Partition of Property and Party Wall Agreements

Where a property is jointly owned and the owners cannot agree on whether to sell it or not, the Partition of Property Act allows the owner who wants to sell to apply to the Court for an order that the property be sold. Where the owner who wants to sell the property has at least a 50% interest in it, section 6 of the Act says that the Court must order the property sold unless there is a good reason not to do so.

Holman v. Brooke, 2022 BCSC 526 is an interesting case under section 6 and demonstrates what can constitute good reasons not to sell a property.

In Holman, two couples had bought a property in East Vancouver. The property comprised a single house situated on two lots and divided into two half-duplexes. The property line between the two lots ran right down the middle of the house. Both couples owned the property as tenants-in-common and each lived in their half of the duplex. Sadly, one member of each couple had died and, subsequently, the remaining owners had a falling-out. One, the petitioner, moved out of the property while the other, the respondent, continued to live in her half of the duplex.

The petitioner had financial difficulty maintaining her new residence as well as her share of the property. She asked the respondent to sell the property, but she disagreed. As such, the petitioner made an application under section 6 of the Partition of Property Act to have the property sold.

The respondent opposed the application. She argued that to force the sale of the property would have the effect of evicting her from the home she shared with her deceased spouse and the one in which she had always intended to live the rest of her life in. Furthermore, the respondent pointed to her inability to work and limited financial resources to find a comparable home, the comfort she found in the property and community, and the proximity of the property to her care providers as reasons why the Court should not order the sale.

After a detailed analysis, the Court sided with the respondent and did not order the sale of the property. In addition to accepting the reasons put forth by the respondent, the Court found that the property could be legally divided into two lots by way of a “party wall agreement”. A party wall agreement can be used to legally divide a property where stratification is not possible or feasible. Essentially, under a party wall agreement, each party would transfer their half-interest in the other’s lot to the other such that each would own their own lot in its entirety. At the same time, they would enter into an agreement setting out their respective rights and obligations regarding the property. The agreement would then be registered with the Land Title Office and either party would be free to sell their now wholly-owned lot to a third party.

Despite the petitioner’s retort that a party wall agreement would devalue the property, the Court found that realizing the greatest possible value from the property was not a relevant consideration. A party wall agreement, in the Court’s view, was a feasible way to separate the interests of the parties, allowing the petitioner to sell her interest while also allowing the respondent to stay in her home.

Although the Court could not impose a party wall agreement on the parties, it strongly encouraged them to enter into one. In dismissing the petition, the Court did note that, if the respondent unreasonably refused to enter into a party wall agreement, that could form the basis for another application by the petitioner that the property be sold.

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