Co-Ownership Agreements and the Partition of Property Act

Co-Ownership Agreements and the Partition of Property Act
By Alex Chang, Associate
with Paul G. Mendes, Partner

 

                                                                        

Alex J. Chang, Associate                                                         Paul G. Mendes, Partner
Phone:  604-685-1255                                                              Phone:  604-685-4894
Email:  ajc@lmlaw.ca                                                          Email:    pgm@lmlaw.ca

 

With real estate prices at all-time highs, particularly in the lower mainland, pooling financial resources is an increasingly popular way of buying a more valuable property than could be afforded individually. However, because real estate is usually the most valuable asset a person can buy and purchasing it with other people presents risks, especially when one of the co-owners wants to end that relationship.

If there is no dispute about how the property should be sold or split-up (partitioned), there is unlikely to be a serious issue when parting ways. What happens, however, when one co-owner wants to sell or partition but the other owners do not? A single owner can certainly market her share of the property, but completing a sale may be difficult during a dispute between co-owners.

A co-ownership agreement may provide some certainty for co-owners and is recommended for anyone considering purchasing property with others. However, many co-owners do not enter into co-ownership agreements.

A solution for co-owners without a co-ownership agreement may lie with the Partition of Property Act.

Owners as joint tenants, tenants in common, coparceners, mortgagees or other creditors who have liens on, and all parties interested in any land may apply to the court to partition or sell the land, or a part of it under the Act.1 The following classes of people can seek a sale or partition of land under the Act:

  • a) Joint tenants of the fee simple or a profit à prendre;
  • b) Tenants in common of the fee simple or a profit à prendre;
  • c) Joint tenants or tenants in common of a life estate; or
  • d) Co-owners of a leasehold estate (co-lessees).2

Cases under the Partition of Property Act are more straight forward where the person seeking the partition or sale owns 50% or more of the property. In such circumstances s. 6 provides that the court must, unless it sees good reason to the contrary, order a sale of the property. What constitutes a ‘good reason to the contrary’ is relatively limited so in most cases the property will be ordered sold by the court.3

Where an owner with less than a 50% interest requests a sale the matter is more complicated. The co-owner requesting the sale must show why a sale should be ordered rather than partition. The court also cannot order the open market sale of the property in such circumstances where another owner undertakes to purchase the selling co-owners share of the property.

Owners considering a petition to the court to sell or partition property under the Partition of Property Act should seek legal advice early.


1Section 2(1)
2Pallot v. Douglas, 2015 BCSC 1296 at 27.
3Johnston v. Johnston Estate, 2015 BCSC 1479 at 23.

Do you have questions about the Partition of Property Act? Please contact Alex Chang at 604-685-1255 or by email at ajc@lmlaw.ca or Paul G. Mendes, Partner at 604-685-4894 or by email at pgm@lmlaw.ca

 

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied on without independent legal advice.