At DBS LLP, we are frequently retained in disputes where one owner wishes to sell a jointly held property while others refuse. These cases often involve family-owned real estate, joint venture investments, or corporate-owned properties where a minority shareholder seeks an exit. A common question arises: can a 49% or otherwise minority interest holder force the sale of a property in Ontario? In many cases, the answer is yes – subject to contractual and equitable limitations.
The Partition Act: Statutory Right to Seek Sale
In Ontario, co-owners of land may seek relief under the Partition Act. Section 2 grants any person with an interest in land (even a small fractional interest) the right to apply to the court for partition or sale. When the property cannot reasonably be divided, the court may order a sale and distribution of proceeds. The courts have repeatedly affirmed that the remedy is presumptive: the court will generally order the sale unless it is shown that the application is brought in a manner that is malicious, vexatious, or oppressive.
Minority Interests and Standing: Even 1% May Apply
There is no threshold ownership percentage required to bring an application. Whether an owner holds 99%, 49%, or even 1%, they may pursue partition and sale. What matters is legal title. The court does not assess relative bargaining power but rather the existence of a legal interest. Arguments that the applicant is a “minority” seeking to pressure the majority rarely succeed unless there is clear evidence of bad faith. The remedy is designed to ensure that no co-owner can be indefinitely compelled to remain in a co-ownership against their will.
Joint Tenants vs. Tenants in Common
Most dispute scenarios involve tenancy in common, where each party holds a defined share. Joint tenancy, common among family-owned properties, carries survivorship rights but still permits an application for sale if severed. Before bringing an application, we examine the form of title, as severance or rectification may be necessary. The form of ownership determines how proceeds will be distributed should the property be ordered sold.
Contractual Restrictions: Co-Ownership and Shareholder Agreements
Not all properties are held by individuals directly on title. Many investment properties are held through corporations, partnerships, or co-ownership agreements. In those cases, remedies may not be governed solely by the Partition Act. If the property is owned through a company, a shareholder holding a 49% position does not have a direct property interest and therefore cannot seek partition. The appropriate remedy may instead lie in the oppression remedy under corporate legislation or via enforcement of buy-sell provisions in a unanimous shareholder agreement or co-ownership contract. Courts will generally enforce binding agreements that set out dispute resolution mechanisms, including rights of first refusal, shotgun provisions, or mandatory buyout clauses.
Arbitration and Contractual Dispute Mechanisms
Many sophisticated co-ownership and joint venture agreements contain arbitration or alternative dispute resolution clauses. Before seeking judicial sale, we assess whether the agreement displaces the court’s jurisdiction. Under the Arbitration Act, 1991, the court will stay proceedings if the parties have contractually agreed to arbitrate disputes, including disputes concerning the sale or forced buyout of a property interest. Commencing an application in breach of such an agreement may result in dismissal or cost sanctions.
Court’s Discretion to Refuse: Bad Faith and Oppression
While the courts presume in favour of sale, they retain discretion to refuse where the application is brought for an improper purpose. For example, if a minority owner seeks partition solely to damage the majority or disrupt a revenue-producing property where reasonable exit mechanisms exist, the court may view the application as oppressive. The burden rests on the respondent to prove such conduct. Mere refusal to sell or disagreement over value is insufficient.
Interaction with the Construction Act and Revenue Properties
In cases involving income-producing or development properties, parties sometimes assert competing claims under the Construction Act, particularly if lien claims or set-off disputes exist. While construction liens do not preclude partition, courts may defer sale until underlying financial disputes are resolved. We carefully assess whether parallel proceedings or accounting orders are required before seeking liquidation of the asset.
Practical Outcomes: Buyouts, Listings, and Court Supervision
In practice, many partition disputes are resolved through negotiated buyouts rather than court-ordered sales. A respondent may seek to purchase the applicant’s interest at fair market value, or the court may direct an appraisal and supervised auction. Where the parties cannot agree on value or process, the court may appoint a trustee to list the property for sale through a realtor. The court’s priority is commercial reasonableness, not punishment.
Conclusion
A minority or majority owner of a property in Ontario has a powerful statutory right to seek partition and sale. Ownership percentage does not bar relief. However, contractual agreements, corporate structures, and equitable considerations may alter the path to exit. At DBS LLP, we evaluate the form of title, the existence of governing agreements, and the strategic implications of invoking the Partition Act or other statutory remedies. We pursue these applications with a view to forced sale, negotiated buyout, or corporate restructuring, depending on our client’s strategic objective. Where co-ownership has become untenable, the law does not compel continued partnership.
If you are involved in a dispute over the sale of jointly owned property or require advice on pursuing or defending an application for partition and sale, you may contact Prabhjot Singh Badesha in the Real Estate Litigation Group at DBS LLP for guidance on strategy, valuation disputes, forum selection, and court proceedings under the Partition Act.
