Shared title to a property
June 2nd, 2013 by Questions
If a property has multiple equal share owners and one owner is declaring bankruptcy how does this affect the other owners of the property? Does the property have to be sold? Is the property lost to the other owners?
Posted from: British Columbia
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June 02, 2013 at 8:24 pm, A licensed trustee said:
When a person files for bankruptcy, the things that they own (their assets) are signed over to their trustee for the benefit of their creditors. The trustee is required to convert the assets into cash. If you own a piece of property, your trustee has to try an turn that property into cash. If you own a share in a piece of property the same rules apply.
So first, the trustee will determine if your “share” has any value. If it doesn’t have any value (perhaps due to a mortgage or other concerns) then it won’t be impacted by bankruptcy.
If it does have value your trustee will ask you if you want to “buy it back” by paying your trustee the fair value of the share. If you can’t afford to do so your trustee will ask the other people that own shares if they want to purchase your share. If no one is able to (or wants to) your trustee may have to apply to the court to request that the property be sold in order to recover your share’s value for your creditors.
There are options and in cases like this it you should work out exactly what the plan for the property is BEFORE you actually file. Either you or one of the other owners is going to buy your share, or the property will be sold. If you wait to work out a plan after you file then you may not be very happy with the outcome…