Section 23 The termination of the commonhold
The commonhold shall terminate:
(1) By the destruction of the building. Notwithstanding any covenant to the contrary, destruction shall be deemed to have occurred when the cost of rebuilding shall exceed fifty percent of the value of the property at the time the event occurs; unless the excess of the aforesaid cost is covered by insurance.
(2) By conversion to ordinary ownership or co-ownership.
23.1 Compulsory winding-up
Subsection (1) sets out a natural cause of commonhold termination.
The CA in Sta Cruz de Tenerife 24-04-2006 and the CA Alicante 03-04-2006 dealt with cases where commonholders agreed unanimously to carry on with the commonhold in spite of building’s destruction.
According to a recent doctrine, the expropriation or a ruin declaration issued by a town hall are also considered to be causes to terminate a commonhold. CA Vizcaya 01-06-2006 held that it is not compulsory to obtain an order declaring the ruin of the building in order to terminate a commonhold
Developments with only detached houses where only roads are common elements could terminate if the roads are eventually transferred to the town council. CA Madrid 17-12-2007
23.2 Voluntary winding up
Commonholders may choose to terminate their community and bring the commonhold to an end. They may choose to do so for whatever reason provided that unanimous consent is obtained. CA Granada 22-12-2004
Voluntary liquidation is a way of collapsing the commonhold back into ‘ordinary ownership or co-ownership’ regulated by section 392 onwards of the Civil Code.
A commonhold also terminates where all the units become owned by one proprietor, or where all common parts vanish. In the latter case section 392 onwards of the Civil Code shall not apply because there is no co-ownership.