Real estate is often one of the most valuable assets one owns. Therefore, when it comes to property ownership, if more than one individual is involved, it is essential for the parties to understand their rights and obligations whether they purchase a property as joint tenants or as tenants in common. Joint tenancy is one form of property ownership widely used, but it often raises questions about the extent of control and decision-making power each joint tenant possesses.
This blog post explores an individual’s rights under a joint tenancy and tackles whether one joint tenant can order the sale of the property. This question touches on the balance between individual rights and the collective ownership of a property, making it a topic of interest and importance in real estate litigation.
Applicant and sister-in-law entered into joint tenancy agreement to purchase property
In Weise v. Weise, the applicant made an application under section 2 of the Partition Act directing that a property in Sault Ste. Marie be sold. When the property was purchased, the respondent in these proceedings was the applicant’s sister-in-law. The parties entered a joint tenancy agreement as the respondent and her husband (the applicant’s brother) did not qualify for a mortgage. As a result, they asked the applicant for financial assistance in purchasing the property. The applicant agreed to be the bare trustee of the property, with the respondent being the beneficial property owner.
On January 2, 2021, the respondent and her husband separated, with the respondent staying in the property alone. The applicant noticed mortgage payments had been taken out of her personal account as the respondent was allegedly not making prompt payments on the loan. As a result, the applicant requested that her name be removed from both the title to the property and the mortgage and that the property be listed for sale. The respondent refused.
After respondent’s separation, applicant’s bank account charged for mortgage payments
In an August 2022 affidavit, the respondent claimed she had communicated with the mortgage company about what was required to remove the applicant’s name from the mortgage and property title. In June 2021, without legal representation or a formal separation agreement, the respondent paid her husband (the applicant’s brother) $25,000 directly to finalize the division of assets due to their separation. She claimed this inquiry led her to understand that the mortgage company must be provided with the separation agreement before considering a request for refinancing.
Regarding the missed payments, the respondent claimed she did not know the new payment amount after the mortgage was transitioned to an open mortgage. Further, she had been working on establishing new bank accounts following her separation. In either case, she claimed she had paid back the funds taken from the applicant’s bank account in June 2021, and no money was outstanding.
The respondent alleged the applicant’s attempt to force the sale of the property was “both malicious and vexatious” due to her feelings towards the separation and was “using the joint tenancy legal title to cause her harm both emotionally and physically.” However, the Court did not accept this argument as evidence showed the applicant was “legitimately concerned about the payment of the mortgage.”
Applicant claimed sister-in-law still owed mortgage payments
The applicant claimed the respondent had only repaid a portion of the mortgage payments, and there was still an overdue payment of $3,329.37. Therefore, to ensure she would no longer be responsible for any mortgage-related costs or liabilities relating to the property, the applicant applied for an order to sell the property.
The respondent stated she had a connection to the property and sought to retain it as she had already paid her husband a “buy-out for all joint property” and had sought financing to transfer the home into her name. The Court found the respondent had “not moved with delay or been unreasonable.”
At the time of the hearing, the respondent had not advised the applicant about the status of the separation agreement or any steps she would take to address the issue. The applicant emphasized she had been patient with the respondent and highlighted that it had been one year since she had commenced the application.
Court rejects applicant’s request for sale of the property
In its analysis, the Court acknowledged the trust agreement did not include a term allowing the applicant to seek the sale of the property, nor did it provide that she would be entitled to any sale proceeds. The Court rejected the applicant’s argument that she had “all the rights, powers, and obligations of a joint owner”. Further, it disagreed that she has an interest in the property by being named a joint owner and/or having agreed to be a joint mortgagee.
Instead, the Court pointed to the fact that both parties confirmed the applicant was a bare trustee and had “no independent power, discretion or responsibility in connection with the property.” The Court further noted the trust agreement allowed the applicant to bring a claim against the respondent for indemnification; however, the respondent had settled her debts owing to the applicant.
As a result, the Court rejected the application seeking an order for the sale of the property, stating that “this application presents as the applicant putting the cart before the horse, to potentially satisfy a judgement that does not exist.” The Court acknowledged the respondent was working through the issues resulting from her separation. Once she can present the mortgage company with an executed separation agreement, the applicant may have her name removed from the mortgage and property title.
Contact Campbell Litigation in Kitchener-Waterloo for Trusted Representation in Real Estate Disputes
Buying and selling property is often one of the most significant financial decisions one will make, particularly when more than one party has an interest in a property. The experienced real estate litigation lawyers at Campbell Litigation regularly advise clients on their rights, responsibilities, and options for resolution when a dispute over the purchase or sale of a property arises.
Whether you are exploring your options following misrepresentation by a vendor or cannot secure funds to purchase a new home due to an aborted real estate transaction, contact us online or by phone at 519-886-1204 to learn how we can help you.