September 2026
The Limits of Majority Rule in the Development and Operation of Co-Owned Land in Taiwan : Risks in the Use of Co-Owned Property and the Allocation of Benefits in Light of Recent Supreme Court Judgments
Developing and operating co-owned land often raises one question: how may a majority of co-owners decide how the land is used when all of them cannot be brought to agree? Article 820 of the Civil Code allows co-owners who meet a statutory threshold to decide on the management of co-owned property by majority. A majority decision may, however, go further by granting a particular co-owner exclusive possession and use of the property, or even the entirety of the benefits derived from it. Where the line lies then turns on the rights of use and profit guaranteed under Article 818 of the Civil Code. Several recent Supreme Court judgments address this very issue. They matter a great deal in practice for how co-owned land is developed and operated and how its benefits are shared.
In Civil Judgment No. 106-Tai-Shang-151 (2017), the Supreme Court held that, since the amended Article 820, paragraph 1 took effect, co-owners may also decide on the management of co-owned property by majority. The Court held that Article 818, by contrast, establishes the baseline entitlements of each co-owner to use the co-owned property and to receive the benefits derived from it in proportion to his or her undivided share. Co-owners may, however, agree by contract to depart from that baseline, either by allocating use of the property disproportionately among themselves or by distributing the resulting benefits otherwise than in proportion to their shares. According to the Court, such arrangements are distinct from the methods of use and profit that fall within management under Article 820, paragraph 1. The Court further held that the lower court erred in law. It had ruled against a party without ascertaining the facts about the partitioned-management decision, on the sole ground that a co-owner's exclusive possession of the land in dispute must rest on a contract.
The same case returned to the Supreme Court, which in Civil Judgment No. 111-Tai-Shang-27 (2022) took a different approach. It held that a co-owner who possesses and uses co-owned property merely for his or her own benefit, rather than with the intent to manage it, is not engaged in an act of management. This holds even where the number of consenting co-owners and their combined shares exceed the statutory threshold. The Court further noted that if a majority allows one co-owner alone to use the property and receive all benefits derived from it, there remains a question whether such an arrangement constitutes management under Article 820. The Court therefore vacated the judgment below. Civil Judgment No. 114-Tai-Shang-1288 (2025) followed the same reasoning and raised the same question as to exclusive use by a single co-owner.
The Supreme Court thus appears to have gradually adopted a boundary for majority-based management in recent years: possession and use of the property merely for one's own benefit, rather than with the intent to manage it, falls outside that boundary. This standard, however, still needs clarification. Suppose one co-owner exclusively possesses and operates the co-owned property, and this may fall outside management. What is the reason? It may be that exclusive use by a single person in itself exceeds the scope of management. Alternatively, it may be that this co-owner also takes all of the benefits, which substantively alters the other co-owners' rights of use and profit. The distinction matters especially for co-owned land. If entrusting the property to one person for unified use were enough to rule out majority rule under Article 820, economically rational models of integrated operation could become difficult to carry out.
In the author's view, the Supreme Court's recent case law on the limits of majority-based management is better understood through the division of functions between Articles 818 and 820 of the Civil Code. Exclusive use by one co-owner should not, by itself, take the arrangement outside the scope of Article 820. Sole possession and use by one co-owner is not necessarily inefficient. The use of co-owned property often involves economies of scale, and dividing it among co-owners may instead raise costs. This is especially true of co-owned real property whose value lies in operating it as a whole. Having one person handle its development, leasing, or operation centrally may sometimes do more to increase the asset's overall value. Denying that such an arrangement is management because of sole possession alone would effectively rule out these efficient forms of use.
The key question, then, in deciding whether a majority resolution exceeds the scope of management under Article 820 is this: does the resolution merely set the "method of use" of the co-owned property, or does it go further and change the "allocation of benefits" among the co-owners? A majority resolution may give one co-owner exclusive use of the property while the other co-owners still receive benefits in proportion to their undivided shares. In principle, such a resolution can still be characterized as management under Article 820. Conversely, a resolution under which all use and profit accrue to one co-owner is no longer merely a choice of method of use. It concerns the allocation of the rights of use and profit governed by Article 818. In principle, that allocation must be agreed by the co-owners by contract and cannot be decided by majority vote.
Economic analysis also supports this distinction. The choice of method of use concerns maximizing the overall value of the co-owned property. Letting a majority decide it prevents minority co-owners from holding out and lowers negotiation costs. The allocation of benefits, however, does not in itself add value to the co-owned property. Here, majority rule does not create value; it only transfers it. The legitimacy of majority rule under Article 820 therefore rests on promoting the efficient use of co-owned property. It does not authorize the majority to redistribute the benefits each co-owner is entitled to under Article 818.
A further question arises when a majority resolution crosses this line and redistributes benefits. Why should the consequence go beyond invalidating the benefit-allocation part alone? The Supreme Court judgments cited above instead question whether the decision is management under Article 820 at all. In the author's view, the answer lies in the incentives of the majority co-owners. If only the benefit-allocation part were void, the worst outcome for the majority would be to repay, after the fact, the benefits that belonged to the other co-owners. That would not be enough to deter them from adopting such resolutions in the first place. The Supreme Court's recent position has a different effect: a decision that crosses the Article 818 line on benefit allocation is no longer lawful management under Article 820. The favored co-owner may then lack any legal basis for exclusive possession of the co-owned property. That co-owner may also face having to return the property or remove structures built on it. Only this outcome gives the majority a real reason to reach a separate agreement with the other co-owners in advance whenever the allocation of benefits departs from the undivided shares. That agreement should cover payment for use and how benefits are allocated.
