Forcing the Sale of an Inherited Property Co-Owned With Family Ontario

It is common for a parent's house or cottage to pass to several family members together. One sibling wants to cash out, another wants to keep the property, and a third will not answer the phone. Without agreement, everyone is stuck owning something together.

Ontario law has a tool for this: an application for partition or sale. This article explains in plain language who can use it, how courts have approached it, what timing rules apply after a death, and what to think about before you start. It is general information, not advice on your particular family or property.

Who can ask the court to order a sale

Under section 2 of the Partition Act, co-owners can be compelled to partition or sell, and that covers both joint tenants and tenants in common. Partition means dividing the land physically. Sale means selling it and sharing the money. For a single house or a typical cottage, sale is usually the practical outcome.

How the owners hold title matters for other reasons too. When a tenant in common dies, that person's share becomes part of their estate. When a joint tenant dies, the surviving co-owners inherit the share. So before anything else, check the title documents to see who actually owns what, and whether any share is still sitting in a deceased person's estate.

The one-year wait after a death

If the land passed by will or intestacy, the Partition Act says no proceeding may start until one year after the death of the person in whom the land was vested. In practice, a sibling who is frustrated three months after a funeral generally cannot start a partition application yet.

That year is not wasted time. It is a window to get the estate organized, find out what the property is worth, and talk about options such as one owner buying out the others. Whether the one-year rule applies to your situation depends on how the land came to you, so confirm that with a lawyer.

How courts have approached these requests

In Inniss v. Blackett, 2022 ONCA 166, the Court of Appeal said joint tenants have a prima facie right to force a sale under section 2 of the Partition Act. The onus is on the party resisting the sale to show that the property should not be sold. In other words, the person who wants to keep the property has the harder job.

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. Simply disliking the timing, or being attached to the home, is not the same thing.

The same case shows how courts can soften the result. The trial judge rejected the argument that the resisting owner's age and illness justified refusing a sale. Instead, the order let that owner buy out the other co-owner first, with the sale to proceed if she was unable or unwilling to buy. A buy-out opportunity before a sale is therefore one realistic outcome to keep in mind.

• If you want out: expect that you may be entitled to a sale, but be ready for the other owners to propose a buy-out first.
• If you want to stay: be ready to show why a sale should not happen, and think about whether you can finance a buy-out.
• Either way: an agreement among the family is usually faster and cheaper than a contested application.

Estate steps that can affect a sale

If the property is still in the deceased's name, the estate has to be dealt with first. Probate is normally required if the deceased owned real property that does not pass to another person by right of survivorship. If real property must be sold, a certificate should be obtained before anyone signs an Agreement of Purchase and Sale.

The estate trustee's role is to wind up the deceased's affairs, pay taxes and debts, collect assets and distribute the residue to those entitled. Where a certificate is needed, the estate pays Estate Administration Tax. For certificates applied for on or after January 1, 2020, it is $0 per $1,000 on the first $50,000 and $15 per $1,000 on the rest, and Ontario real estate counts at appraised date-of-death value, minus encumbrances such as mortgages or liens.

If the deceased had no will, the spouse or common-law partner usually has first right to apply to administer the estate, and otherwise a close adult relative can apply. Disagreements about who should act can delay everything, so it is worth sorting out early.

Tax points for inherited property

On death, the deceased is treated as having sold all their property just before death. Any gain or loss is reported on Schedule 3 and line 12700 of the final return. The deemed proceeds are the fair market value of capital property on the date of death.

A cottage is personal-use property, and a loss on it generally cannot be claimed. A property that qualifies as a principal residence must still be designated on the final return using Schedule 3 and Form T1255, and the deceased's designation applies only until the date of death. Only one property per family unit can be designated as a principal residence for any year after 1981, so a cottage designation can block the family house for those years. An accountant should review this before a sale is priced or listed.

What to do next

• Get a copy of the title and confirm whether owners are joint tenants or tenants in common.
• Find out the date of death and how the land passed to the current owners, since the one-year wait applies only where land passed by will or intestacy.
• Confirm whether probate is needed and whether a certificate must be in place before any sale.
• Get an appraisal so everyone is discussing the same number.
• Put any buy-out offer in writing and give the other owners a fair chance to respond.
• Ask an accountant how the deemed sale on death affects the final return.
• Speak with an Ontario lawyer before starting or responding to a partition application.

Frequently asked questions