Problems may arise where family members, friends or business partners are co-owners of real estate. It may be a family cottage, a farm or an investment property. One party may lose interest in the property or have a desire to sell their interest to access funds. Selling a fractional interest in real estate is difficult unless one of the other owners has a desire to pay fair value for the fractional interest of the party that wants out. Seeking legal advice before the joint purchase of the land may help avoid these issues.
Unfortunately, there is often no written agreement between the owners to address this scenario. In the absence of an agreement, a person owning a fractional interest in a property may be able to apply to the court for an order compelling the sale of the property under the Partition of Property Act (the “PPA”).
An owner wishing to prevent the sale of the property would then have the responsibility of demonstrating to the court a “good reason” why the property should not be sold. “Good reason” is a difficult test to meet and has been limited to situations where the individual resisting the sale has a long-standing connection to the property or would experience serious hardship if the property were to be sold.
While an owner of less than a 50% interest in a property is able to seek a court order for sale under the PPA, he or she would have the added responsibility of demonstrating to the court that the sale of the property is necessary.
Further, there are often disagreements as to how the proceeds of the sale will be split. The individual property owners may have spent, or invested, differing amounts on the property and a court has the ability to direct how the proceeds from the sale of a property are to be divided.
While receiving legal advice before purchasing property with others may help to avoid many of these issues, should you find yourself dealing with these problems, or simply want advice on your legal options, seek the advice of an experience property law lawyer to assist you.
As one of the largest law firms in the Interior, our lawyers have a broad range of specializations, ensuring that we have the experience to competently and professionally represent you.