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   RA Civil Code article 198 paragraph 2 is a mandatory rule, by which “Disposition of property that is in joint ownership shall be conducted by agreement of all the participants which shall be presumed regardless of which of the participants conducts a transaction for disposition of the property”, by the third paragraph of the same article is set that, “Each of the participants in joint ownership has the right to conduct transactions for the disposition of the joint property unless otherwise follows from an agreement of all participants. A transaction made by one of the participants in the joint property connected with the disposition of the common property may be declared invalid on demand of the remaining participants on the ground of the absence of the necessary powers to the participant who made the transaction, only in the case if it is proved that the other party to the transaction knew or clearly should have known of this.”

   Literal interpretation of the above-mentioned rules shows that each of the spouses may enter into the property management transaction, however, having the other spouse consent preserving the mandatory requirements set by the 2nd paragraph of the article. And as the third paragraph of the article is not mandatory, it gives an opportunity to co-owners/spouses/ to define other form of property management transaction / for example, spouses, by marriage contract can make restrictions regarding right of alienation by each of them/. In fact, unless otherwise provided by an agreement of the spouses, each spouse can manage joint property and the power to dispose the property to the spouse shall be deemed to exist when the spouse has the consent of the other spouse regarding entering into transactions for managing the property. Characterized and legislative gap, however, lies in the fact that in the case of managing the property in the absence of authority the transaction may be declared invalid ONLY when it is proved that the other side /the buyer/ knew or clearly should have known about it.

   The mentioned provision is contrary to 275 article paragraph 1, which sets the request right of the property owner from the good faith purchaser.

   If the property was purchased by compensation from a person, who didn’t have right to sell it, and the buyer didn’t know and couldn’t know about it/bona fide/, then the property owner has the right to require the buyer only if the property is lost by the owner or the person to whom the owner of that property passed the right of possession, or is captured from one or the other, or in other way out of their possession, regardless of their will.

   Specificity of the article is that there is not specified the type of ownership, which proves that it is applicable both for sole owner and co-owner.

   Article 275 paragraph 1 of the Civil Code of RA shows, that if the property was sold by a person who didn’t have right and the buyer knew or obviously suspected about absence of right, the owner can IN ANY CASE demand from the bona fide buyer. If the buyer/bona fide buyer/ didn’t know and couldn’t know about lack of right to the seller to dispose the property the owner of the property is not precluded from demanding the property from the buyer, if the property owner proves that the property was out of his ownership by unforeseen circumstances. Unwittingly possession of co-owned property can be if the co-owned property is under the possession of one co-owner/for example if the car owned by spouses is always or mostly is ridden by one of them/. And as law reserves a right to each of co-owners to dispose the property, so in case of dispose of property by one of co-owners without consent of the other /without authority/, and if the buyer didn’t know about it, the co-owner not participated in the sell has the right to demand the property from the buyer according to the 275article of the Civil Code of the RA, and according to the same Civil Code article 198 didn’t have right to demand the property.

   The application of article 198 of the RA Civil Code was problematic in the court practice mostly after comments of the Court of Cassation.

   Thus, the Court of Cassation carrying out its mission to ensure the uniform application of law in a number of its precedential decisions considered applicable the presumption of existence an agreement in managing the joint property, which leads to the following: In the absence of co-owners disagreement in connection with property management transaction made by the other co-owner, is considered as consent by co-owner and existence of right /authority/ to the co-owner, who is making a transaction.

   So, the authority to make a transaction exists, if there is no disagreement from the co-owner. Moreover, the other party of the transaction/the buyer/ should be aware of disagreement, otherwise the transaction cannot be declared invalid by a court of law.

The presumption of consent existence threaten the property right of the citizens guaranteed by the Constitution of the RA, because, despite the grounds of origin of the joint ownership are that the main participants have the same household, are using the property together, having the opportunity to be aware of the intention of the other party to alienate the property, However, in practice there are cases when not expression of disagreement by the participant is a result of non-awareness.

