Can compensation for a co-ownership share be reduced upon the dissolution and settlement of co-ownership if such a share was acquired for speculative purposes? The Supreme Court has now clarified when this is possible—and when it is not.
How is compensation determined in the settlement of co-ownership?
Every co-owner has the right to demand the dissolution and settlement of co-ownership or their separation from it.
If the court decides to assign a co-ownership share to another co-owner, the original co-owner is entitled to reasonable compensation, which is considered to be the monetary equivalent of the value, i.e., the amount which would allow for the acquisition of a similar item under the locally applicable conditions. Compensation is usually determined based on the share’s proportion of the market value of the jointly owned property.
Can the court reduce the compensation?
The Supreme Court addressed the question of whether the amount of this compensation may be determined differently in cases where the termination of co-ownership is initiated by a person whose business consists of purchasing shares (not only) in forced auctions and their subsequent monetization through judicial settlement. Given that the transfer of a co-ownership share constitutes a compulsory deprivation of ownership rights, the court took into account in its deliberations the constitutional requirements set forth in Article 11(4) of the Charter of Basic Rights and Freedoms, which include, among other things, the provision of adequate compensation.
The Supreme Court confirmed that:
- the amount of compensation is subject to the corrective principle of good morals; and
- the court may in exceptional cases modify (moderate) the settlement shares of former co-owners or, where appropriate, deny compensation entirely, citing the corrective principle of good morals.
However, such an approach may only be contemplated in entirely exceptional cases in which the conduct of the parties to the proceedings is fundamentally at odds with good morals.
What grounds for a reduction are not recognized by the court?
The Supreme Court, citing its earlier case law and that of the Constitutional Court, stated that the following cannot be automatically considered extraordinary circumstances justifying the application of the public policy doctrine to reduce a settlement share:
- – the advantageous acquisition of a co-ownership share at a public auction, or
- the pursuit of corresponding business activities.
According to the Supreme Court, the very purpose of investing in real estate is precisely the expected economic benefit, and if the investment were not to yield such a benefit to the owner, such an investment would logically be meaningless. According to the Supreme Court, the aforementioned circumstances cannot therefore be considered a priori immoral in and of themselves and are thus not, without further ado, grounds for reducing the amount of reasonable compensation in the settlement of co-ownership.
| The Conclusion for Practical Purposes The amount of compensation in the settlement of co-ownership remains, as a rule, linked to the market value of the jointly owned property and the size of the co-ownership share. The possibility of judicial moderation exists, but applies only in exceptional cases where the conduct of the parties to the proceedings is fundamentally contrary to good morals. |
Author: Ondřej Sehnal, Senior Associate, LYNX (Czech Republic)
Source: 10. Resolution of the Supreme Court of 29 October 2025, Ref. No. 22 Cdo 2350/2025
