Two legal paths when litigating ownership of land with a non-spouse in Ontario
Landownership is beneficial in many different situations. Three common examples involve a married couple who purchase a home to raise a family, friends or family members who purchase together as co-owners to make the cost of owning property more affordable, and business partners that buy a building for their operations. This can take the form of a joint tenants or tenant in common relationship.
Unfortunately, the parties can change their mind about the future of the property. One may wish to sell while the other prefers to retain ownership. What happens when these disputes arise between non-spouses?
#1: Take a proactive approach before finalizing a real estate deal
Ideally, the landowners will enter a contractual agreement that outlines how ownership is handled in the event of a dispute. This is beneficial whether the landowners are merely business partners or the closest of family members. Even those with the best of intentions can change their mind and disagree with their co-owners on whether to sell or retain the property. The parties can then refer to this contract to guide a dispute over ownership to resolution.
This co-ownership agreement can include many different provisions, such as the use and associated expenses for a cottage, a right of first refusal and how much each party is entitled from proceeds if a sale occurs.
#2: Options are available when in a dispute
It is common for those who move forward with a real estate transaction to do so without the contractual agreement discussed above. In these situations, if there is a dispute the landowners will need to refer to the Partition Act for guidance. This law allows landowners to petition the court sell their share of the land.
As discussed in more detail in an article in The Lawyer’s Daily, the Appeal Court recently offered guidance for these situations. It clarified that the burden is on the party that wishes to retain ownership to prove the other party should not move forward with a proposed sale. The non-selling party can meet this obligation and retain ownership if they can establish the party seeking sale is acting in a “malicious, vexations or oppressive fashion.”
Resolution options in the event of a dispute can include:
- Use of a previous contract. Parties who executed a co-ownership agreement as noted above can then refer to the agreement for guidance. The court is generally reluctant to conflict with this agreement if the other party disagrees and attempt to challenge the terms of the contract.
- Offer to buy-out the other owner. In some cases, the best-case scenario is to offer to purchase the other property owner’s interest.
- Partition of Sale. If the previous options do not work, the owners can petition the court to intervene and partition the property for sale.
It is important to point out that even a minority owner can push the court to force a sale. Although it is possible for the individual wishing to retain ownership to block an attempted sale, building a successful case is difficult. As such, it is important to carefully prepare this case while also reviewing additional legal remedies, like those listed above.