Join Australia's most dynamic and respected property investment community

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

Discussion in 'Legal Issues' started by Terry_w, 27th Aug, 2015.

  1. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    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.
     
    Skilled_Migrant and HUGH72 like this.
  2. Drone

    Drone New Member

    Joined:
    27th Oct, 2015
    Posts:
    4
    Location:
    Melbourne
    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.
     
  3. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    I can't answer for your brother's intentions but if ownership were to change a new loan and mortgage would be needed.
     
  4. Drone

    Drone New Member

    Joined:
    27th Oct, 2015
    Posts:
    4
    Location:
    Melbourne
    Thanks Terry,

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

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    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.
     
  6. Skilled_Migrant

    Skilled_Migrant Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    738
    Location:
    Melbourne
    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 ?
     
  7. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,446
    Location:
    Perth, WA
    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?
     
    legallyblonde and Terry_w like this.
  8. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    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.
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    5,168
    Location:
    Sydney
    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
     
  10. Drone

    Drone New Member

    Joined:
    27th Oct, 2015
    Posts:
    4
    Location:
    Melbourne
    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.
     
    legallyblonde, Perthguy and Terry_w like this.
  11. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    Good - Except the banks will not allow the parents on the loan unless they are legal co-owners too.
     
  12. larrylarry

    larrylarry Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    4,357
    Location:
    Sydney
    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.
     
  13. Drone

    Drone New Member

    Joined:
    27th Oct, 2015
    Posts:
    4
    Location:
    Melbourne
    Yes Terry,

    That is what will occur.
     
  14. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,020
    Location:
    Remote
    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.