Family Health Legal Library

Real Estate Issues

What Should You Do?

The section on small claims shows details on how to obtain information which can give you the confidence to stand up to the neighbor and to pursue your legal rights if necessary - all for a fraction of the amount which you might otherwise lose.

3. Joint Ownership Disputes

Often, joint purchases of property commence with the best intentions. For example, a girlfriend may lend her boyfriend his share of the down payment, so they can purchase a condominium jointly. Later the relationship turns sour, and one needs the cash and wants to sell the condo. The other resists, claiming it is appreciating and will be worth a lot of money if it is held for two more years.

Similarly, parents might lend their daughter and her husband money to purchase a house. The couple separate a year later. One person wants to sell, the other does not.

These are two examples of common transactions involving joint ownership. In each case, reasonable people may have varying ideas on the future of the property; and neither is wrong.

How are these disputes resolved? Courts usually apply general principles of real property. Often the results do not seem fair. Most court decisions are based on the fundamental principle that the owner, or co-owner, of a piece of property can sell, encumber, assign, give, devise, or bequest his/her share of the property without regard to the other person's interest.

Thus, in Example 1, the person needing cash can sell his/her interest to a third party without obtaining the approval of the co-owner, unless such a sale is prohibited in the original joint purchase agreement. The original co-owner would thus end up with a co-owner he/she did not even know or trust.

In Example 2, the daughter could also become a co-owner of property with someone that she does not know, if her separated husband sells his interest to another person.

There are certain rules of property ownership that will apply to limit this right of transfer, at death, for example. Courts will not hesitate to uphold this general rule, despite the unfair consequences.

Again, as is the concern of this discussion, the way to prevent this type of occurrence is to avoid it from the beginning. Thus, if you decide to become a joint owner in a piece of property, you should enter into a properly drafted agreement with your co-owner, which clearly sets forth how these issues will be resolved. For example, such an agreement might contain a right of first refusal, whereby the co-owner who does not wish to sell will have the right to purchase the co-owner's interest, to prevent the sale of property to another, unknown or undesired third party. Whenever such a co-owner purchase is contemplated, it is advisable to spend a few hundred dollars to have a document properly drafted and have a lawyer fully explain the consequences of such ownership.

Saving thousands of dollars in legal fees in the future may, in this case, be the least of your worries, when you find yourself living with an unknown third party and his/her relatives and guests, and you stand to lose many tens of thousands of dollars in your real estate investment.

Real Estate Issues
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