Property ownership can be a sensitive issue in a territory with limited space like Bermuda where a single property can have a significant impact on many neighbouring properties. That can particularly be the case where the property is co-owned.
Title deeds typically specify the proportion of a property owned by each co-owner, if there is more than one owner. Parents often pass on property jointly to siblings and there may be grandchildren who may have children of their own, who in turn jointly inherit.
The more distant the co-owners' relationships, the harder it is for co-owners to agree on every aspect of coownership. Disagreement may be exacerbated if there are differences in co-owners' financial resources. Arguments can arise when expensive maintenance or repair is required, if a co-owner needs to raise money through a mortgage or another party requires a sale to release funds for other priorities.
A course of action required by one co-owner may be unacceptable to other co-owners. Often the most amicable solution is for co-owners to buy each other out but such is only possible if financial resources are available to the purchasing co-owner (in savings or by way of a mortgage).
If an agreement cannot be reached for a buyout, a property can swiftly fall into disrepair and become a burden for the co-owner willingly or unwillingly paying for upkeep. When a property decays, all co-owners can lose out; a higher rent may not be justified or potential tenants may be unwilling to rent at all.
Such disagreements can also affect the wider community since neglected properties become local eyesores and even public health hazards. Recently, there was publicity about a neglected property being a breeding place for mosquitoes and rats. Bermuda legislation known as the Partition Act 1855 and Partition Act 1914 ("Partition Acts") may offer a solution to aggrieved co-owners (but not to neighbours).
Before incurring litigation costs and facing the uncertainty of court outcomes however, co-owners should seek to agree as much as possible amongst themselves. A starting point is to contract a surveyor to value the disputed property and ascertain the possible value of respective co-owners' shares.
In the event of irreconcilable disagreement, the only solution may be to force a sale under the Partition Acts. Old family quarrels and emotional turmoil may prevail over common sense and the only practical solution may be litigation. Under the Partition Acts, the court can order a property to be subdivided into separate lots for each respective co-owner. However, if a property is too small for subdivision, a court is likely to order the property be sold and the sale proceeds be split between the co-owners.
Where co-owners are in dispute concerning their respective shares in the property, the court is empowered to consider all material factors before rendering a decision about the split of the sale proceeds. For example, the title deeds may say that all co-owners own in equal shares, however, in reality one co-owner may have paid the whole monthly mortgage payment for years while another lived on the property rent free but paid all the land tax. In such cases, the court may take into account the value of mortgage payments, rent free periods of occupation and land tax payments when ascertaining the size of each co-owner's share in the property.
In a recent Bermuda court case, a co-owner petitioned the court to partition a property co-owned with other members of her family. The court agreed to partition the property, taking into account that the other co-owners provided more than 80 per cent of the original purchase cost and satisfied several mortgages. In view of such payments, the court held that the requested one-third share of the estimated value of the property should be reduced to one-sixth. Upon payment of the one-sixth sum by the other co-owners, the petitioning co-owner was ordered to transfer her share of the property to the other co-owners.
A lawyer can often assist with a family dispute in advising on applicable law and by bringing the objectivity of an outsider to the relevant facts before such matters are considered before the courts.
Article first published in The Royal Gazette, July 2013
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
