Inheriting a Cottage With Siblings in Ontario: Keep It or Sell It?

A cottage can hold decades of memories, and that is exactly why it causes friction when siblings inherit it together. One sibling may want summers there, another may need the money, and a third lives far away and rarely visits.

This article walks through how co-ownership works, the early decisions about costs and use, the options for keeping or selling, and what the law allows if you cannot agree.

First, the estate has to be settled

Before the cottage is in your names, the estate trustee has work to do. Their duties are to wind up the deceased's affairs, pay taxes and debts, collect assets and distribute the residue to those entitled.

Probate is normally required if the deceased owned real property that does not pass to another person by right of survivorship. If the real property must be sold, a certificate should be obtained before anyone signs an Agreement of Purchase and Sale.

The estate pays Estate Administration Tax, and Ontario real estate counts at its appraised date-of-death value, minus encumbrances such as mortgages or liens. The deceased is also treated as having sold the cottage just before death, so tax on any gain is reported on the final return. These costs can affect how much the estate has to work with.

How siblings hold title

Ontario co-owners hold title as joint tenants or tenants in common. When a tenant in common dies, their share becomes part of their estate. When a joint tenant dies, the surviving co-owners inherit the share.

This matters for the next generation. If one sibling dies, their children may or may not receive their share, depending on how title is held. Siblings who plan to keep the cottage for years should find out how title will be registered and what that means for each family.

Agreeing on use and costs

Many disputes are about everyday things, not the big decision. A written co-ownership agreement can cover these points before they become fights. A lawyer can help draft one that fits your family.

• Who pays property taxes, insurance, utilities and repairs, and in what shares.
• How summer weekends and holidays are shared.
• Whether family members, guests or renters may use the cottage.
• What happens if one sibling cannot pay their share.
• How major decisions are made, such as renovations or a sale.
• What happens if someone wants out: a right to buy first, a valuation method and a timeline.

If a surviving owner does not pay municipal taxes, the municipality can register a tax arrears certificate. Anyone can cancel the sale by paying the cancellation price within one year after registration, after which the land must be offered for sale by public auction or tender unless there is an extension agreement. Keeping taxes current protects everyone.

Your options and what happens if you cannot agree

Under the Partition Act, co-owners, whether joint tenants or tenants in common, can be compelled to partition or sell. Where land passed by will or intestacy, no proceeding may start until one year after the death of the person in whom the land was vested.

The Court of Appeal has said joint tenants have a prima facie right to force a sale. The onus is on the party resisting the sale to show the property should not be sold. A court may refuse a sale only where it is satisfied that the party seeking the sale is acting in a malicious, vexatious or oppressive fashion.

In one case, the trial judge rejected the argument that the resisting owner's age and illness justified refusing a sale. The order let that owner buy out the other co-owner first, with a sale to proceed if she was unable or unwilling to buy. How a buyout compares with a court process in your situation depends on the facts, so it is worth confirming with a lawyer.

What to do next

• Confirm who the estate trustee is and what the estate must pay before distribution.
• Get the cottage appraised as of the date of death.
• Ask an accountant about the tax on the final return and your cost base.
• Find out how title will be held and what that means for each sibling's share.
• Hold a family meeting and write down who wants to keep, buy or sell.
• Have a lawyer draft a co-ownership or buyout agreement before anyone spends money on the property.

If talks stall, a lawyer can explain where you stand before anyone starts a court proceeding.

Frequently asked questions