The Partition of Property Act: What Every Property Co-Owner Needs to Know
Disagreements aren’t always avoidable, and change is inevitable. If you share property ownership with someone, whether with a spouse, friend, common-law partner, business partner or beneficiary, it helps to know what recourse you have when property disputes arise or if changes need to be made. In this article, lawyer Michael Liu of Spraggs Law outlines what the Partition of Property Act is and how it may provide potential legal remedies when disputes arise between co-owners of a property.
There Are Many Reasons to Co-Own Real Estate, Including:
- Financial necessity such as when parents assist their children;
- Investments opportunities or business ventures;
- Estate planning; and
- Personal factors such as marital agreements or multigenerational households.
How decisions on a co-owned property are made can range from informal arrangements and discussions amongst friends and family to legally enforceable contracts. It is inevitable that friction and differences in opinion could arise during the process. It is best practice to document any agreements, decisions or substantial discussions in writing and have all interested parties acknowledge the same in case of potential disputes.
Unfortunately, there are times when co-ownership of a property is no longer feasible, such as relationship breakdowns or a change in a co-owner’s personal or financial circumstances. Moreover, the co-owners may not agree on how to deal with the property. In this situation, a provincial legislation, the Partition of Property Act (the “Act”), may provide potential legal remedies.
Under the Act, the Supreme Court of B.C., Upon Hearing a Court Application, May:
- Order the sale of the disputed property and the sale proceeds to be distributed amongst the interested parties;
- Order the partition of the disputed property, i.e. give instructions on how ownership interests over the disputed property are to be divided or transferred;
- Direct any investigations that are necessary to determine if a sale or partition is warranted.
It is important to note that it is not just the co-owners who have the right to make an application under the Act. Anyone who may have an interest in the disputed property, such as lenders or creditors, may be eligible to apply.
Some Additional Information to Note:
- The Act applies to all forms of co-ownership structure, including joint-tenancies and tenants-in-common;
- It is at the court’s discretion whether to order the sale or partition of a property, and the judge will need to balance the interests of all the interested parties. For instance, it may not be desirable to order the sale of the property if it is the matrimonial home of one of the parties and that person has nowhere else to stay. However, when a majority of the interested parties request the sale of the property, the court must respect the majority’s wishes unless there is “good reason to the contrary;” and
- Without going into details, when an applicant seeks the sale of the property, there are provisions in the Act to allow the other co-owners to purchase the applicant’s share of the ownership interest or for an interested party to bid on the property.
While the mechanisms under the Act are relatively straightforward, the devil is in the details, and the likely success of an application will depend on the specific facts of the case.
If You Have Questions, We Can Help
Please note: This article does not contain legal advice. If you would like advice on your specific situation, please contact Spraggs Law.