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Co-owners and occupation fees

When there are 2 owners of a property and only one occupies the property it often seems unfair that the non-occupying owner cannot charge an occupation fee.   However, generally speaking the co-owner in sole occupation is not liable to pay a fee.  Each co-owner has a right to possession of the whole property and a failure by a co-owner to exercise that right does not allow for them to be compensated.  However, a co-owner can force a sale of the co-owners’ property.  During this process, a trustee for sale is appointed by a Court. Once the trustee is appointed, the co-owners’ rights are converted from an interest in the property to a right to a share in the sale proceeds.  When the trustee for sale is appointed, therefore, a right to charge an occupation fee arises since the right to occupy the property ceases except under lease or licence from the trustee. The co-owner occupying the property is accountable for “mesne profits” equivalent to a reasonable rent, for so long as the co-owner remains in occupation.  So, if the relationship between co-owners has soured, it makes sense for the non-occupying owner to start the process for sale of the property rather than to try to force the occupier to pay rent.  For a recent discussion on this point see Foundas v Arambatzis (No. 3) [2020] NSWCA 87.  In this particular case, due to COVID-19 issues, the trustee for sale agreed not to seek an occupation fee until 28 May 2020.

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