March, 2022

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When Co-Owners Disagree: Application for Partition or Sale

Disclaimer: This article is intended for the purposes of providing information on applications for partition or sale under the Partitions Act. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

In a perfect world, co-owned properties would be owned by individuals who would be able to unanimously agree on how to dispose of the property.

However, in the real world, sometimes things don’t go as planned. In fact, that is why we adamantly recommend that parties enter into a co-ownership agreement before purchasing property with others.

In the absence of that agreement, when co-owners can’t agree on what to do with jointly owned property, they may have to apply for partition and sale under the Partition Act. That disagreement must be an irreconcilable difference and the party’s only option to move forward is to file an application.

This process forces a sale of the property and allows each party their share of the proceeds. Let’s take a closer look at what this process entails.

When does the Partition Act apply?

The Partition Act applies when there are two or more people who own property together and they can’t agree on what to do with it.  It does not matter if the property is co-owned by way of joint tenancy or tenants-in-common.

What remedies are available under the Partition Act?

The answer is actually found within the remedy itself – an owner can apply for partition or sale of the property. The court can either grant an order for partition, which would result in the property being divided, or it can grant an order for sale, which would result in the property being sold and the parties splitting the proceeds.

The court’s remedy is determined by a number of factors, including the type of property itself. Vacant land may lend itself more to being partitioned, whereas a condominium unit would likely be ordered to be sold.

What remedies are not available under the Partition Act?

The court will not transfer the property from one co-owner to another.  So, if there are two co-owners and one wants to buy out the other, they would not be able to use the Partition Act for that purpose.

The court also will not make any determination as to who is at fault or how the property got into the current situation. The focus of the Partition Act is solely to grant the co-owner permission to sell the property or divide it.

Principles of the Partition Act

The court looks to some general principles when it decides whether it should grant an application for partition or sale.

They are:

  • A co-owner has a presumed right to partition or sell the property,
  • The other co-owner has an obligation to permit that partition or sale, 
  • The court should grant a partition or sale unless there is a sufficient reason not to.

This means that it is the responsibility of the owner that is objecting to the sale to prove that it should not take place. The co-owner wishing for the partition or sale does not have to provide information as to why they want that remedy.

That phrase “sufficient reason” has been further fleshed out by the courts. For example, a court may find that the application for partition or sale was done in a vexatious or oppressive manner. 

The Partition Act and Your Co-Ownership Agreement

If the co-owners have a co-ownership agreement, the courts will not grant an order that would be tantamount to a breach of that agreement.

Significantly, co-owners can have terms in their co-ownership agreement that waives their right to the provisions of the Partition Act. If a co-owner waives their right to resort to the Partition Act, that co-owner cannot then expect a court to employ that law to go against the contract.

Understanding Your Options

While co-owning a property can offer many benefits, it’s important to understand the risks that come along with it. Whether you want to discuss having a co-ownership agreement in place to avoid these issues, or you want assistance in handling a disagreement,  our team can help.

At Beeksma Law,  we have a broad range of experience with both transactional and litigation issues related to real estate. That means that not only can we help you craft agreements that will avoid future issues, we can also help you navigate any issues that arise.

To learn more, please book a free consultation to discuss your specific situation with a member of our team.

Questions to Ask Before Co-Owning a Home

Disclaimer: This article is intended for the purpose of providing information on co-owning a house only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Entering the real estate market in Ontario is becoming increasingly difficult, with the average home in Toronto now selling for roughly $1.2 million. Faced with this reality, some people are choosing to co-own property with friends or family members.

In fact, one report indicates that family members are providing financial help for up to 30% of new home purchases. Of course, there are other scenarios where you may want to co-own a property, such as a group of friends getting together to buy a vacation home.

Regardless of the circumstances, there are many considerations to think about before owning a home with anyone, including your family members. (Note: there are different limitations under the Family Law Act for the matrimonial home).

Of course, each situation is unique (and we would be happy to discuss your situation with you). However, here are three key questions to ask yourself before co-owning a home with anyone:

Do I really need a co-ownership agreement?

Yes. Unequivocally, no questions asked, you should absolutely have a co-ownership agreement in place. 

But it’s my mother, father, sibling, best friend since kindergarten and we always get along.

Agreements can become disagreements, even amongst the closest of friends and family. As well, having an agreement can also ensure that you’ve considered different scenarios and are on the same page.

Who is responsible for maintaining the property? You should outline in the agreement who is responsible for maintaining the property and to what extent.

