Jointly owned properties can create legal problems if one owner wants to sell. Consider this example. A house or cottage is owned by two or more people. The owners may be family members or business partners. One of them wants to sell because there is a rift in the relationship, or for other reasons. The other owner will not agree to list the property for sale. What can be done?
People owning property jointly are not bound to the relationship forever. If a sale cannot be agreed upon amicably, there is legislation available to resolve the dispute. The Partition Act provides that any person who has an interest in land with another person may bring an application before court to order that the property be sold. The test is whether it is more advantageous to the owners that the property be sold rather than partitioned. The obvious example is a cottage shared by siblings who no longer get along. The cottage will be sold. The court’s discretion is only limited to cases where the applicant has behaved maliciously toward the other owner.
One weakness in this nineteenth century legislation is that there is no discretion to order a right of first refusal in the purchase of the property. Any owner wanting to own the property as sole owner must make an offer when the property is listed for sale in the open market. It is, therefore, prudent for such an owner to attempt to purchase the property from the other owner privately before the matter escalates into a court proceeding. Agreeing upon the market value of the property is often the stumbling block but, if market value can be settled, a successful purchase is net of real estate commissions.