Legal Tip 70: Two owners of a property - one wants to sell the other doesn't

What happens when two people (or more ) people own a property together and one wants to sell and the other doesn't? One cannot enter into a contract to sell if the other doesn't agree. Mortgage cannot be discharged either and the transfer will need to be signed by all owners.

The first step would be to seek legal advice and to try to negotiate. if this fails then the only option may be to apply to the Supreme court to have a trustee appointed and this will allow the trustee to sell and sign the relevant documents. Once sold the trustee will take their hefty fees out (prob at least $10k) and the rest will be divided up between the owners. Mortgagees will still be paid first.

There would also be hefty fees involved in bring the matter to court.

 

Hi Terry,

My brother is divorcing and he wants to sell the PPOR, while the wife refuses. Property worth approx 900k with mortgage of 500k. Ownership and mortgage in both names 50/50

Her parents want to pay him 125k to leave (approx 30%) of equity and have the property transferred into her name. Her parents are unwilling to actually buy the property.

Her parents (retired/no PAYG income) and her (part time employee) would surely not qualify to service the loan under this transfer arrangement?

Would my brother be left as a mortgagee while the wife assumes sole ownership of the property? Is this arrangement even possible in Victoria?

Very concerned about how this will effect his future plans.

 

I can't answer for your brother's intentions but if ownership were to change a new loan and mortgage would be needed.

 

Thanks Terry,

It seems they may be attempting to leave him with responsibility for the mortgage while his (ex) wife assumes sole ownership. OMG!

 

You are confusing a mortgage with a loan. A mortgage is a charge over the property that the legal owner gives. If he is not an owner he cannot give a mortgage. But he could be on the loan. naturally he should seek legal advice before signing anything.

Just last week I had someone who was on the loan for their ex-wife's property. He had been paying her loan for the past 4 years or so, solely, and he new wife was threatening to leave him if he didn't stop. He didn't even know if he was an owner of the property too - which it turns out he was luckily.

 

This is a common scenario for sheriff auctions, because the interests under auction are usually for one owner. In addition to the mortgage, there might also be other caveats like council rates etc.

Briefly what are the steps involved in appointing the trustee under court direction and what is the approximate time frame before the property can be listed.

Any relevant cases ?

 

This seems like a very basic family law scenario. Your brother would be able to get much of his questions answered in a first appointment with a family lawyer.

Has he gone and seen one yet?

 

Application to the Supreme Court to appoint a trustee. Once court makes order the trustee will be appointed and they will arrange to sell the property. It would probably take at least 6 months to get to that stage.

in NSW I think the relevant legislation is s66G Conveyancing Act. There would be many cases.

 

Costly. Like a bad marriage. The trustee may disregard one or both parties and isnt always a great idea if they give the prop away

 

Update- Brother has agreed to be paid his share in the property from her parents.

The loan will then be re-financed to include the parents and wife while removing my brother.

The wife will assume sole ownership of the property which my brother now forfeits.

Negotiations completed and courts avoided.

 

Good - Except the banks will not allow the parents on the loan unless they are legal co-owners too.

 

Best to seek independent legal advice. Terry was referring to S66G of Conveyancing Act (NSW) appointment of trustee for sale. There aren't many reported cases but one that I'm involved in at the moment. Always an interesting read. Cases involving joint venture went wrong or a property with several owners involved. The application is dealt by equity judges in the Supreme Court of NSW.

Property division between divorcing couples should be done through family law jurisdiction.

 

Yes Terry,

That is what will occur.

 

In that case there will be stamp duty and CGT to consider. But this could be minimal if their share of the property is small.

 

Recent case

Chen v Cheung [2023] NSWSC 331
Chen v Cheung - NSW Caselaw

 

Daughter bought their house under a court order for the sale because of dissenting vendors (family law).

Getting anything signed was a nightmare - court even ordered which vendor had to sign first (and each had their own solicitor) but it all worked out in the end, and the price made the hassle worthwhile.

 

That sounds like there was no trustee appointed

 

Not sure. Warring parties were given six weeks to get a signed contract otherwise the court would take control.

Just know that documents had to be sent to husband first, then after he signed sent to wife, who usually wanted to change something. Thankfully all handled by solicitors (QLD).

Then again, I only know what I was told.

 

The 66W type application involves the court appointing a trustee so they can then sign the transfer to sell. This sounds like it might have been just a family law order - which would have been cheaper

 

S66G