Forcing the Sale of a Co-Owned Property

Property co-ownership is a way for friends, relatives and business partners to pool resources and share in the inherent financial risk that comes with investing in real estate.

While the end goal is to collectively benefit from the appreciation of the property’s value over time, disputes can arise before that occurs. Particularly, when one owner’s circumstances change, and they need to sell the jointly held property.

If you find yourself in this situation, there are a few strategies for selling jointly held property when co-owners disagree. Keep reading to learn more about your options.

Option 1. Negotiate with Property Co-owners

If one party is unwilling to sell, try to resolve the issue amicably with co-owner(s) before taking legal action. Open and honest communication is crucial in this process.

• Start a conversation: Share your reasons for wanting to sell, whether it’s financial strain, a change in personal circumstances, or simply a desire to move on from the investment.
• Explore buyout options: The other co-owner(s) may be willing to buy your share if they have the financial means.
• Mediation: If direct negotiation doesn’t work, engaging a solicitor to assist you in proposing a mediation may be necessary. A neutral third party can help facilitate a discussion and may help find a solution.

If all else fails and a resolution still can’t be reached, it may be necessary to take legal action.

Option 2. Force the Sale of Co-Owned Property

If an agreement cannot be reached between the owners on what to do with the property, you may need to take legal action to force the sale of the shared property. Here are the steps involved:

1. Court Application

First, you will need to apply to the court for an order to force the sale of the property.

The application requires supporting evidence (usually in the form of an affidavit) to demonstrate that there is a dispute, your attempts to resolve have been unsuccessful and that you are entitled to seek a statutory trustee.

2. Appointment of a Statutory Trustee

Section 38 of the Property Law Act 1974 (Qld) allows a co-owner to apply to the court for the appointment of a statutory trustee to sell the property.

The trustee will then sell the property and divide the proceeds according to the further orders of the court.

Statutory Trustees and Family Disputes

It should be noted that an application to appoint a statutory trustee applies to situations where family members or friends jointly acquire real estate.

It is not applicable to real estate held jointly by couples going through domestic separation. These types of property disputes are handled under the Family Law Act 1975 (Qld) and with a family lawyer.

3. Property Sale by Statutory Trustee

The statutory trustee will sell the property, paying off any outstanding debts (mortgages, real estate commissions, etc.).

Afterward, the proceeds will be divided between the owners, based on any further court orders or agreements.

4. Fund Distribution

The statutory trustee proceeds from the property sale will be distributed according to any further orders made by the court. If the parties are in dispute about how the proceeds are to be distributed, the funds may be held in a trust managed by the statutory trustee until the parties reach an agreement.

Option 3. Sell to a Third Party

If you wish to exit the co-ownership and hold your interest in the property as a tenant in common, you can lawfully sell or transfer your share to a third party without the consent of the other owners.

If you hold your interest as a joint tenant and have a willing third-party investor to purchase your share, you can sever the joint tenancy, thereby converting your ownership into a tenancy in common.

This allows you to independently sell or transfer your share, without requiring the approval of the other co-owners.

Option 4. Partition the Property

Partitioning a property involves dividing it into separate lots, each owned by different individuals.

The process begins by having the property surveyed to define the boundaries of each lot. After obtaining the necessary permits from the local council, the physical subdivision can take place, including constructing dividing structures and registering the subdivision with the land registry.

The final steps involve valuing the lots, assessing stamp duty, and completing registration to transfer ownership.

Partitioning a property is an option in limited circumstances and is a complex process that requires careful planning and professional guidance.

How to Prevent Future Property Co-ownership Disputes

If you are in the process of purchasing a property with either a group of investors or a family member/ friend, insist on creating a written agreement for the property. The agreement should outline the rights and obligations of co-owners to prevent disputes from arising later.

On the other hand, if you require advice on forcing the sale of a property or defending an application for the appointment of a statutory trustee, contact our litigation solicitors at Greenhalgh Pickard.