When might I consider forcing the sale of a jointly owned property?
Any co-owner of property can apply to the Court to force the sale of a jointly owned property in Queensland. This involves a statutory trustee being appointed to sell the property.
The co-owner does not require a justification as to why they wish to sell the jointly owned property. In our experience a breakdown in relationship between the co-owners is often the motivator.
Will a court agree to force the sale?
The Courts will usually want to see that some effort has been made to resolve the matter between the parties before appointing a trustee. If no agreement is reached or the other co-owner is uncooperative, the Court will most likely agree to appoint a trustee to force the sale, subject to the following exceptions:
- The property was held by spouses and the relationship between them has recently ended – the matter would fall under the Family Law Act 1975 (Cth) instead. This article sets out more information; or
- There is a binding agreement between the owners that sets out a procedure for the sale of the property.
What happens after the court agrees to appoint the trustee?
The trustee steps into the place of the co-owners to sell the jointly owned property. They must act in the best interests of the co-owners, but are not instructed by them. This means that the trustee can:
- Take reasonable steps to prepare the jointly owned property for sale – e.g. performing minor repairs or removing an occupant (whether a co-owner or a tenant);
- Choose which real estate agent sells the jointly owned property; and
- Accept a particular sale price.
The trustee
The statutory trustee must be independent of the co-owners and be suitably experienced. The applicant must nominate the trustee and evidence why they are suitable. The applicant will usually have their choice of trustee appointed.
Insolvency practitioners (e.g. liquidators or trustees in bankruptcy), lawyers and accountants are commonly appointed. They will charge a professional fee for acting as trustee.
Right to Purchase
It is common practice (if the correct orders are sought during the court application) when the property is sold that an existing co-owner can purchase the other co-owners’ share from the trustee. The co-owner’s existing interest in the property is then set off against the purchase price. If there are offers made by multiple co-owners, the highest offer would usually be accepted. If the appropriate orders are obtained, stamp duty can be reduced on this purchase as well.
The Proceeds of Sale
Once the jointly owned property is sold, the proceeds of sale would usually be distributed in the following order:
- Firstly, to pay the costs of sale – e.g. agent’s commission, conveyancing costs, the statutory trustee’s fees relating directly to the sale;
- Next, to pay any mortgage or liability secured against the property;
- Any other fees incurred by the statutory trustee are then paid;
- The parties are reimbursed of the costs of making the court application; and
- Finally, the remaining proceeds are divided between the co-owners.
Usually the proceeds are divided pursuant to the co-owner’s registered interests – so a property owned as joint tenants or as tenants in common in equal shares would usually see the proceeds divided equally between the parties.
A co-owner may disagree with this and instead request that the proceeds be distributed proportional to the co-owners’ actual contributions to the jointly owned property. They could negotiate a different division between themselves, or an application could be made to the Court that a different outcome is appropriate.
Statutory Trust for Division
Instead of forcing the sale of the jointly owned property, a statutory trustee could also be appointed to subdivide the property. Each co-owner would receive land in shares proportionate to their registered interests. This outcome is uncommon with town blocks as it is often impractical to subdivide property. It is more commonly seen with regard to rural land where the land may still retain some value after subdivision.
When to engage a lawyer
We recommend that if your relationship with a co-owner of a jointly owned property deteriorates, you should engage a lawyer as soon as possible. The longer the co-ownership continues, the greater the risk that the other co-owner may take steps that could diminish the value of the property.
Our team at Swanwick Murray Roche regularly act in statutory trustee matters and can provide expert guidance tailored to your situation. Contact us today.
This is general guidance only and not legal advice. You should seek legal advice before relying on anything included in this page.