Forced Sale of Jointly Owned Property: Partition and Sale in Alberta
In Alberta, you can force the sale of jointly owned property. Section 15 of the Law of Property Act allows a co-owner of property to apply to the court for the sale or division of property. A co-owner is someone who is listed on title as a “joint-tenant” or a “tenant in common”.
On application to the court for the sale of the property, the court must do one of the following three things:
- physically divide the property between the co-owners (this is rare);
- order the sale of the land and distribute the net sale proceeds between the co-owners; or
- allow one of the other co-owners to purchase the other co-owner’s interest.
Typically, the court will first give other co-owners the opportunity to purchase the selling party’s interest. This is totally optional to the other co-owners. They have to want to purchase the selling party’s interest and will not be forced to do so. They will also need to qualify to purchase the property on their own, or with an alternative co-signor.
If the co-owner is unwilling or unable to purchase the selling party’s interest, then the court will order the sale of the property on the open market. The court will oversee the terms of the sale. This means the court can set the listing price, direct which real estate agent will list the property and make directions for the other co-owner’s cooperation in selling the property (things like a requirement to maintain the property in a saleable condition, to sign any and all documents required by the listing agent and to allow access to the property for appraisals, showings, repairs etc.)
If the co-owners can’t agree on the distribution of the net sale proceeds once the property is sold, then the proceeds will be paid into court or held in a lawyer’s trust account until further order of the court or agreement between the parties. In Alberta, the starting point is an equal division of the net sale proceeds. The party claiming an unequal division of the proceeds has the burden of establishing why the proceeds should not be split equally. The court will consider the following factors when deciding whether to order an unequal distribution of the proceeds:
- whether one co-owner has excluded another co-owner from the property;
- whether one co-owner has received more than their just share of revenue from the property (i.e. rental income);
- whether a co-owner has committed waste by an unreasonable use of the land; and
- whether a co-owner has made improvements or capital payments that have increased the realizable value of the land.
The above factors are listed in section 17 of the Law of Property Act and are not exhaustive. The court will consider various additional factors depending on the specific circumstances of each case before it.
The Alberta courts have acknowledged that non-financial contributions are relevant and worth something. Non-financial contributions can be things such as maintaining the home or pledging one’s credit to obtain the home in the first place (by co-signing for the mortgage).
Finally, the Alberta courts have held that in family circumstances (not necessarily marital circumstances, but situations of relatives such as siblings, parent/child and cousins) that a detailed financial audit of each party’s financial contributions is not required. To obtain an equal division of the proceeds, it is enough to show that each co-owner contributed to the property significantly.