Where two or more people own property together and one will not agree to sell, section 66G of the Conveyancing Act 1919 (NSW) gives the NSW Supreme Court power to appoint trustees for sale. The discretion is narrow; most matters settle once the application is filed.
Buying or owning property with someone else can work well while everyone agrees about what should happen to it.
The problem arises when one owner wants to sell and the other refuses.
This can happen between siblings who inherited a property, friends who bought together, investment partners, parents and adult children, or people who entered into another shared property arrangement.
One owner may want their money out. The other may want to keep the property, continue living there or simply refuse to engage.
If you are both registered owners, an ordinary sale generally requires both owners to cooperate.
But that does not necessarily mean the other owner can prevent a sale indefinitely.
If you co-own property in NSW and the other owner refuses to sell, section 66G of the Conveyancing Act 1919 (NSW) may provide a way to bring the co-ownership to an end.
One or more co-owners can apply to the NSW Supreme Court for the appointment of trustees for sale.
If trustees are appointed, they can take control of the sale process. The sale no longer depends on the cooperation of the co-owner who has been refusing to sell.
A section 66G application can be a powerful remedy, but it is important to understand what it does and does not resolve before commencing proceedings.
Potentially, yes.
A co-owner cannot necessarily require another owner to sign an ordinary contract for sale simply because they want to sell.
That is why co-owned property can reach a stalemate.
Section 66G provides a statutory mechanism for dealing with that problem.
Under section 66G of the Conveyancing Act 1919 (NSW), one or more co-owners can apply to the Court for trustees to be appointed over property held in co-ownership on a statutory trust for sale or partition.
For many residential property disputes, the practical remedy sought is the appointment of trustees for sale.
The trustees can then deal with the property for the purpose of carrying out the sale.
Section 66G applies to property held in co-ownership.
This can include property owned as:
The legislation allows “any one or more” of the co-owners to make the application.
This means an application is not restricted to someone who owns more than 50 per cent of the property.
Section 66G disputes can arise between:
The legal and beneficial ownership of the property should be established before an application is commenced.
No.
The point of section 66G is to provide a mechanism where the co-owners cannot agree.
If everyone already agrees that the property should be sold, there will usually be no need for trustees for sale to be appointed.
The provision becomes relevant when one owner wants to realise their interest in the property and another owner will not cooperate.
The application itself does not require the consent of all co-owners.
Usually, yes.
Supreme Court proceedings involve legal costs and take control of the sale process away from the owners.
Before commencing proceedings, it is generally worth identifying why the other owner is refusing to sell.
For example, do they:
Sometimes a formal proposal can resolve the dispute.
That might involve obtaining an independent valuation and giving the other owner a defined period to buy your interest.
Alternatively, the parties may agree on an agent, sale method, listing price and timetable.
If agreement cannot be reached, section 66G may provide the mechanism for moving forward.
An application is made to the NSW Supreme Court seeking orders under section 66G.
If the Court appoints trustees for sale, the property is vested in the trustees for the purposes of the statutory trust.
The trustees then take responsibility for implementing the sale rather than leaving the process in the hands of co-owners who cannot agree.
The precise orders will depend on the case.
The trustees may need to deal with matters such as:
The important practical effect is that one co-owner can no longer frustrate the sale simply by refusing to sign the ordinary sale documents.
A co-owner cannot necessarily defeat an application simply because they do not want the property sold.
That would undermine the purpose of the provision.
However, section 66G proceedings should not be treated as entirely automatic.
There may be other legal issues affecting the property or the parties' rights.
For example, there may be:
Those matters can affect how the proceedings are conducted and what orders are appropriate.
A preference to keep the property is different from having a legal basis for opposing the orders sought.
Living in a co-owned property does not necessarily give one owner the right to prevent a sale indefinitely.
This is a common issue where siblings inherit a property and one sibling continues living there.
For example, three siblings might inherit a house in equal shares.
Two want the property sold and their inheritance distributed.
The third has been living in the house and refuses to leave or agree to a sale.
The fact that the third sibling lives there is obviously important from a practical perspective.
But occupation of the property does not, by itself, necessarily extinguish the other owners' rights in the property.
The particular ownership arrangements and any other rights or agreements need to be examined.
A buyout can be a practical alternative to a sale.
The first issue is usually agreeing on the value of the property.
An independent valuation can help avoid an argument where the owner who wants to stay argues for a lower value and the owner leaving argues for a higher one.
The parties then need to determine the value of the interest being transferred.
That is not necessarily as simple as applying the registered ownership percentage if there are separate disputes about beneficial ownership, contributions or accounting between the parties.
The owner keeping the property also needs to be able to fund the transaction.
If there is a mortgage, the lender may need to approve refinancing and release the outgoing owner from their obligations.
A promise to “take over the mortgage” does not itself release another borrower from liability to the bank.
Not necessarily.
This is one of the most important distinctions in a co-ownership dispute.
