It is quite common for individuals to purchase property with a family member, friend or a loved one whether it be for residential or investment purposes. Given the increasing property prices which are making it less affordable to live in major cities such as Sydney, many people are opting to combine their buying power to be able to afford to reside in more desirable areas.
Although a lot of the times these arrangements do not cause any major disputes between parties, there are times where co-owners are simply unable to agree on a proposed course of action, resulting in property disputes. In our experience, property disputes between co-owners tend to arise when one party no longer wants to be a co-owner, due to a change in their financial or personal position, or simply due to a personal preference, and wants to sell their interest in the property.
Often, this can lead to arguments over agreeing when the property will be sold, at what price the property will be sold, the method it will be sold (privately or at an auction), and deductions that will be made from the proceeds of the sale.
Another example is where the other co-owner is withholding information relating to the property, or is not accounting to you for your share of the rental proceeds, or the relationship has simply broken down to the point where you are unable to meaningfully cooperate with one another as co-owners.
This is where a well drafted co-ownership agreement entered into before purchasing a property can assist the parties is defining their rights and responsibilities as a co-owner, and provide a mechanism to value and sell the property or resolve property disputes if somebody wants to sell their interest or purchase the other co-owners interest in the property, or a difference in opinion has arisen.
What if I don’t have a co-owners agreement with the other buyer?
If you don’t have a co-ownership agreement, and you are unable to agree on way forward with the sale or purchase of the property, then there are other legal avenues that you might consider.
Depending on the facts of your particular situation, the decision to sell can be taken away from one or both owners and the property sold under a statutory trust of sale or partition pursuant to section 66G of the Conveyancing Act 1919 (NSW).
How can a co-owner force the sale or partition of a property?
Section 66G of the Conveyancing Act 1919 (NSW) allows the Supreme Court of NSW to appoint a Statutory Trustee of the property and vest the property in the Trustee to allow the property to be sold or partitioned, where one of the owners does not want to sell or partition the property, but the other does. There are a few reasons why a person may make an application to the Supreme Court under section 66G, however, one of the most common is because the relationship between the owners of the property has broken down, and they cannot agree on the sale of the property.
There are a few reasons why a person may make an application to the Supreme Court under section 66G, however, one of the most common is because the relationship between the owners of the property has broken down, and they cannot agree on the sale of the property.
Once the Trustee is appointed, they are then given the legal power to sell the property and with that have a duty to sell the property to the best of their ability for the best possible price, which usually includes other professionals such as Real Estate Agents, Valuers, and Lawyers. Once the property is sold, subject to any mortgage or charge that may be present on the Certificate of Title, the proceeds are distributed to the owners of the property in accordance with their interest in the property, usually as recorded on the Certificate of Title.
What are the costs?
There are significant costs involved in making a 66G application in the Supreme Court of NSW, most of which is comprised of the Trustee’s fees and disbursements. It is not uncommon for their fees to exceed $100,000, not including your legal costs in making the application. These fees are normally taken from the equity in the property, which will only eat into the proceeds of the sale that each co-owner will receive.
It is therefore always advisable to try and resolve these disputes amongst yourselves, or between legal representatives using alternative dispute resolution procedures such a Mediation, before seeking the Court’s intervention.
How can we help?
If you would like assistance in trying to resolve a dispute with a co-owner of a property, speak with one of our experienced property disputes lawyers who can guide you through the most cost effective solution for your particular scenario. As a first step, we always try to negotiate with the other party or their representatives, to see if we can achieve an outcome that is suitable for everybody. This also helps preserve the relationship and avoid any bad blood that may arise out of legal proceedings between the parties.
However, if that fails, Rockliffs have years of experience dealing with property disputes in the Supreme Court, so if you thinking of commencing proceedings, or have been threatened by somebody wanting to make a Section 66G application, contact the highly experienced and results-driven team at Rockliffs Lawyers who will be able to provide professional advice and guide you in the right direction.