Quite frequently friends and or family members purchase a home together. In the event they do so a co-ownership agreement is an important vehicle for addressing their expectations. However, often times, either to avoid what they see as an unnecessary expense or, to be blunt, misplaced trust, the home is purchased without a co-ownership agreement.
What happens when the relationship goes sour and one or both of the owners wishes to sell the home? The Partition Act governs this issue. That Act allows any person interested in land to apply to the Court by Application for a sale or partition of home. Absent contrary evidence by the other owner, partition of the property is not feasible and therefore the only issue for this Court is whether a sale should be ordered and on what terms. The relevant sections of the Act read as follows:
1. In this Act,
“court” means the Superior Court of Justice; (“tribunal”)
“land” includes lands, tenements, and hereditaments, and all estate and interests therein.(“bien-fonds”) R.S.O. 1990, c. P.4, s. 1; 2006, c. 19, Sched. C, s. 1 (1).
Who may be compelled to make partition or sale
2. 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, or any part thereof, whether the estate is legal and equitable or equitable only. R.S.O. 1990, c. P.4, s. 2.
Who may bring action or make application for partition
3. (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, 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. R.S.O. 1990, c. P.4, s. 3 (1).”
∙ ∙ ∙
There is a prima facie right of an owner to a partition of the home. The Court should compel a sale if no sufficient reason appears why such an order should not be made. Each case must be considered in light of its particular facts or circumstances and the Court must then exercise its discretion after considering those particular facts and circumstances. More recently the Courts have affirmed the statement of law that there is a prima facie right of an owner to a partition or sale in the absence of sufficient reason for the Court to exercise its discretion to refuse the order. The basis for finding a sufficient reason to deny the request is limited to circumstances where the moving party owner has acted maliciously, oppressively or with a vexatious intent toward the other owner.
Once an order is made to sell the home the terms of sale can either be negotiated between the owners or, if they are unable, by order of the Court. Similarly, the owners can either agree on how any net proceeds are to be divided, but if they cannot that will also be decided by the Court.
By Charles Baker