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.

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