What if one owner wants to sell? It’s important to consider what will happen if one of the owners would like to sell. Who will be responsible for securing a new co-owner? What if the departing owner wants to sell their share back to the remaining owners? These are all important questions that your agreement should answer.

What if someone wants to make changes to the property, like an addition or a new roof? Such changes could be expensive and may require the consent of all owners. It’s important that everyone is on the same page and agrees to any proposed changes, big or small.

Will there be rental income from tenants? If so, how will you divide that income? For example, if two friends are co-owners and one friend lives in the property while the other rents out their bedroom to a tenant, how will you divide the rental income?

If a parent is co-owning the home to help their child qualify for a mortgage, how will that gift be treated when it’s time to sell? Let’s say, for example, a child and parent own a property using a 70-30 split. In the absence of a co-ownership agreement, the parent would be entitled to 30% of the sales proceeds. The parent may want their full investment returned and that should be spelled out in the co-ownership agreement.

A co-ownership will address all these situations, as well as who will own the the property and how you will handle any disagreements (i.e. by mediation, arbitration, etc.)

What are the implications of co-owning a property?

Let’s talk about the scenario of two people co-owning a home.

a picture of a home. you may be thinking of co-owning a home.

If one person is a first-time homebuyer and the other is not, their eligibility for the land transfer tax credit would be affected. The tax credit would be reduced proportionately to the ownership of the property.

For example, a child (a first-time homeowner) and parent (not a first-time homeowner) equally divide the purchase of a property. The child’s 50% ownership would entitle them to 50% of the land transfer tax credit. Knowing this, you may structure the ownership differently. The parent may have a smaller share of the property to maximize that credit.

On the other hand, the parent should fully understand the implications as far as any mortgage is concerned, as the parent may be fully accountable for any default.

As with any property, all parties will want to ensure that there are mechanisms in place if one of the parties passes away. Of course, you would want to talk to an estate lawyer to ensure that you cover all your bases.

How Can I Protect My Interests when co-owning a house?

These are just a few key things to consider when co-owning a property. As with any legal document, it’s important that you seek legal advice to ensure that you can protect your interests.

We have helped many co-owners document their intentions and be able to purchase their property. Have the peace of mind of knowing that you’ve considered all the key issues and have a plan in place.

If you’re thinking of co-owning a property and would like more information, please contact us. We would be happy to help.

Lessons Learned: Parking and Title Searches

Disclaimer: This article is intended for the purposes of providing information on parking space on title deeds only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Let’s outline a scenario that may come up (and in fact, recently did arise on one of our files). Those lessons are:

  • Get in touch with a real estate lawyer before you have even made an offer
  • The listing does not tell the full story – the title search does
  • A good real estate lawyer can help you with any unexpected

Let’s outline what happened. It was a row house that was being purchased in an older part of the city. The listing indicated that there were multiple parking spots.

However, a title search revealed that there was only one registered parking spot on title. The bylaw department would be allowed to ticket any vehicles in the remaining spots, as they were not authorized by the city.

This is not uncommon, especially in older areas. So what can you learn from this scenario?

Involve a Lawyer Early in the Process

If you are purchasing a home in an older area where parking spots are registered on title, you want to acknowledge this possibility early in the process. What can you do?  You can:

  • make it a condition that before closing, the seller provides confirmation of the registered parking spots; or
  • have a lawyer complete a title search before making an offer

Either way, a lawyer can help you protect your interests and ensure that you are not purchasing a property that does not have the parking that the listing indicated.

Want the full story? Check the title search

The seller believed that there were multiple parking spaces registered to the property; however, those representations are not accurate and should not be relied upon until they are confirmed by the title search.

This reinforces why a title search is such an important part of the closing process. Only by looking at the records on title can we determine what the property actually comes with.

This is especially important when it comes to a parking space on the title deeds, as there can be a significant difference in the value of a property depending on whether or not it has registered parking. This leads us to our final lesson.

You want a great real estate lawyer when there are unexpected issues

It is not uncommon for there to be discrepancies between the listing and what is revealed in a title search. However, it can still be frustrating and stressful when it happens.

As we mentioned, the difference between the listing and the title search can mean a material difference in the property’s value. Having a real estate lawyer with the right caliber, experience and expertise can help you negotiate a resolution that is acceptable to you.

Whether it is working with the seller to try and get additional parking spots registered, or adjusting the purchase price to reflect the difference in value, a great lawyer can help you achieve a favourable result.

