What Happens When Co-Owners Dispute Over Property?

November 29, 2021
couple in a property dispute

Sharing a property with another person, particularly a partner or a spouse, is very common. When people share in a committed relationship, they also tend to share in the value and cost of their living circumstances including their investments and probably their property, which is almost always an excellent investment on both accounts.

But what happens when a couple decides to divorce, dissolve their relationship and go their separate ways? While many of their assets might be relatively easy to assign to one or the other, property distribution can be a bit more difficult.

But before we dive into how to distribute a co-owned property, it’s important to understand the main two ways in which property can be held.

How is a property held?

There a usually two ways that a property title is commonly held:

Tenants in Common – Under this type of ownership/investment each owner outright owns their share of the property with full rights and responsibilities for future ownership and/or sale or distribution of the property. This means that each tenant has the right to do as they please with their legal shares of the property. In addition, if one of the tenants in common were to pass away, their share does not automatically or rightfully pass to the other tenants.

Joint Tenants – This is the more common way property is owned. When people are joint tenants each party owns the entirety of the property. This instils a right of survivorship in the party that outlives the other. It also does not allow for one party to sell or bequeath their share to someone else. Instead, the decision to sell or bequeath the property at the time of death belongs to both tenants

What if both parties of a join tenancy disagree?

Usually, joint tenancies and the sale or bequeathing of property can be done easily and with an agreement between the tenants, but not always. There are such situations that give way to a property dispute. As previously stated when couples decide to dissolve their relationship the issues surrounding the sale of a property held as joint tenants can be difficult. For example, the selling or keeping of the family home.

Overall, if one party objects to the sale of a joint tenant property, the other party can make an application to the supreme court for an order granting the property be sold. This option is supported by section 66G of the Conveyancing Act 1919. Using this process, the party wanting to sell the property can be granted permission to do so. If permission is granted the following steps must occur:

  • The property is placed with a trustee
  • The trustee is responsible for the sale of the property
  • The funds from the sale of the property are placed in a trust
  • Any debts incurred on the property will be paid
  • The balance of the monies is then distributed to the parties in accordance with equitable distribution

The last element can be the most difficult to determine in a property dispute. If one party has put more time or finances into the maintenance of the property, or if the property was being used to financially stabilise a third party, the Court will take these factors into consideration. When these factors are considered the Court might find that one tenant is entitled to more of the proceeds than the other.

The sale of a property can be stressful under the best of circumstances. Therefore, if you find yourself and your spouse/partner struggling with agreeing to the sale of your jointly held property, or having difficulty agreeing to an equitable distribution of the profits from the sale, it would be wise to engage the assistance of a solicitor or mediator who can help you move through the property dispute process more expediently and fairly.

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Owen Hodge Lawyers
Owen Hodge Lawyers is a top tier law firm Sydney residents rely on. We commenced providing legal services to the St George and Sutherland communities in 1951. Since then our Sydney Law Firm has grown considerably, developing a reputation for quality legal services, value for money and a strong commitment.
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