12 June 2013

Partition and Sale Court Applications: The Law's Solution to Co-Owners of Real Estate No Longer Getting Along

If Only the Division of Real Estate By Partition Were So Simple
Lots of folks co-own real estate with other people. Perhaps most commonly, spouses may be co-owners. But so too are other family members, investors, business partners, corporations, and even governments.

Let's face it, acquiring real estate has always taken a big chunk of change out of anyone's budget, so co-owning enables that cost to be shared. Co-owning can also give security and peace of mind to others that their contributions to a personal or business relationship are valued, even where they aren't contributing cash to acquire the property. Finally, co-owning might be something imposed on you, like when you and your 17 brothers and sisters jointly inherit the family cottage from your deceased parents.

However, when those co-owner relationships break down in so severe a way that one or more of the co-owners are desperate to escape the relationship, what's to be done? Well, anything can be done by agreement. All parties agree to sell, and come up with some formula to split the net proceeds of disposition and the costs of sale, and you're in business. No lawyers required, other than real estate lawyers. Unfortunately, when even one of the co-owners adamantly refuses to sell, you're stuck. You can't secretly or publicly sell a property out from under a co-owner, unless you've previously concluded some kind of agreement with the person permitting sale. This is where the courts (and yes, wait for it, the LAWYERS) are needed.

Sometimes it will be a spouse who refuses to leave the family home notwithstanding the end of the domestic relationship. At other times siblings will fall to squabbling over who gets to stay at the cottage during the three non-rainy weeks of the summer, or how the repairs to the cottage will be funded now that snow has collapsed the roof, squirrels have eaten the wiring, and rising lake levels have swept away the beach. Or perhaps a business partner will flee in the middle of the night, leaving you on the hook for all property expenses, and not leaving you permission to sell the property.

But wait, the courts (and lawyers) have a cure for your property ills: the partition and sale application. Five things you need to know about it:

1. you need to go to a superior court of justice, which might be called something different where you live - generally the highest level trial court in your jurisdiction;

2. you need to provide notice (or at least make reasonable attempts to provide notice) to the other co-owners that you are seeking court authority to sell the property, and then prove to the court you provided such notice;

3. you need to put sworn evidence before the court, usually in the form of affidavits and exhibits, proving your rights to the property and why you need court authority to sell it;

4. you should try to present the court with a draft order seeking relief which spells out all the steps of sale you are seeking authority for - like listing with a real estate agent, for a minimum selling price based on an appraisal, and authority to transfer and register the transfer after sale notwithstanding the lack of consent of the co-owner(s);

5. you will usually be able to link in your application to some kind of statutory authority, like in Ontario where the Partition Act (isn't it nice when the Act's title is the same as what you are seeking?) says at sections 2 and 3: "All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land ... Any person interested in land in Ontario ... may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested."                                  

True, I've never used the word dower since law school, and I don't think I've ever had occasion to even write the word coparcener, but hopefully you get the gist that anyone who owns an interest in land can ask for it to be split or sold. For most of us, it's unlikely we'll be co-owners of a vast tract of land without buildings that lends itself to being equitably split up, so usually we'll be wanting sale.

To accomplish all this, you'll usually need a lawyer. This isn't really a DIY law kind of undertaking. But with the value of real estate today, and the ongoing expenses of its upkeep, getting court authority to divest yourself of a property will hopefully be worth the legal expenses. Sometimes no one will even show up in court to oppose you, but you'll still need some authority to partition or sell.

See www.acmlawfirm.ca to learn more about property dispute resolution services.

2 comments:

  1. I would like to understand the term "advantageous" to the parties concerning a partition order. Advantageous could mean the preservation of a family union and property heritage of 180 years passed down from Canadian relatives. Or advantageous financially if all were to receive their partitioned value from a forced sale? can nothing be done when the party wishing for a "buyout" or forced sale ( if the buyout is not possible) is of a toxic nature and whose activity against the owners ( family) is of criminal mischief ( but not formally charged by the family) Can stability of character and mind be presented in an effort to make it advantageous for the other owners to retain owner ship and initiate an injunction until such "relationship" issues are resolved?

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  2. A good question. Generally, the law will not force co-owners who are not getting along to continue being co-owners. The rationale is not dramatically different than forcing spouses who can't get along to continue in a marriage. Worse mischief can result by forcing people to stay together, than by permitting them to split up. So once it has been established that the parties are all legitimate owners of a property, the only end outcome will be of such an application will be splitting up the property (if it is big enough), or selling it. Though you might try to delay the final implementation of the application for a bit of time until such a disposition of the property is appropriate to the market.

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