Section 66G provides a mechanism for dealing with the property and bringing the co-ownership to an end.
It does not automatically resolve every financial dispute between the owners.
For example, one co-owner might argue that they:
Those issues may affect the parties' ultimate entitlements.
Depending on the circumstances, there may need to be an accounting between the co-owners or separate equitable claims.
It is therefore important to distinguish between two questions:
Should the property be sold?
and
How should the net proceeds ultimately be divided?
They are not always the same dispute.
A section 66G application does not make the mortgage disappear.
Any mortgage or other registered interest affecting the property needs to be dealt with as part of the sale.
Ordinarily, the secured lender will be paid in accordance with its rights from settlement funds before the remaining net proceeds are available to the owners.
There may also be other deductions from the sale price, including:
The amount left after those payments is the net sale proceeds.
There may still be a dispute about how those proceeds should be divided.
Costs in section 66G proceedings need to be considered carefully.
There is authority supporting the usual approach that costs associated with obtaining the appointment of trustees for sale may be paid from the proceeds of sale.
However, costs remain a matter for the Court.
The parties' conduct can be relevant, and the Court may make a different costs order in an appropriate case.
There are also costs associated with the trustees carrying out their role and selling the property.
This means the financial consequences of commencing proceedings should be considered before an application is filed.
Where the property has substantial equity, the cost of proceedings may be proportionate to resolving the stalemate.
Where the equity is limited, the economics may look quite different.
That may be relevant to the financial accounting between the owners.
Suppose two people own a property equally, but for several years one owner has paid all of the:
That does not necessarily mean that person automatically owns a greater percentage of the property.
But those payments may be relevant to the financial adjustment or accounting between the parties.
The position can become more complicated if one owner has had exclusive use of the property during the same period.
These issues should be identified before the sale proceeds are distributed.
Inherited property is a common source of co-ownership disputes.
For example, a parent may leave a house equally to three adult children.
One wants to sell immediately.
One wants to retain the property as an investment.
The third wants to move into it.
Unless the will or another legal arrangement provides a mechanism for resolving that disagreement, the beneficiaries may eventually find themselves unable to agree about what happens to the property.
Section 66G can become relevant once the relevant co-ownership interests exist.
However, estate administration can introduce additional issues.
Before commencing proceedings, it may be necessary to consider:
A property dispute connected with a deceased estate should therefore be considered in the context of the estate administration rather than treating the property as an isolated asset.
Family property arrangements can become particularly difficult because they are often informal.
A parent may contribute money to help an adult child purchase a property.
An adult child may move into a parent's property and contribute to the mortgage.
A parent and child may purchase together.
Or a parent may contribute substantial funds in return for a right to live at the property.
Years later, the parties may disagree about what those payments actually meant.
Were they a gift?
A loan?
A contribution towards ownership?
Payment for a right to occupy?
These questions may need to be resolved before the parties' true interests in the property can be determined.
Where an older parent contributed money in return for a lifetime right to accommodation, the arrangement may also raise issues concerning a granny flat interest, estate planning and social security.
A co-owner may theoretically be able to deal with their own legal interest, depending on the form of ownership and the circumstances.
In practice, selling an undivided interest in an ordinary residential property to an unrelated third party can be difficult.
Most purchasers want the whole property, not a share of a house that remains co-owned with someone they do not know.
That is one reason section 66G is important.
Rather than trying to find a purchaser for an individual co-owner's interest, it can provide a mechanism for selling the property itself and realising the value held in it.
There is no single timeframe.
It depends on factors including:
A straightforward application where the co-ownership is clear is very different from proceedings involving disputed beneficial interests, trusts, estate issues or extensive accounting claims.
This is another reason to identify the real dispute before commencing proceedings.
It can.
A co-owner who has been refusing to engage may take a different approach once formal proceedings have commenced and the legal mechanism for a sale becomes clear.
The parties might then agree to:
That can avoid the need to have every issue determined by the Court.
However, proceedings should not be commenced merely as a threat.
There should be a proper legal basis for the application and a clear understanding of the costs and consequences.
Start by identifying exactly what is preventing the property from being dealt with.
If the other owner wants to buy you out, a valuation and a properly structured proposal may resolve the issue.
If the dispute is about how much each person should receive, the beneficial ownership and accounting issues may need to be addressed.
If the other owner simply refuses to sell or engage, section 66G of the Conveyancing Act 1919 (NSW) may provide a way to break the stalemate.
The important point is that co-ownership does not necessarily have to continue indefinitely simply because one owner refuses to cooperate.
Urban Law Group advises on NSW property and co-ownership disputes, including applications for the appointment of trustees for sale under section 66G of the Conveyancing Act 1919 (NSW).
If you are stuck in a co-ownership arrangement and cannot agree on what happens to the property, we can advise on the options for negotiating an exit or bringing the co-ownership to an end.
If you are dealing with a co-ownership dispute and would like to speak with one of our experienced lawyers, make an enquiry.