Many individuals choose to acquire and own property, as joint owners, with their friends, family, or business partners. But what happens when co-owners can no longer agree as to their joint ownership of a property? What happens when an owner wishes to sell the property but the other owner(s) do not? In those circumstances, the Partition Act may provide recourse.
The Partition Act in Ontario
Owners of real property have an inherent right to dispose of their interest in that property as they see fit. If an owner wishes to sell the property but the other owner(s) do not, a party may seek the court ordered sale of the property pursuant to the Partition Act. Under the Partition Act, a court may order the partition of the land or the sale of the land. The court may oversee and direct that process to the extent necessary. The suitability of partition versus sale largely depends on the nature of the property. Partitioning vacant land might be straightforward, but may be impractical for properties like condominium units.
Judicial Considerations and Principles
When a co-owner applies for partition or sale, the court typically grants the request unless there are compelling reasons not to. According to the Ontario Court of Appeal in Davis v. Davis, a co-owner has a prima facie right to partition or sale. The court should compel partition or sale unless there is a sufficient reason to deny such an order. The court retains the discretion to refuse partition or sale if the applicant has behaved maliciously, oppressively, or with vexatious intent toward the respondent. However, this discretion is rarely exercised. The court’s discretion to refuse partition or sale is broader in family law versus sparingly in commercial contexts.
Importantly, a court will not order a co-owner to purchase the other co-owners interest.
Practical Challenges and Legal Complications
Mortgages, liens, repairs, family law disputes, and greater area development plans can complicate the operation of the Partition Act. In marriage disputes, deferring a Partition Act application might be necessary until property claims between the couples become more resolved. In other cases, one co-owner may have made disproportionate financial contributions towards the acquisition and maintenance of the property. The Partition Act allows a court to consider the equitable distribution of net proceeds of sale to account for such disproportionate contributions. However, in some circumstances, there may be insufficient net proceeds of sale for such an accounting.
Recommendations for Co-Owners
One way an owner of a property can protect their interest(s) is the execution of a co-ownership agreement. These pre-negotiated terms may avoid complications and legal disputes in the future. ad arguments in the future. These agreements can provide the groundwork for resolving conflicts without resorting to litigation.
If no co-ownership agreement exists, co-owners of a property should consult a lawyer regarding their rights and entitlements to seek a sale of the property.
Conclusion
The Partition Act remains a crucial tool for resolving property disputes between co-owners. Co-owners are encouraged to plan proactively and seek legal advice to avoid the pitfalls of property co-ownership conflicts. Our litigation team can assist you in navigating co-ownership disputes and can advise you as to your rights and entitlements to remedy those disputes.