24/10/2018, 12:54:PM

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Co-owners of Property

Co-owners of Property


Property investment in the last 10 years has been the boom topic around Australia. However, when real estate starts to take at turn, investors in all forms consider selling. One major issue which always arises, is when one co-owner to a property investment wants to sell out and recoup their funds and the other co-owner does not want to sell, how does that issue get resolved? 


Where disputes arise between co-owners of property, such as tenants in common noted on title, which is usually the case with investment properties, the best outcome to resolve the issues, where two co-owners say Party A & Party B, is that Party A sells out their share in ownership of the property to Party B.


If the co-owners agree with this method of selling, where Party A sells their share to Party B, the appropriate step to come to an agreed price for that half, is to have a certified valuation done on the property. This certified valuation should be completed by a registered State valuer who specialises in property transactions. Then where there is a disagreement with the certified value, a second valuation on the property should be obtained. 


Once an agreement is reached on the value, a contract of sale needs to be prepared, signed off on and the settlement processed through PEXA, known as Property Exchange Australia. Though keep in mind that stamp duty will also be payable on the half share of the property that is transferred. 


The aforementioned is the best outcome that can be achieved between parties for the sale of a share of property between them. 


Unfortunately, the best outcome is not always achievable, because Party A who wants out of the property investment, is unable to sell to Party B, which could simply be that Party B is unable to fund the purchase of Party A’s share in the property. So in this circumstance how does this situation get resolved? 


Where co-owners of a property cannot agree to an outcome to settle their differences with the ownership of the property, whether that being a sell out or just paying the rates and taxes, one co-owner can raise an application in VCAT, or a relative tribunal and legislation in the respective State, under the Property Law Act 1958 Vic, section 225 or the Act. 


Section 225 of the Act says:

Application for order for sale or division of co-owned land or goods


(1) A co-owner of land or goods may apply to VCAT for an order or orders under this Division to be made in respect of that land or those goods . 


(2) an application under this section may request -


(a) the sale of the land or goods and the division of the proceeds among co-owners; or

(b) the physical division of the land or goods among the co-owners; or

(c) a combination of the matters specified in paragraphs (a) and (b). 

(3) A person who makes an application under subsection (1) must give notice of the application to the holder of a security interest over the land or goods to which the application relates.

Where one co-owner makes an application to VCAT or a relative tribunal in the respective State for enforcing their legal right, what can VCAT order the other co-owner of the property to do?

Under section 228 of the Property Law Act 1958 Vic VCAT may order: 


(1) In any proceedings under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs. 


(2) Without limiting VCAT’s powers, it may order -


(a) the sale of the land or goods and the division of the proceeds of sale among the co-owners; or 


(b) the physical division of the land or goods among the co-owners; or

(c) that a combination of the matters specified in paragraphs (a) and (b) occurs.

There are various orders that VCAT may make, and the key aspect that any co-owner should keep themselves aware of is the words of the legislation that say: “VCAT may make any order it thinks fit.” These words can result in an outcome that may not always be favourable to one party. As example, where Party A wants to sell the property, and Party B does not want to sell, Party B may end up being ordered by VCAT that they have to sell the property to release Party A from the ownership of that property, where Party B is unable to pay out Party A.

Disputes between co-owners can destroy a relationship between parties. The best solution when considering to buy property as co-owners on title, whether tenants in common, or joint tenants, is to get that legal advice to protect your legal rights and interests.

If legal advice is required please contact: John Melis at Legal AU Pty Ltd (03) 9999 7799 www.legalau.com 


Legal AU Pty Ltd Lawyers are “Liability limited by a Scheme approved under Professional Standards Legislation.”

Co-owners of Property
John Melis Oct 24, 2018 12:54 PM