Property in Victoria can be expensive. So one way of entering the market faster is to pool funds with family or friends. Unfortunately, things can get difficult when one co-owner wants to sell and the other doesn’t.

When this happens, can you force a sale?

The two different ways to co-own a property

The first thing to consider is how you co-own the property with the other party / parties. In Australia, this can be one of two ways:

  • Joint tenants – when two or more people have an equal share in the property, which does pass on to the other co-owners upon death (known as the right of survivorship)
  • Tenants in common – when two or more people co-own a property in defined shares (which can be unequal), which don’t pass on to the other co-owners upon death

Joint tenancy is a common way for married couples or people in a de facto relationship to own property, thanks to the right of survivorship. However, when you buy with friends or family, you will usually be advised to purchase as tenants in common.

As a tenant in common, you have the right to sell your share in the property to a third party without the consent of the other owners. However, that doesn’t help you if the buyer wants to buy the whole property or you want to list the home on the market. What then?

The law doesn’t want to trap you

 In Victoria, disputes between co-owners of property, including land or goods, are heard by the Victorian Civil & Administrative Tribunal (VCAT).

Under the Property Law Act 1958, VCAT can make orders for:

  • Co-owned property to be sold
  • How to sell the property in question (e.g. choosing between private sale and auction and which agent or conveyancer to use)
  • How to distribute the proceeds of a sale
  • Compensation or reimbursement for monies a co-owner has put into the property

The good news is that VCAT doesn’t believe in trapping co-owners together when one party wants to get out. So you might be able to force a sale by applying to VCAT.

However, there are some situations when VCAT can refuse your application. This is generally when an order would be inconsistent with a prior agreement you’ve made with the other co-owners. For example:

  • Promising not to sell unless all co-owners agree
  • Promising the co-owner they could live in the property for life

VCAT also won’t hear property disputes between married couples or those in a de facto relationship. That’s a family law matter, rather than property law.

A legal agreement today can prevent disputes tomorrow

While your relationship might be solid, at some point it’s likely you won’t see eye-to-eye. A legally binding co-ownership agreement can stop these differences of opinion from escalating into a dispute.

The agreement sets out your rights and responsibilities as co-owners and details what happens should one of you be unable to make your loan repayments or wants to sell.

Freya Southwell is a property lawyer at Sutton Laurence King Lawyers.

Get your ownership agreement in writing by working with the conveyancers at Sutton Laurence King. Call us on 03 9070 9810 or email info@slklawyers.com.au to get started.