Partition And Sale Of Co-Owned Property In Ontario

Partition is the legal process that ends co-ownership of property when owners can’t agree on what to do with it. 

If you own property with someone else — a former spouse, family member, business partner, or anyone else — and you want out but they refuse to sell or buy you out, partition forces a solution.

Ontario’s Partition Act gives co-owners the right to ask the court to either physically divide the property (partition) or sell it and split the proceeds (sale). 

For most residential and commercial properties, physical division isn’t practical, so the court typically orders the property sold and the money divided according to each owner’s share.

Common situations where partition becomes necessary:

Relationship breakdowns: Former couples who jointly own a home but can’t agree on selling or one buying out the other.

Family disputes: Siblings who inherit property together but have different plans for it; one wants to keep it, another wants to sell.

Business partnership disputes: Former business partners who jointly own commercial property and can’t agree on its future.

Investment property disagreements: Co-investors with conflicting goals for the property’s use or sale.

Stalemate situations: Any scenario where co-owners are deadlocked and unable to move forward voluntarily.

Partition is often the last resort after negotiation, mediation, and buyout discussions fail. It provides a legal exit strategy when co-ownership has become unworkable.

While co-owners have a strong presumptive right to partition, the court has discretion to refuse in some circumstances:

Malicious, oppressive, or vexatious motives: If you’re bringing the application to harass or punish the other owner rather than genuinely wanting to exit co-ownership, the court may refuse your request.

Corporate ownership: If the property is owned by corporations rather than individuals, different rules apply and partition might not be available.

Tenanted property: If the property is occupied by tenants, the court must consider their rights and may structure the sale differently.

Agreement to the contrary: If co-owners signed a co-ownership agreement specifically waiving partition rights, the court might enforce that agreement instead.

Ontario courts have consistently held that a joint owner of property has a prima facie right to seek partition and sale under section 2 of the Partition Act.

In Lehto v. Dumonski, the Court confirmed several key principles governing partition and sale applications:

• A jointly owned property will generally be sold upon request by one owner.
  
• The burden falls on the party opposing the sale to show why the court should refuse the request.
  
• Judicial discretion to refuse a sale is narrow.
  
• Courts may deny a sale where the moving party is acting maliciously, vexatiously, or oppressively.

The dispute involved former spouses who jointly owned a home in Ontario. One party sought an immediate sale, while the other argued the property should not be sold until resulting trust and unjust enrichment claims were determined.

The responding party alleged he had funded nearly all of the acquisition, construction, mortgage payments, taxes, and carrying costs relating to the property. He argued that a premature sale could prejudice his claim that he held a greater beneficial interest in the home.

The Court agreed that, at this stage of the litigation, the ownership issues were not sufficiently clear to justify an immediate sale.

Importantly, the Court emphasized that while equitable claims do not automatically prevent partition and sale, a court must consider whether a sale would cause unfair prejudice before ownership issues are resolved.

The decision confirms that Ontario courts will closely examine several factors before granting an interim sale of disputed property, including:

• Whether the sale of the property is ultimately inevitable.
  
• Whether unresolved resulting trust or unjust enrichment claims could alter ownership interests.
  
• Whether sale proceeds can adequately protect the parties’ claims if held in trust.
  
• The financial prejudice to either party.
  
• The impact of the proposed sale on children and housing stability.
  
• Whether disclosure and documentary evidence remain incomplete.
  
• The timing of the proceeding and proximity to trial.

In this case, the Court found that the sale was not yet inevitable because the unresolved resulting trust claim could potentially eliminate or significantly reduce the other party’s ownership interest.

As a result, the motion for partition and sale was dismissed as premature.

Document everything: Keep records of all contributions — down payments, mortgage payments, renovation costs, property taxes, and maintenance expenses.

Get an appraisal: Obtain an independent property appraisal early to establish fair market value and support your position on distribution.

Maintain the property: If you’re occupying the property, keep it well-maintained to preserve value and show good faith.

Communicate in writing: Keep email records of all negotiations and offers to demonstrate your reasonableness if the matter goes to court.

Contact Pinto Shekib LLP at info@pintoshekib.ca or 416.901.9984 to schedule a confidential consultation about partition and sale applications or co-ownership disputes.