We all go into business and land partnerships with the best intentions. Many of these arrangements are profitable and offer new ways to finance the purchase of real estate and build businesses.
Unfortunately, these plans can backfire and interests you sought to advance can become severely threatened. Co-ownership of real estate is one example where this can occur. Despite previous agreements, you may be forced to bear more of the expenses to hold the property (e.g. mortgage payments, taxes, utilities, insurance, strata charges) because of the default of your co-owner. Conversely, if rent or other payments are being received by your co-owner for the use of the property and he or she is not paying you your proportionate share, you are likely suffering a loss of income again as a result of the default of the co-owner.
Fortunately, there are legal remedies available to address these kinds of problems. One set of remedies is set out in sections 13, 13.1 and 14 of the British Columbia Property Law Act. Here is a summary of the law and how you can seek relief.
Remedies for Unpaid Expenses
Section 13 of the Property Law Act states that when a co-owner fails to pay all of their share of the expenses of owning a property, another co-owner who has to step in and cover those unpaid expenses can apply to the Supreme Court of B.C. for relief under section 14.
Once the Court determines the amount by which the co-owner is in default, Section 14 allows the Court to make an order giving the applicant a lien on the defaulting co-owner’s interest in the property. The Court can also order that if the amount in default is not paid within 30 days of service of the order or some other time period set by the Court, the defaulting co-owner’s interest in the land can be sold pursuant to the Rules of Court governing the Court ordered sale of land. If a sale of the defaulting co-owner’s interest in the property is ordered, the Court can also make an order allowing the applicant to purchase the interest in the land of the defaulting co-owner.
Remedies for Unpaid Revenues
Under section 13.1, a co-owner who has not been paid their fair share of the revenues received as a result of owning the property may bring an ‘action of account’. If the Court finds on the evidence presented that an accounting is warranted, the Court will direct that a hearing type place, typically before a Court official called a registrar, to make a determination of the exact amount due.
The registrar’s determination is also typically referred back to a judge of the Court for approval. If the registrar’s determination is approved, a Court order granting judgment in that amount would be issued against the defaulting co-owner. That judgment can also be registered against the title of the co-owner’s interest in the land and if unpaid, it is possible to apply for its court ordered sale.
Other Remedies Where a Co-owner Is in Default
The relief afforded co-owners under the Property Law Act is not the only legal remedy available where co-owners are in dispute and cannot resolve their differences amicably. A co-owner of land who is dissatisfied with their working relationship with another co-owner should first consult any agreement that they have with that co-owner. That agreement may stipulate how disputes are to be resolved. For example, if the agreement contains a clause referring all disputes to arbitration, then an arbitrator may have to be appointed to arbitrate the dispute.
In addition, the British Columbia Partition of Property Act allows for a unhappy co-owner to apply to the Court for an order compelling the sale of land in certain circumstances. If such an order is made, an accounting may also be ordered to resolve any outstanding disputes between the co-owners about the sharing of expenses and revenues.
Property litigation is a complex area of law and you may require legal assistance. The lawyers at McLarty Wolf are experienced in helping landowners resolve their disputes effectively. Contact our office today to arrange for a consultation.