And whether the factual circumstances of not having the same household at the moment of making transaction, and existence or absence of ability to present disagreements to the third party by the co-owner, who didn’t take part in the transaction are considered important in transaction invalidity cases. Thus, in N ԵԱՔԴ/1023/0210 civil case the Cassation Court, referring to the raised question, confirmed, that at the time of transaction the factual circumstances that the spouses are divorced/therefore unawareness of co-owner about the transaction/ cannot be considered as noteworthy factual circumstances in the claims of making the transaction invalid.

How this position does not provide justice in many cases, however, it derives from the Supreme Courts power to interpreting the law rather than amending it. Terms of making the transaction Invalid, as already mentioned, are set in the Civil Code Article 198 3rd paragraph, The legal norm is imperative and despite the factual circumstances of the case identically applicable to all civil cases.

Solution to the problem lies not in the spatial interpretation of the above mentioned norm, but the abandonment of the presumption of existence an agreement between co-owners in the property management transactions or establishing mechanisms to counter risks arising it.

After all, even discussing the wording of the provision it is clear that the legislator in making the transaction invalid highlighted the importance of absence of necessary authority to the property alienator co-owner /spouse/, as well as the fact of being aware or possibility of knowing about the absence of the authority by third party/buyer/. Meanwhile, by applying the logic of the presumption of existence the consent, the alienator of property always has authority regardless of the other co-owners real will. It is unacceptable of application of consent existence principle in existing conditions of making the transaction invalid, in the future the incompetent owner unintentionally given his consent will not have a real opportunity to restore the violated rights.

And what are other countries' approaches about this issue. The presumption of consent of spouses regarding alternation of joint property is applicable in the Russian Federation, Ukraine and other countries and unlike the Republic of Armenia, the application of the presumption is derived by law, reducing some of the mechanisms of citizens' losses.

Thus, Russian Federation Family Code Article 35 paragraph 2 sets, that if one of spouses is entering into joint property management transaction is assumed that he was acting with the consent of the other spouse. Taking into account the risk of presumption of consent the 3rd paragraph of the article required notarized consent of the spouse for managing the real estate and notarization of the transaction or transactions, which require state registration,

In Ukraine the Presumption of consent is also applicable, however, notarized consent of the other spouse is required for notarized transactions and transactions, which need state registration /Family code of Ukraine Article 65 paragraph 3/. Moreover, in Ukraine presumption is not applicable in case of managing valuable property, where at least written consent of the spouse is required.

As mentioned above, in case of management of joint property presumption principle is applied in other countries, it is set by law and is directly applicable only for possession of small value property transactions / household items, etc. /, while in other property management transactions the other co-owner's consent is required, and its absence is already a ground to make the transaction invalid.

Meanwhile, in the Republic of Armenia, the presumption of consent is not mentioned in any legal settings about joint property management, and its application stems from the Cassation Court case comments, apparently contradicting the literal interpretation of the rule, is applicable in connection with any property transaction, and satisfaction of the claim to make the transaction invalid is connected with the fact that the applicant notified the third party/buyer/ about his disagreement, but the citizens do not always have this opportunity. A common example of this is a vehicle sale transaction, where only one spouse sells the vehicle which the spouses acquired during their life.

   The RA Court of Cassation applying the other countries experience regarding joint property management transactions considered mandatory the principle of consent presumption, ignoring the existence of risk counterbalancing norms in their legislations and these norms absence in our legislation.

   The Constitutional Court in his 24.02.2012 decision referring to compliance of RA Civil Code article 198 paragraph 3 to the constitution, decided that there is no uncertainty or problem with constitutionality of RA Civil Code art. 198 paragraph 3.

Meanwhile the Law of “Constitutional Court” article 63 in assessing the established law practice the Cassation Court highlighted the importance of registration of co-owners rights and also in the cases prescribed by the RA law “On the state registration of the property” Article 18 , when the property rights toward the property arisen based on the law, for participation by the owner to property management transaction is necessary positive consent of all co-owners.

Although the Constitutional Court's estimation, the Court of Cassation in his future decisions continued confirming and to invoking the presumption of applicability .

Solution to the problem lies in the application of literal interpretation of the RA Civil Code Article 198 and refusal of norms adapted from other countries regarding the terms of transaction invalidity, which will give an opportunity to owner to make transactions invalid, which were made without his consent, in any case when the 2nd paragraphs requirements were violated.

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