Where there is co-ownership of real property the parties will hold the property as either joint tenants or tenants in common.
Tenants in common own specified shares of the property (equal or unequal) which are recorded on the Certificate of Title. An important advantage of a tenancy in common is that your shares are protected in the proportions designated. If a tenant in common dies their share of the property passes in accordance the instructions of their will. It is important to have a valid and enforceable will if you are holding property as a tenant in common.
Joint tenants own the property equally. Following the death of a joint tenant the share passes to the other joint tenant/s (in equal shares if more than one) automatically without reference to any intention of the deceased person. The most common use of holding as joint tenants is a husband and wife situation where upon the death of the husband or wife their interest automatically passes to the surviving party.
A co-owner may make an application to the Court for a trustee to be appointed to sell the property. The application will be brought under Section 38 of the Property Law Act 1974 in Queensland. Bringing an application will involve costs which will increase in the event that the application is opposed.
The property will vest with the trustee until it is sold. The proceeds of sale will be apportioned between the parties following payment of the trustee’s fees, real estate agents fees, auctioneers fees (if applicable) and legal fees.
It is advisable to attempt to resolve a dispute by mediation or negotiation before making an application for a trustee. This may give rise to alternative solutions such as one co-owner purchasing the property from the other owner who wishes to sell and will be less costly than bringing an application to the Court.
When looking at purchasing property with another person it may be important to consider:
Often property is purchased with a friend or family member. The nature of the relationship may result in a lack of formal agreement. However, a simple partnership agreement can clarify and resolve issues and assist in avoiding disputes. A formal agreement should outline both parties rights and obligations under the ownership arrangement and should detail the options available if one party wants to sell their share in the property.