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Unexpected Result: When You Can’t Sell your Own Property after a Separation

In a recent decision, Benias v Lee, 2021 BCSC 2312, the B.C. Supreme Court rejected the claim of a co-owner to compel the sale of her jointly owned property.

The parties lived together in a marriage-like relationship for about 5-6 years (the date of separation was disputed).  They were registered as joint tenants in a property in North Vancouver.  The parties initially lived in the Property but by 2012, they began to rent it out to tenants.  The Petitioner had contributed three times more to the purchase price of the Property than the Respondent and the parties obtained a mortgage for the balance of the purchase price.  They separated in either 2013 or 2014.

After the separation, the Petitioner repeatedly asked the Respondent to sell the Property.  The Respondent resisted.  He declined to buy out the Petitioner’s interest in the Property and declined to agree to a sale.  Finally, in September, 2020, the Petitioner hired a lawyer to compel the sale of the Property.

In the meantime, the current tenants had been renting the Property since 2014.  They signed several standard Residential Tenancy Act agreements, the most recent of which was in September 2020.  The agreement provided that the term was one year ending August 31, 2021, but at the end of the term, “the tenancy would continue on a month-to-month basis, or another fixed length of time, unless the tenant gives notice to end tenancy at least one clear month before the end of the term”.

Partition of Property Act and Immediate Right of Possession

Under B.C.’s Partition of Property Act, R.S.B.C. 1996, c.347, in order to have standing or the ability to even bring the court action, a co-owner must have an immediate right of possession of the land.  In this case, as the Property was rented out, the Court examined the Residential Tenancy Act, S.B.C. 2002, c. 78 and noted that the ability of a landlord to terminate a residential tenancy was limited (for example, a landlord could terminate for non-payment of rent, for cause, for a landlord requiring the use of the property for itself or a close family member, or for end of employment with the landlord if the tenant was a caretaker of the property).  None of the allowed grounds for termination of the tenancy agreement by the landlord was applicable in this situation.   This meant that neither the Petitioner nor the Respondent had a right to immediate possession of the Property.

The Petitioner’s claim was dismissed as she did not have standing to bring her claim.

What could the Petitioner have done?

As the parties were in a common law relationship for more than 2 years, the Family Law Act, S.B.C. 2011, c. 25 could have assisted the Petitioner had she brought her claim within two years of separation.  The Family Law Act may provide an alternative route for sale since it does not require that the parties have a right to immediate possession of the Property.

Therefore, it is important to deal with all jointly owned property and debts as soon as possible after a separation, and in any event, if no agreement is reached, a court action must be started not later than 2 years after the separation.  Failure to do so will, in some cases, result in one of the spouses being unable to access his or her equity in jointly owned property if the other party refuses to sell.

If you have any questions about jointly owned assets or debts after you separate, contact Lana K.L. Li at lli@kornfeldllp.com or 604-331-8309 to discuss how you can protect your rights.

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