So you have broken up with your partner, moved out and want to sell the house you purchased together. If you can both agree to list the house and split the profits, if any, that’s great. But all too often, one person doesn’t want to sell the house and also doesn’t have the funds to buy the other co-owner out. The other problem may be that they can’t afford the mortgage payments on their own.
Situations like this can lead to foreclosure by the banks because one co-owner stops paying and the other co-owner refuses to or simply can’t make the mortgage payments on their own.
So what can an owner do to avoid foreclosure?
One option is to allow one co-owner to stay in the home by re-financing the property and buy out the other owner’s share. In many cases, one co-owner will not qualify for a mortgage based on their income alone and therefore can’t take you off the mortgage. If the co-owner doesn’t agree to sell the house, you can apply to the court to have the home sold under the British Columbia Partition of Property Act.
The Partition of Property Act provides that a co-owner can apply to court for an order that the property be partitioned. Actual partition of the property is usually not a practical solution, and therefore under Section 6 of the Act, the court can direct the sale of the property instead of actually partitioning it.
Unless there is “good reason to the contrary”, the court will order the sale of the property. The courts can also provide direction as to how the sale will be done and the way in which the proceeds will be dealt with.
In situations where a spouse wants to sell the family home, the Family Law Act of BC provides for the division of family assets. The division takes place upon a divorce, annulment or declaration by a court that there is no reasonable prospect of reconciliation between the parties. If you were married spouses, you must apply to divide family property or debt no later than two years after you get an order for divorce. If you were unmarried spouses, you must apply within two years of the date on which you separated.
It is always in the best interests of owners to come to an agreement and avoid having to go to court. However, a court ordered sale may be your only option when trying to end a shared property ownership and to avoid foreclosure. If the banks foreclose on your home, not only will your credit be negatively affected for years, you may also miss out on any equity that may be in your home.