There are always great property investments in Cairns and while there may be many benefits to acquiring real property (that is, land and any improvements thereon) with others, problems can arise where one of the co-owners wants to sell the property or their share in it.
In Queensland, section 38 of the Property Law Act 1974 allows a co-owner to make an application to a Court for the appointment of statutory trustees for the sale of a property. There are costs involved in making such an application and these costs are likely to increase if the application is opposed by the other co-owner/s or the other co-owner/s contend that they are entitled to a greater share of the proceeds of the sale of the property.
Whilst the Courts have the discretion to refuse to make an order appointing trustees for sale, the discretion is a very limited one. Generally, co-owners have a prima facie right to have the property sold. There can, however, often be significant disputes as to the parties’ respective entitlements to the proceeds of the sale of the property.
When the Court makes an order to appoint statutory trustees for sale, the subject property immediately vests with the trustees who are appointed by the Court for the purpose of selling the property. Upon the sale of the property, the proceeds are apportioned between the parties (former owners), after payment of any mortgage debt, the trustees’ fees and expenses, any real estate agent and auctioneer’s commission fees and expenses and legal costs relating to the conveyance of the property.
Co-owners may, of course, negotiate to either buy each other’s interest in the property or to sell the property without trustees for sale being appointed. Where this can be negotiated, significant legal costs of Court proceedings can be avoided.
Family members or friends will often purchase property together without any formal agreement which sets out the terms upon which the property will be held in co-ownership. Whilst this might not be a problem while the co-owners are getting along, problems can arise in the future where the relationship between the co-owners breaks down or circumstances of a co-owner change. Therefore, before entering into co-ownership, it is important for co-owners to consider entering into a formal agreement in writing with each other which includes terms dealing with the following issues:
- The co-owners’ obligations in relation to the payment of outgoings associated with the property.
- How income (if any) derived from the property is to be apportioned between the co-owners.
- Whether the property is to be held by the co-owners as joint tenants or tenants in common.
- What is to happen in circumstances where one or more of the co-owners wishes to sell the property or their share in the property.
- What happens if one of the co-owners becomes ill or dies and cannot continue contributing to the property
A relatively simple agreement can assist in resolving the above issues and avoid potential disputes in the future. A quick trip to a lawyer before purchasing a property could save you a lot of heartache in the future.
If you would like to discuss the above or any other property law needs, please get in contact with Preston Law. We are based in Cairns and our lawyer can deal with any issue you may have.