21 Nov Brining an end to joint ownership of real estate
People who want to extricate themselves from joint-ownership of a property with a sibling, friend or family member who is not a spouse can do so simply and quickly, Barrie civil litigator Scott Hawryliw tells AdvocateDaily.com.
“Many of the cases I handle include cottages that parents handed down to more than one child or investment properties purchased by friends, he says. “These are not matrimonial homes, and as such, the same rules don’t apply.
“It’s really any situation where people bought property with someone who is not at arm’s length, like a friend or a cousin, or property inherited with a sibling,” Hawryliw says.
If a sale is desired by one of the owners, “the process involves bringing an application for a partition or sale under the Partition Act, and in most circumstances, it’s going to be granted,” he says. “Only in exceptional situations would the sale be prevented.”
That means if someone wants to get his or her money out of a jointly owned property and remove their name from the mortgage, they can do so quite easily, Hawryliw says.
“I don’t want to say a person has an absolute right to get out of jointly held property no matter what, but it’s pretty close,” he says. “An owner has a prima facie right to partition or sale. If someone owns a property jointly with someone else, and they don’t want to continue in that, they most likely have the ability to bring that joint ownership to an end.”
The courts will likely determine the owners didn’t work out their issues and an order to sell will be granted, Hawryliw says.
“These situations often start out with something that causes a fair amount of hostility between owners, and that can increase when the parties try to work it out themselves,” he says. “A partition and sale application is very straightforward and can be done quickly in most cases. It allows people to move on with their lives and gain access to the capital they’ve invested or are entitled to.”
If one party refuses to buy out the other, Hawryliw says he can launch a partition application quite quickly.
“We can normally have these applications before a judge to get an order for the sale in a matter of weeks,” he says. “If there’s no reasonable way to partition the property, the court will make an order to sell it,” he says.
Everyone who enters a joint ownership should have a contract, Hawryliw says.
“I’m a big fan of that, but it depends on the circumstances,” he says. “If you and your sibling inherit a property from your parents, you’re not usually going to have a contract. What I see quite often is that things are OK for a while and then there’s some sort of a falling out.”
One sibling may claim the ownership is 50-50, but the other may insist they paid a larger share of the mortgage, the taxes or other expenses, and, as such, wants a larger share of any sale earnings to offset the costs, Hawryliw explains.
“I often see someone with bad credit or without a down payment purchase a property with another person jointly, on title as an equal owner, despite the fact that the other person only provided their name for mortgage approval or a small initial down payment,” he says. “In cases like this, because that other person is on title as a joint owner, they have the right to bring a partition application to have their half bought out or to force a sale to liquidate the property.”
Hawryliw says when someone buys a property with another person as a co-signer on the mortgage, the co-signer can claim 50 per cent ownership, demanding either to have their half bought out or can force a sale to liquidate the property.
“These cases get very heated,” he says. “You’re doing this because you think family is helping you out by co-signing or, in extreme cases, even putting the title in your family member’s name completely while the real owner makes the mortgage payments through the family member’s account.
“People should be very careful when adding anyone to the title of their property, even if it’s a family member. The reality is that a mortgage company will often require a co-signer to be a co-owner and that a family member providing a downpayment might want the security of being a co-owner, but if the agreement is something other than what is reflected on title, you need to have a written contract setting out what the agreement between the parties really is,” Hawryliw says.
He says he is often asked if a contract is necessary when entering into these kinds of arrangements with family members.