Owning property with others - what happens if the relationship goes sour?
Often people purchase property with family and friends not expecting that their relationship will change for the worse.
So what happens if there is a dispute and one owner wants to sell but the other co-owner(s) don't want to sell and can't (or won’t) buy the other out?
The simplest method is usually to make a court application under the Property Law Act for the appointment of a “statutory trustee” to sell the property (regardless of whether the other co-owner(s) agree). Any co-owner can make this application.
The application needs to be supported by evidence and the consent of the statutory trustee (usually a solicitor or accountant). The appointed statutory trustee can then sell the property by auction or private sale. Once the property is sold, the funds (after costs) are divided between the co-owners in proportion to the percentage of their ownership.
In most cases these applications are granted without too much difficulty.
So what can you do to prevent this? The best method is to have a written agreement as to how you will deal with the property. If it is not in accordance with this agreement then the Court will not grant the application. This agreement can clearly set out when and how the property can be sold.
A written agreement between the parties could avoid the situation where you have no say in how your property is sold and for what price. It would also avoid the unnecessary cost of a court application and the consequent trustee’s fees.
The moral of the story is that if you are considering purchasing real property with others it’s worth giving consideration to what should happen if one party wants to sell.
For advice on this and any other area of property law contact Michael Sobey to discuss.