In British Columbia, people who own real estate generally have broad rights to manage or sell their property as they see fit. However, disagreements can arise when two or more individuals share ownership of a property, especially when it comes to selling. A common flashpoint involves one co-owner wanting to sell while the other does not.
Legal intervention may be required when co-owners cannot agree on selling a property. In these situations, the party seeking a sale can ask the BC Supreme Court for an order under the Partition of Property Act.
Co-Ownership and the Partition of Property Act
The Partition of Property Act gives courts in British Columbia the authority to force the division or sale of jointly owned property. It provides a legal remedy when one or more owners want to sell but cannot reach an agreement with the other owner(s).
One of the most critical aspects of an application under the Partition of Property Act is whether the person bringing the application has standing (their right to ask the Court for relief). If the applicant does not meet the legal requirements to bring the case, the Court may dismiss the petition without ever reaching the merits of the dispute.
A recent decision of the BC Supreme Court in Jackson v. Vetter illustrates the importance of standing in cases involving co-owned property.
Residential Condo With Two Owners at Centre of Dispute
In Jackson v. Vetter, two individuals jointly purchased a residential condominium in September 2020. Their ownership arrangement was governed by two key agreements: a bare trust agreement and a co-ownership agreement.
Under the bare trust agreement, the petitioner (Jackson) was listed as the registered owner of the property, but only in a trustee capacity. The petitioner and the respondent (Vetter) were beneficial owners, each holding a 50% interest as tenants in common. The agreement authorized the petitioner, as trustee, to manage the property on behalf of both parties.
The co-ownership agreement imposed further rules. Both owners must agree in writing on all major and minor decisions affecting the property. It also outlined a shared responsibility for property-related expenses and required each party to act cooperatively and in good faith.
Breakdown in the Relationship Between Co-Owners
For about two years, the co-ownership proceeded smoothly. However, by late 2022, the relationship between the parties began to deteriorate. The petitioner wanted to sell his 50% interest in the property based on a valuation of $520,000. The respondent, however, was not interested in a sale to an outside party. He was open to buying the petitioner out, but the petitioner declined. His goal was not to transfer the interest to his co-owner but to sell his share on the open market.
The respondent pointed to the bare trust agreement, preventing either party from selling the property unilaterally. This impasse led to further conflict.
Temporary Resolution Falls Apart
In March 2023, the parties agreed to sell the property and retained a realtor to list it. After three months with no acceptable offers, the respondent informed the petitioner that he would seek a new tenant to help cover mortgage payments. The petitioner objected, insisting the property remain vacant and listed for sale.
Despite the objection, the respondent signed a two-year lease with a new tenant in August 2023. His lawyer then advised the petitioner to remove the property from the market, given the new tenancy. In response to the ongoing dispute, the petitioner disagreed and filed a petition seeking a court order for sale under the Partition of Property Act.
Seeking an Order for Sale
In his application, the petitioner asked the Court to order the sale of the property under section 6 of the Partition of Property Act, which provides that a court must order a sale when a majority of owners request it, unless good reason exists not to do so. Since the property had only two owners, each with a 50% share, the question of majority did not apply. Still, the petitioner hoped the Court would grant the sale on equitable grounds.
The respondent opposed the petition, arguing that the petitioner lacked standing to bring the claim. The respondent contended that without proper standing, the Court had no jurisdiction to order a sale.
Understanding Legal Standing Under the Partition of Property Act
Standing refers to a person’s legal right to initiate a lawsuit or court application. To have standing, a party must show a sufficient interest in the subject matter of the dispute and a connection to the issues being litigated.
The courts have interpreted this requirement narrowly in the context of a petition under the Partition of Property Act. The party applying for an order of sale must not only be a legal or beneficial owner of the property butt also have the right to immediate possession of it.
If the property is rented out to a third party under a valid lease, and the owner cannot guarantee vacant possession, they may be barred from seeking a court-ordered sale.
Rental Agreements and Their Impact on Standing
This restriction often applies in residential real estate situations where a property is subject to a lease that automatically renews month-to-month. Under British Columbia’s tenancy laws, a tenant in good standing cannot simply be evicted because an owner wants to sell.
As a result, if a tenant occupies a co-owned property under such terms, the owners may not legally be able to provide vacant possession to a future buyer. This can disqualify them from seeking a sale order under the Partition of Property Act.
No Standing Due to Tenant’s Exclusive Right of Possession
The central issue in Jackson v. Vetter was whether the petitioner had standing to request the sale of the property, given the new lease entered into by the respondent. The lease, signed in August 2023, allowed the tenant to occupy the property for two years and included an automatic renewal on a month-to-month basis. It also gave the tenant the right to renew for another two-year term.
The Court found that the lease gave the tenant the exclusive right of possession. Since neither the petitioner nor the respondent could guarantee that the tenant would vacate the property, except in the event of a lease breach, they did not have the legal right to take back the property or ensure it would be vacant for a future buyer.
Because of this, the Court concluded that neither co-owner had standing to bring an application for sale under section 6 of the Partition of Property Act. The petitioner’s application was dismissed for lack of standing.
Key Takeaways for Co-Owners of Property in BC
The Jackson v. Vetter case offers important lessons for individuals who co-own property in BC:
- Understanding the standing requirement under the Partition of Property Act: You must have standing to seek an order under the Partition of Property Act. This means being a co-owner with the right to immediate possession of the property.
- Leases can complicate or even prevent court-ordered sales: If a tenant has a valid lease, particularly one with renewal options or automatic month-to-month terms, the co-owners may not be able to satisfy the legal requirements for vacant possession.
- Disagreements should be resolved before renting out a property: Entering into a long-term lease without mutual consent can limit future legal options, especially when selling the property is on the table.
- Legal advice is essential: Co-ownership disputes are complex, and agreements like bare trusts and co-ownership contracts carry significant legal consequences. Consult a property litigation lawyer early if conflicts arise.
Meridian Law Group: Vancouver Property Dispute Lawyers Providing Experienced Partition of Property Advice
British Columbia’s Partition of Property Act is a valuable legal tool for resolving ownership disputes, but it comes with strict requirements. The innovative real estate litigation lawyers at Meridian Law Group understand how leases, possession rights, and co-ownership agreements intersect in BC. The firm helps clients navigate complex property disputes involving multiple owners of real estate and partition of property-related conflicts. To book a consultation, please call (604) 687-2277 or contact us online.
