Expert warns: co-ownership of property in Estonia can end in forced sale

Co-ownership of real estate is becoming increasingly common in Estonia, but inadequate agreements can lead to serious disputes and even forced sales. 1Partner Kinnisvara senior broker Angela Virak warns that what seems like a simple joint purchase can have complex legal consequences.

Co-ownership of real estate is a growing trend in Estonia, often seen as a convenient way to get onto the property ladder together with a partner, family member, or friend. However, according to Angela Virak, senior broker at 1Partner Kinnisvara, the apparent simplicity of a joint purchase can mask serious risks when the co-owners fail to put proper agreements in place from the start.

The core danger lies in the legal framework governing co-owned property in Estonia. When co-owners cannot agree on how to manage, use, or sell the property, any one of them has the legal right to demand the dissolution of the joint ownership. If no buyout agreement can be reached between the parties, a court can order the property to be sold at public auction — a forced sale that often results in a significantly lower price than the market value.

Virak emphasises that many buyers enter co-ownership arrangements without fully understanding their rights and obligations. Common problem areas include decisions about renovations, rental income distribution, and what happens when one party wants to sell but the other does not. Without a written co-ownership agreement addressing these scenarios, disputes can escalate quickly.

Legal experts recommend that anyone considering buying property jointly should draft a detailed co-ownership agreement before completing the purchase. Such an agreement should specify each party's share, rules for decision-making, the process for one party buying out the other, and conditions under which the property may be sold. This can prevent costly and emotionally draining legal battles down the line.

As property prices in Estonia remain elevated and more people turn to shared purchases to afford a home, awareness of the legal risks involved is increasingly important. Virak urges prospective co-buyers to consult both a real estate professional and a lawyer before signing any contracts, noting that prevention is far cheaper than litigation.