The client
Two friends who bought a $520,000 Port Alberni home together years ago, as joint tenants with no written co-ownership agreement at all, reached renewal with one wanting out.
Appraised home value
$520,000, Port Alberni
Existing mortgage balance
$310,000, at renewal
Co-ownership agreement
None ever signed
Held as joint tenants by default
Remaining friend's income
$8,900/month
Qualifying solo
The problem
Two co-owners who never signed anything setting out how an exit would work are, legally, in exactly the position British Columbia's own property law was written to resolve -- just not the way either of them actually wanted it resolved.
The right that was sitting there, unused
- ▸BC's Partition of Property Act, RSBC 1996, c.347 gives either co-owner an application to force a sale when co-owners cannot agree
- ▸That right does not depend on fault, hardship, or a written agreement first -- it is close to automatic absent a compelling reason for the court to refuse
- ▸Neither friend had ever discussed what would happen if one wanted out; the mortgage's own renewal was what forced the question
This was never a fight. But without an agreement, a fight was the mechanism the law would have defaulted to if a number couldn't be agreed quickly.
The numbers
Once an independent appraisal set a number neither friend was disputing, structuring the exit was straightforward.
| Pricing the exit before either co-owner had to file | Amount |
|---|---|
| Home equity | $210,000 |
| Departing friend's equal 50% share | $105,000 |
| New solo mortgage balance | $415,000 |
| Total debt service | Figure |
|---|---|
| Payment at the qualifying rate (6.90%), 21 years | $3,098/mo |
| Property tax + heat | $470/mo |
| Total debt service, remaining friend alone | 42.7% |
42.7% is close enough to the informal 44% reference point that a broker would want real margin confirmed before proceeding -- but it cleared, at a pace consistent with the timelines mortgage renewal statistics show most files actually move on. Getting an appraisal fast, before either friend proposed a number, is what kept this off a court docket.
The solution
A submortgage broker registered under BC's Mortgage Brokers Act treated the absence of a co-ownership agreement as the real risk in this file, not the mortgage math itself.
First, explained to both friends what the Partition of Property Act actually allows -- a near-automatic right to force a sale, available to either of them, the moment they couldn't agree on a number.
Second, commissioned an independent appraisal before either friend proposed a figure, removing the negotiation entirely from a process that could otherwise have turned adversarial.
Third, structured the remaining friend's solo refinance around the appraised buyout figure, resolving the exit by agreement well before the Act's own machinery was ever a live possibility.
The outcome
The refinance funded at 4.90% for a new $415,000 balance, with total debt service on the remaining friend's income alone at 42.7%.
Because this file is uninsured, CMHC's ratio maximums do not apply directly; the 42.7% figure is informational. Had either friend been unwilling to negotiate, the Partition of Property Act's own court process -- not this refinance -- would have set the timeline.
What to take from this file
- 01Two co-owners with no written agreement are relying entirely on the province's default property law if they ever disagree. In BC, that default is the Partition of Property Act's near-automatic right to force a sale.
- 02A written co-ownership agreement at purchase would have set the exit terms in advance. Ask any two unrelated co-buyers whether they have one -- most don't.
- 03An independent appraisal, obtained early, is what actually keeps a friendly exit friendly. Removing the number from negotiation removes most of the reason to disagree.
- 04This right is not unique to BC -- every province has its own partition statute. Confirm the specific act and its actual threshold for that province before assuming how automatic it is.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.90% contract rate — rates move daily; not a quote.
- ▸the equal 50/50 share — absent a written agreement, these two friends held as joint tenants with an equal presumed share; an unequal registration would change the split entirely.
- ▸the TDS figure — this is an uninsured buyout refinance, so there is no CMHC ratio ceiling -- the number is informational.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.