A lot of people own land. It might be a place to live, a location to invest, or both. Land can also be held by many people.
Land can be co-owned in one of two ways: as joint tenants or tenants in common.
- Each joint tenant owns 100 percent of the land in undivided portions. For example, a husband and wife frequently own their family home as joint tenants, which means they jointly own the entire property.
- Tenants in common, on the other hand, hold 100 percent of the land in split parts. For example, three persons may own a business property in equal thirds. Each owner’s one-third stake is stated on title.
Sometimes co-owners of land argue over how a property should be managed or whether the land should be kept or sold. It is not unusual for one co-owner of a property to want to sell it while the other does not. As a result, you may be obliged to sell your property if you are a joint tenant or tenant in common of a property with a friend, family member, or business partner…
How To Resolve These Disputes:
The Partition Act permits anybody with an interest in land in Ontario to file an action or make an application to the court to have that land partitioned or sold at the court’s discretion. According to Section 2 of the Act:
“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.”[i]
Prudent landowners may opt to sign into a contract with another person prior to acquiring land, which gives a method for dealing with problems. However, in many cases, land is simply acquired with little thought given to how to deal with any future problems.
The Partition Act of Ontario gives some help to co-owners of land who are in conflict. A landowner may petition to the court under the Partition Act to force the sale of his or her land. This right, however, is not absolute. The individual wishing to sell the land must have what is called as a “possessory right” to it.
For example, if a co-owned commercial property is leased to a tenant, one co-owner cannot force the sale of the land since the property is occupied by a tenant with a lease. Furthermore, even though a co-owner has a prima facie right to sell a property, a court may deny a transaction if the moving party’s motive is malevolent, oppressive, or vexatious against the other co-owner.
As noted above, the court may reject to award partition or sale in cases of malice, oppression, or vexatious purpose (Brienza v. Brienza).[ii] Please keep in mind that pursuing division or sale does not become oppressive or vexatious just because the other co-owner will be dissatisfied with the loss of the property.
The recent case, O’Brien v. McGilvray,[iii] provides an interesting examination of how the presumption is to prefer partition over sale, but a sale will be ordered if the court finds it to be “more beneficial to the parties.”
Galsan Holdings Inc. v. Davalnat Holdings Inc. is a recent noteworthy case regarding the Partition Act.[iv] In this example, two people held land through a network of holding companies.
In this case, Person 1 requested an order that the land be sold through his holding company, which owned shares in the Co-Owned Holding Company. Person 1 and Person 1’s Holding Company’s application was denied by the court.
In this situation, the land was held by the Co-Owned Holding Company rather than Person 1 or Person 1’s Holding Company. Person 1 (or his holding company) had even a possessory interest in the land. Another co-owned business owned the land.
This instance demonstrates the significance of forethought in land ownership. There may be benefits to owning land through a company. However, corporate ownership arrangements can deprive a person of the relatively straightforward and quick procedure of forcing the sale of land under the Partition Act, and instead impose more difficult and costly actions when parties disagree.
As a result, it is evident that it is pivotal to keep all this in mind while getting into a co-ownership agreement with one or more people. You should consult with a real estate lawyer at Cactus Law about this and consider establishing a contractual agreement between all parties involved that outlines all of the parties’ wants and expectations about the property.
As always, if you have any questions about your real estate needs, please contact Cactus Law today to speak with a lawyer specializing in real estate law.
The information presented above is solely for general educational and informational purposes. It is not intended to be, and should not be taken as, legal advice. The information given above may not be applicable in all cases and may not even reflect the most recent authority after the date of its publication. As a result, please refer to all updated legislation, statutes, and amendments. Nothing in this article should be relied on or acted upon without the benefit of legal advice based on the specific facts and circumstances described, and nothing in this article should be interpreted otherwise.
About the Author:
Kanwar Gujral is entering his third year at Osgoode Hall Law School in Toronto, Ontario. He has a dedicated interest in real estate, business, and corporate law.
[i] R.S.O. 1990, c. P.4, s. 2.
[ii] 2014 ONSC 6942 (CanLII), at para. 26, citing Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2004), 2004 CanLII 48652 (ON CA), 75 O.R. (3d) 478 (C.A.)).
[iii] 2018 ONSC 2442
[iv] 2018 ONSC 3600