For the development and operation of co-owned land, satisfying the majority threshold under Article 820 is therefore not enough. Where benefits are to be allocated other than in proportion to the co-owners’ respective undivided shares, the co-owners should expressly agree by contract on the consideration for use and the allocation of benefits. This can reduce the risk of disputes over the legal basis for exclusive possession and operation.
In Civil Judgment No. 106-Tai-Shang-151 (2017), the Supreme Court held that, since the amended Article 820, paragraph 1 took effect, co-owners may also decide on the management of co-owned property by majority. The Court held that Article 818, by contrast, establishes the baseline entitlements of each co-owner to use the co-owned property and to receive the benefits derived from it in proportion to his or her undivided share. Co-owners may, however, agree by contract to depart from that baseline, either by allocating use of the property disproportionately among themselves or by distributing the resulting benefits otherwise than in proportion to their shares. According to the Court, such arrangements are distinct from the methods of use and profit that fall within management under Article 820, paragraph 1. The Court further held that the lower court erred in law. It had ruled against a party without ascertaining the facts about the partitioned-management decision, on the sole ground that a co-owner's exclusive possession of the land in dispute must rest on a contract.
The same case returned to the Supreme Court, which in Civil Judgment No. 111-Tai-Shang-27 (2022) took a different approach. It held that a co-owner who possesses and uses co-owned property merely for his or her own benefit, rather than with the intent to manage it, is not engaged in an act of management. This holds even where the number of consenting co-owners and their combined shares exceed the statutory threshold. The Court further noted that if a majority allows one co-owner alone to use the property and receive all benefits derived from it, there remains a question whether such an arrangement constitutes management under Article 820. The Court therefore vacated the judgment below. Civil Judgment No. 114-Tai-Shang-1288 (2025) followed the same reasoning and raised the same question as to exclusive use by a single co-owner.
The Supreme Court thus appears to have gradually adopted a boundary for majority-based management in recent years: possession and use of the property merely for one's own benefit, rather than with the intent to manage it, falls outside that boundary. This standard, however, still needs clarification. Suppose one co-owner exclusively possesses and operates the co-owned property, and this may fall outside management. What is the reason? It may be that exclusive use by a single person in itself exceeds the scope of management. Alternatively, it may be that this co-owner also takes all of the benefits, which substantively alters the other co-owners' rights of use and profit. The distinction matters especially for co-owned land. If entrusting the property to one person for unified use were enough to rule out majority rule under Article 820, economically rational models of integrated operation could become difficult to carry out.
In the author's view, the Supreme Court's recent case law on the limits of majority-based management is better understood through the division of functions between Articles 818 and 820 of the Civil Code. Exclusive use by one co-owner should not, by itself, take the arrangement outside the scope of Article 820. Sole possession and use by one co-owner is not necessarily inefficient. The use of co-owned property often involves economies of scale, and dividing it among co-owners may instead raise costs. This is especially true of co-owned real property whose value lies in operating it as a whole. Having one person handle its development, leasing, or operation centrally may sometimes do more to increase the asset's overall value. Denying that such an arrangement is management because of sole possession alone would effectively rule out these efficient forms of use.
The key question, then, in deciding whether a majority resolution exceeds the scope of management under Article 820 is this: does the resolution merely set the "method of use" of the co-owned property, or does it go further and change the "allocation of benefits" among the co-owners? A majority resolution may give one co-owner exclusive use of the property while the other co-owners still receive benefits in proportion to their undivided shares. In principle, such a resolution can still be characterized as management under Article 820. Conversely, a resolution under which all use and profit accrue to one co-owner is no longer merely a choice of method of use. It concerns the allocation of the rights of use and profit governed by Article 818. In principle, that allocation must be agreed by the co-owners by contract and cannot be decided by majority vote.
Economic analysis also supports this distinction. The choice of method of use concerns maximizing the overall value of the co-owned property. Letting a majority decide it prevents minority co-owners from holding out and lowers negotiation costs. The allocation of benefits, however, does not in itself add value to the co-owned property. Here, majority rule does not create value; it only transfers it. The legitimacy of majority rule under Article 820 therefore rests on promoting the efficient use of co-owned property. It does not authorize the majority to redistribute the benefits each co-owner is entitled to under Article 818.
A further question arises when a majority resolution crosses this line and redistributes benefits. Why should the consequence go beyond invalidating the benefit-allocation part alone? The Supreme Court judgments cited above instead question whether the decision is management under Article 820 at all. In the author's view, the answer lies in the incentives of the majority co-owners. If only the benefit-allocation part were void, the worst outcome for the majority would be to repay, after the fact, the benefits that belonged to the other co-owners. That would not be enough to deter them from adopting such resolutions in the first place. The Supreme Court's recent position has a different effect: a decision that crosses the Article 818 line on benefit allocation is no longer lawful management under Article 820. The favored co-owner may then lack any legal basis for exclusive possession of the co-owned property. That co-owner may also face having to return the property or remove structures built on it. Only this outcome gives the majority a real reason to reach a separate agreement with the other co-owners in advance whenever the allocation of benefits departs from the undivided shares. That agreement should cover payment for use and how benefits are allocated.
For the development and operation of co-owned land, satisfying the majority threshold under Article 820 is therefore not enough. Where benefits are to be allocated other than in proportion to the co-owners’ respective undivided shares, the co-owners should expressly agree by contract on the consideration for use and the allocation of benefits. This can reduce the risk of disputes over the legal basis for exclusive possession and operation.
