In today’s economy, shared ownership of a residential property may be the only way for some people to get their foot into the real estate market. Relationships of various nature may decide to purchase property together such as siblings, friends, parent-child, and business partners. Usually, the decision to purchase a property occurs when relationships are at their peak, but what happens when there is a breakdown in the relationship?

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We are seeing an increasing number of cases where two individuals purchase a property together with the intention to share and live in the property, but then over time the relationship begins to sour and eventually one of the co-owners moves out. At that point, either of the co-owners can apply pursuant to the Partition of Property Act, RSBC 1996, c 347 (the “Act”) to have the property sold and the net sale proceeds divided between the co-owners pursuant to their entitlement.

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The core purpose of the Act is to allow co-owners to apply to the court to physically divide (partition) or sell the shared property when owners can’t agree amongst themselves. Today, a sale of the property is the more common remedy than partition under the Act.

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Section 2 of the Act expressly states that an owner may be compelled to sell the property against their will. Section 6 of the Act goes one step further and says a co-owner that owns 50% or more of the property can apply to the court to have the property sold and the court must order the sale of the property unless there is good reason not to.

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The Act also provides recourse for co-owners that own less than 50% of the Property. In these cases, the court will give the co-owner that has a higher interest in the property a limited right of first refusal – giving them the option to buy out the share of the party requesting the sale.

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Where there is no issue concerning the co-owners’ interest in the property, the court will order the sale of the property unless the responding co-owner can demonstrate that there is good reason not to order the sale. Courts in British Columbia have outlined that personal inconvenience, “emotional attachment”, inability to buy a comparable property do not constitute good enough reasons to oppose a sale. On the other hand, serious hardship, lack of good faith, and there being an agreement in place between the parties restricting the sale may be sufficient for the courts to not order the sale.

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In addition to ordering the sale of the property, the Act provides the courts with the ability to make sure the profits from the sale are divided fairly. As such, both co-owners will need to present evidence to account for any expenses and revenues associated with owning the Property and advocate for how the net sale proceeds need to be adjusted accordingly.  

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Co-owning property can be a practical or profitable arrangement, but it can also lead to conflict – especially where personal or financial circumstances change. If you are in a co-ownership situation and are facing disputes over the use, division, or sale of the property, it’s wise to seek legal advice. A lawyer experienced in property law can help you understand your rights under the Act and guide you through the process of applying to the court if needed.