Co-ownership allows two or more people to be listed on the title of a property. Property may be held by way of a joint tenancy or tenants in common.
The difference between these two means of holding property boils down to what happens in the event of the death of one of the co-owners.
In a joint tenancy arrangement one of the joint tenants dies, the interest of the deceased joint tenant automatically passes to the surviving joint tenant or tenants and does not form part of the estate of the deceased. Many married couples utilise the joint tenancy arrangement.
In a tenants in common arrangement, if one of the parties dies their interest in the property forms part of the deceased’s estate and does not automatically pass on to any other co-owner of the property.
In the event of a conflict between co-owners, s 66G of the Conveyancing Act (Section 66) can be used by any one of the aggrieved owners to force a sale of the property. We note that even an owner who holds 1/100th of the property can bring such an application to force the sale of the property. A Sydney property lawyer can assist with preparing such an application to the Supreme Court.
Section 66 empowers the court to decide to appoint a trustee of the property to hold the property on statutory trust for sale or partition (partition involves division of property according to contributions of each co-owner). The court procedures required depend on the nature of the application that is made – namely, whether an application for sale or partition is made. These are set out in s 66G of the Conveyancing Act.
The court may order the sale or the partition of the property, according to:
- whichever is “more beneficial” financially in the circumstances (Drinkwater v Ratcliffe);
- whether or not both parties are cooperative and in agreement.
The discretionary power of the court to grant this application was affirmed in the case of Ngatoa v Ford; however, as a general rule, an order will be made unless it would be inequitable to do so as (Tory v Tory). For a party to demonstrate that an order for sale or partition would be inequitable a high threshold is imposed – the party wishing to avoid the order must prove that ‘more than mere hardship or unfairness’ will be suffered (Myers v Clark).An application be denied where appointing a trustee would be “inconsistent with a proprietary right, or contractual, or fiduciary obligation.”
The Section 66 mechanism is very effective in obtaining an impartial sale.
If a trustee is appointed to the property their primary obligation is to sell the property. Once the property is sold, the money from the sale is placed into a trust, from which the funds will be distributed amongst co-owners in accordance with their ownership of the property.
Carneys Lawyers’ property lawyers and litigation lawyers have extensive experience making applications for Section 66 orders. Contact us today to discuss your situation.