The Beeksma Law Advantage

Searching for and buying a home can be overwhelming, especially in today’s competitive market.  That’s why you need the lawyers at Beeksma Law. We have experience helping clients buy and sell property in Ontario. We know what to look for and what questions to ask. Then, we will work hard to protect your interests, regardless of what comes up along the way.

At Beeksma Law, we provide our clients with confidence. Our clients know the legal details of their purchase are handled. They can then focus on making the best decision for their family.

If you are purchasing a home and want to make sure that everything goes smoothly, contact us today for a free consultation. We would be happy to answer any of your questions and help you get started on the right foot.

What’s On My Title Search: Easements

Disclaimer: This article is intended for the purposes of providing information on easements only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Surprises can be fun. However, when it comes to your home purchase, we agree with Jane Austen when she said, “Surprises are foolish things….and the inconvenience is often considerable.”

It’s indeed an inconvenience to purchase your home, only to realize that there are easements that impact how you use your property. That is why performing a title search is a vital step in your real estate closing.

One item that is commonly registered on title is an easement. At Beeksma Law, we are passionate about empowering people to understand the law. This article will outline what an easement is and why it matters when purchasing your home.

What Is An Easement?

Generally speaking, an easement is defined as“a right or interest annexed to land, which permits the owner of the dominant land to impose restrictions on the owner of the servient land as to its use.” 

So let’s break that down. An easement involves two pieces of property – the dominant land and the servient land. The owner of the servient land allows the dominant owner use or access to a portion of its land.

Note: An exception is an easement in gross. This easement attaches to no specific piece of land, but rather exists for the benefit of a particular person or company. For example, a utility easement would be an easement in gross.

What Should I Know About An Easement On Title?

When reviewing the documents that are registered on title, your real estate lawyer will review any easement agreements. She will then be able to tell you:

  1. Is the easement active or expired?
  2. Is your property the subservient or dominant property?
  3. What is the scope of the easement?
  4. Does the easement impact how you can use your property?
  5. If there is an easement on title, it’s important to understand its limitations to avoid any surprises down the road. For example, suppose you’re planning to build a garage and there is an easement for access to the property. In that instance, you will need to get permission from the holder of the easement before building your garage.

Types of Easements

Easements are granted in Ontario in several forms:

  • express easement: an easement specifically identified in a deed or other written agreement. An example would include an easement for the use of a shared driveway.
  • implied easement: arises from the circumstances, such as the use of the property over time, without any formal documentation. For example, if there is a path that has been used by the public for years to access a body of water, an easement may be implied.
  • prescriptive easement: granted to someone who has used the land for a specific period of time (usually at least 20 years), without the owner’s permission. (Note: these easements are limited to properties that are registered under the Registry System.)
  • by statute: a type of easement that is granted by law, such as an easement for utilities.

Let’s speak more specifically about utility easements. We have seen many properties with easements for the local hydro company or communication companies. The holder of the easement has the right to go onto your property to conduct repairs or maintenance, even if it means damaging your property.

Typically, these easements will prohibit you from building anything permanent in the area that is covered by the easement. For example, if you put in a pool, and the easement is for underground cables, you may be required to remove the pool at your expense if the cable needs to be accessed. Talk about a “considerable inconvenience!”

It’s important to note that you are prevented from building anything permanent. For example, you would not want to install a shed with a concrete foundation in an area covered by a utility easement. A garden, on the other hand, would usually be permissible.

Know What You’re Buying

Buying a home is a significant purchase and should not be taken lightly. Easements on title can impact how you live in your new home. Therefore, you should have all the information before deciding if it is the right home for your family.

Easements are increasingly common. Therefore, it does not mean that you should not buy a home that has one on title. It is simply important for you to understand the property you are buying so you can make the best decision for your needs.

Fortunately, you do not have to do it alone. You can work with a real estate lawyer who has the experience and expertise to help you understand what is on the title for your future home. They can also explain what that means for you.

At Beeksma Law, we believe that you should know what you’re buying. We are here to help you and build your confidence every step of the way, from understanding the legal jargon to negotiating on your behalf.

Here is what one of our clients had to say after we helped her buy her first home:

“There were so many unknowns, so your patience with me, your willingness to share and explain things in simpler ways and your shared excitement were a huge blessing.”

Contact us today for a free consultation. Let us help you make the best purchase decision for you and your family.