expenditure incurred.

A quoad usum agreement should therefore regulate separately:

• the allocation of expenditure relating to parts intended for exclusive use and works affecting common elements, such as the roof, foundations, facade, installations, staircase, access road or fence,
• whether a co-owner may independently renovate the part of the property used by that person,
• which works require the consent of the other co-owners,
• who bears the cost of works relating to structural elements,
• whether expenditure will be settled when the co-ownership ends,
• how the value of improvements will be determined,
• whether the co-owners waive specified claims.

The case law of the Polish Supreme Court indicates that a quoad usum division modifies the statutory model for settling expenses and expenditure. A co-owner who incurs expenditure on a part remaining in that co-owner’s exclusive use may not always be entitled to claim a proportionate contribution from the others. Each such situation therefore requires a detailed legal analysis.

Income from the property, letting and business use after a quoad usum division

A quoad usum division may cover not only the exclusive use of a specified part of the property, but also the right to derive income from it. If one co-owner is allocated a commercial unit, garage or part of a building in which a business is operated, the agreement should specify:

• whether that part may be let,
• whether the consent of the other co-owners is required,
• who is entitled to the rent,
• who bears the cost of repairs and taxes,
• who is liable for the acts of tenants,
• whether the permitted use may be changed.

Does a quoad usum agreement require the consent of all co-owners?

An agreement dividing jointly owned property for use should be concluded by all co-owners. This is because a quoad usum division modifies each co-owner’s statutory right to possess and use the whole property.

If even one co-owner does not consent, the others cannot impose a contractual manner of using the property on that person, even if they hold a majority of the shares.

A lack of unanimity does not, however, mean that a quoad usum division cannot be established. Any co-owner may apply to the court to determine the manner of using the jointly owned property. The matter is heard in non-contentious proceedings by the district court having jurisdiction over the location of the property.

Is a purchaser of a share in the property bound by a quoad usum agreement?

A co-owner’s share in jointly owned real estate may be transferred. The sale of a share by one co-owner does not, however, automatically terminate the existing arrangement governing the use of the property.

Under Article 221 of the Polish Civil Code, legal acts determining the manner in which jointly owned property is to be used are also effective against a purchaser of a share if the purchaser knew of the arrangements or could easily have learned of them.

A purchaser of a share may therefore be bound by a quoad usum agreement even though that person did not participate in its conclusion. The mere fact that the purchaser was not a party to the original agreement is insufficient to challenge the existing division. In practice, a person buying a share in the property may be required to respect an arrangement under which a particular floor, building, part of the garden or parking space has been allocated for the exclusive use of another co-owner.

A purchaser’s knowledge may be evidenced, among other things, by a reference to the quoad usum division in the sale agreement, delivery of the earlier agreement, information provided before the transaction, or a visible and established pattern of using the property. It may also be relevant that, after acquiring the share, the new co-owner complied with the existing arrangement and did not challenge it for a prolonged period.

In the event of a dispute, it will therefore be necessary to prove not only the existence of the agreement, but also the purchaser’s knowledge or circumstances enabling the purchaser to learn easily of the adopted manner of using the property.

In practice, a quoad usum agreement may require a co-owner selling a share to:

• inform the purchaser of the existing division,
• provide the purchaser with a copy of the agreement and its annexes,
• include information about the division in the sale agreement,
• obtain the purchaser’s confirmation that the purchaser knows and accepts the manner in which the property is used.

Additional protection may be obtained by entering the relevant claim in Section III of the land and mortgage register.

Can a quoad usum division be changed, and when?

A division of jointly owned property for use does not have to remain in force indefinitely or without amendment. It may be changed:

• with the consent of all co-owners,
• in accordance with the procedure set out in the agreement itself,
• by a court order if new and material circumstances arise, as discussed below.

A change may be justified, for example, by the reconstruction of a building, a change in permitted use, the need to secure access to a road, a change in the number of co-owners or new needs connected with the property.

Court-ordered division of jointly owned property for use (quoad usum)

If the co-owners cannot agree on a quoad usum division and the co-ownership has not been dissolved, the manner of using the property may be determined by the court.

An application may be made by a co-owner who is unable to agree with the others on the rules governing the use of the property. The application should describe the proposed division as precisely as possible, identifying the parts to be allocated for the exclusive use of individual co-owners and the parts that should remain in common use. It may be helpful to attach a map, floor plan, sketch or expert opinion.

For example, the court may determine that one co-owner is to have the exclusive use of the ground floor and a specified part of the garden, another the upper floor and garage, while the staircase, driveway and installations remain in common use. In doing so, the court does not legally subdivide the property or grant ownership of particular rooms or parts of the plot to individual co-owners. It merely determines how their rights in the jointly owned property are to be exercised.

When deciding a case concerning a court-ordered quoad usum division, the court should take into account:

• the nature and intended use of the property,
• its layout,
• the size of the shares,
• the previous manner of use,
• the legitimate needs of all co-owners.

The possibility of providing independent access to individual parts of the property, the course of installations, the use of common areas and the need to bear their maintenance costs may also be relevant.

The court is not strictly bound by the division proposed by the applicant. It may determine a different manner of use if it considers that arrangement better suited to the nature of the property and more capable of reconciling the interests of all co-owners.

A court-ordered quoad usum division is not final in the sense of being unchangeable. If there is a material change in circumstances, for example a change in the intended use of the property, its development or the needs of the co-owners, an application may be made to amend the earlier order. New and important reasons justifying a different arrangement for the use of the jointly owned property must, however, be demonstrated.

Summary

A quoad usum division allows co-owners to organise the use of real estate without formally dissolving the co-ownership. It may cover buildings, units, floors, gardens, garages, parking spaces and other physically identifiable parts of the property.

A properly drafted quoad usum agreement should not merely identify who uses a specified part of the property. It should also regulate costs, repairs, expenditure, income, access to common areas and the consequences of selling a share.

A precise map or plan of the property is particularly important. Unclear boundaries of use or an uncertain status of a shared driveway may become a source of further conflict rather than resolving the existing dispute.