When disputes over the co-ownership of property arise and cannot be solved by discussions between the owners, an owner can seek an order from the Supreme Court of B.C. to have the property sold. The Partition of Property Act provides that an owner with a one half interest in the property can apply to force its sale and in most cases, in the absence of a written agreement or other good reason that precludes a sale, a sale will be ordered. In a case where the owner owns less than a one half interest in the property, the Act provides that he or she may still be able to require the property be sold, or at least force the other owners to buy them out at market value.
In its recent decision in Holman v Brooke, 2022 BCSC 526, the Supreme Court found good reasons to decline ordering a sale of a non stratified duplex home that served as the collective residence of two couples for over 20 years. The parties in question only shared a central wall and roof. The duplex was situated on two separate lots that were co-owned by parties. The wall separating the two suites in the duplex was located on the boundary between the two lots. Therefore one side of the duplex was located one lot and that the other side of the duplex was located on the other lot.
The court refused to order a sale because the property was readily divisible and there was great sentimental attachment to it by both parties. Instead, the court suggested a party wall agreement as a feasible means of separating the interests of the parties and allowing the respondent, who was resisting a sale, to remain in her home.
In finding that there were good reasons not to order a sale, the court differentiated between investment and residential property. It found that when properties are held primarily for investment purposes the ‘presumption’ is to order a sale when there is a dispute between the parties. Further, the court commented that value maximization is an important factor when ordering a sale of investment property but not in the case of residential properties.
The judge in this case found that both parties had a great emotional attachment to the property. They put all their money towards purchasing the property and invested considerable time and effort into renovating it. The ashes of their spouses and pets were spread on the property. Each party initially intended the property to be their ‘forever home’. The property was also situated in an accepting and open neighbourhood where the parties, who were both same sex couples, felt safe and welcome.
Secondly, the court emphasized the intention of both parties to treat the duplex as effectively separate properties until arrangements could be made to formalize the separation via a stratification process or other means. This intention was present from the time of purchase to the current dispute. It was further evidenced in the parties’ discussions and a draft agreement the parties never finalized surrounding the maintenance and division of the property.
The court also found that the respondent would suffer hardship if she were forced from the property. The respondent was on long-term disability due to a serious work accident. Her only income came from a disability pension. She also had chronic health conditions as well and was ordered to retire by her doctors. The court found that these factors prevented the respondent from being able to finance a purchase of the petitioner’s interest in the property or to buy a comparable property if a sale were ordered.
Lastly, the property had the unusual characteristic of being readily divisible. The separation of the parties’ interests could be affected through stratification or a party wall agreement. However, the stratification option was too costly for the parties as the duplex would have needed to be brought up to code before the municipal government would grant approval of the subdivision. Instead, the court suggested that the parties’ interests would be better served by a party wall agreement.
A party wall agreement sets out the rights and obligations between the parties in relation to the property. It can include common expenses such as roof maintenance and fire insurance. This agreement is then registered in the Land Title Office, which means that a third party purchasing one side of the duplex would be bound by its terms.
In this case the court found that a party wall agreement would be an ideal solution for the parties given that they were not in agreement as to the sale of the entire property and could not afford to stratify it. The petitioner’s application for an order for sale was therefore dismissed. Although the court held that it could not force the parties to enter an agreement, it suggested that if the respondent subsequently proved to be unreasonable in negotiating such an agreement, that might provide the basis for “future judicial intervention”. In other words, if the respondent placed unreasonable conditions on the negotiation of a future party wall agreement, the petitioner might be able to eventually force the sale of the entire property.
Discussions about conflicting interests in the same property can be difficult and result in conflict. If you are involved in a dispute over property and you are seeking to either force a sale or resist an application by a co-owner to sell a property, you should contact an experienced property law lawyer for guidance. To schedule a consultation with one of our land ownership lawyers, call McLarty Wolf today at 604-688-9542 or send us an email through our online contact form.