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To sell or not to sell, that is the question

Mullane & Lindsay Solicitors
Mullane & Lindsay Solicitors
To sell or not to sell, that is the question

In this podcast Special Counsel, David Collins discusses the pitfalls of co-ownership of a property and the need of one party wanting to sell said property.

Lorraine: “Good morning, David, you’re a part of the Litigation team at Mullane and Lindsay Solicitors.”

David: “Good morning, thank you for inviting me. Yes, I’m in the litigation team at Mullane and Lindsay Solicitors and I’m going to talk to you today about how the law helps the co-owners of property, when one of them wants to sell and the other one doesn’t and the short answer to that question is, yes they can sell and they can force the sale but it’s the law as with many things there’s a little bit more to it.”

Lorraine: “How does it happen when one owner wants to sell, and one doesn’t?”

David: “It often comes back to how they became joint owners in the first place so people get married or they move in together and buy a property or pull their resources and get an investment property or they may inherit a property under a Will but essentially the reason that one party ultimately decides  to sell when the other doesn’t, it can vary whether the married couples or De Facto’s ended for instance, they may no longer want to hold that property together. If they’ve pulled their resources to get an investment property, they may have fallen out or one of them might be concerned that the properties market value is about to crash, and the other is just happy to ride it out and keep the property. Or when they’ve inherited a property like my dad, he just didn’t want to be a landlord, and so he and his brother sold the property. There’s lot of reasons why one person decides to keep it and the other decides that they want to sell and they’re very personal, but the most important thing is that one of them has decided that they want to sell.”

Lorraine: “And what does the law say about that?”

David: “Well, when owners own property together, they become registered on title as joint tenants or tenants in common and essentially what that means, is if one of them were to die and they’re joint tenants, the other remaining owners absorb their interest where as if they’re tenants in common, they can leave their share under a Will. In the area of Family Law, that’s very specialist and so the listeners would need to call and ask to speak to one of our accredited specialists in Family Law but for everybody else in New South Wales, the key piece of legislation is Section 66G of the Conveyancing Act 1919 and effectively what that legislation does is allow the owners that want to sell to ask the court to for an order to place the property on Statutory trust for sale or there is an alternative within that section as well if they don’t want to sell the whole property they might seek partition of the property and then it’s a request to put the property on statutory trust for partition and they’re may be a dispute if one party wants to sell and the other wants a partition, if that’s the case then the person who’s doing the partition who’s going to have a bit more work to do because they have to establish that a partition is more beneficial in the circumstances but ultimately the court will decide and have a discretion whether or not it agrees that its more beneficial to partition the property. And that’s probably the golden rule to remember really is that the court always has a discretion.”

Lorraine: “What can the other owner do?”

David: “I think as with a lot of legal disputes, the most practical thing the owner can do is talk to the person that wants to sell or partition the property, if they can afford to buy them out then that is certainly one option they can discuss and in that situation they may want to seek advice from a professional valuer or could get an appraisal from a real estate agent but if it goes to court, the judge wont take much notice of an appraisal from a real estate agent unfortunately, they will want a formal valuation. If you think there is going to be an issue when you’re talking to your co-owner, it may be good to propose a formal valuation, talk through the issues, its far quicker, cheaper and better to talk things through then it is to involve the courts but ultimately if you can’t do that then the court is there and Section 66G will be the process that you follow.”

Lorraine: “What is the process and is it expensive?”

David: “Sadly, the application first and the 66G is to the Supreme Court of New South Wales so there will be the normal costs of court proceedings, so you’ll have to pay a solicitor, you’ll almost certainly have to pay a barrister, there will be court fees, there will be expert fees and particularly if it’s something like partition then you may have several experts, the trustee once she is appointed will charge fees, and then you’ve got your normal real estate agent other fees relating to the partition and transactional fees. So, it can be quite an involved and expensive process.”

Lorraine: “What are the risks, pros and cons of court proceedings and are there alternatives?”

David: “So the main risk to any party in court proceedings is that they lose their side of the application and their faced with a potential costs order to pay the reasonable costs of the other side in addition to their own costs, that obviously can add significant financial insult to injury. The main advantage is that where you’ve got a dispute between parties that may have just fallen out badly, the court may appoint a trustee who takes control to follow the process and minimises the opportunity for disagreement and the main alternative is talk to each other and if you can’t talk to each other nicely mediation is a really practical way of helping to explore alternatives.”

Lorraine: “How can our listeners find out more?”

David: “They can arrange an appointment with me or with Kristy Nunn in our Newcastle Office or in our Tea Gardens office, who Michael McGrath is here most weeks would be able to help. If you’re not sure and you just want to talk through the principals, we offer a fixed price of initial consultation or if they’ve already decided no, they definitely want to sell or to partition we can skip through that initial consultation process and move straight into what’s required and they can do that by emailing us, telephoning us or click onto the website and fill out one of the enquiry forms online.

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