How to Navigate a Property Co-Ownership Dispute

Understanding Section 38 of the Property Law Act 1974 (Qld): Trustee Sale of Land

By Nanae Yoshiwara, Senior Associate

Co-owning property can offer financial advantages, but it can also lead to disagreements especially when the owners cannot agree on the future of the property. Whether it is a family inheritance, business partners, or friends investing in property together, co-ownership disputes are common. When co-owners disagree on whether to sell, or one owner cannot afford to maintain their share of the property, things can become complicated.

If you find yourself in such a situation, Queensland law provides a solution through what is commonly referred to as a trustee sale. This can help resolve disputes and force the sale of the property when owners cannot come to an agreement.

In this article, we will explore the common issues faced by co-owners, how section 38 of the Property Law Act 1974 (Qld) works, and how it can serve as both a tool for resolution and a means to facilitate negotiations.

What are Common Issues Faced by Co-Owners of Land?

When land is held by more than one owner, conflicts can arise for various reasons:

One owner wants to sell while the other(s) want to keep the property.
Disagreements over how the property should be managed or maintained.
Disagreements about financial responsibilities, like who should pay for rates, maintenance, or repairs.
Failure to contribute to the upkeep of the property or share the costs.
Concerns over who should occupy or use the land.

These types of disputes are often complicated by personal relationships, particularly in cases involving family members or business partners. These disputes can also become emotionally charged, especially when family relationships or long-standing friendships are involved. If you’re considering purchasing property with family, business partners or friends, read our article on how to avoid complications in a shared property purchase to help avoid these disputes in the future.

What Can You Do When Property Co-Owners Don’t Agree?

When co-owners are at an impasse, Queensland law allows one or more co-owners to apply to the Supreme Court to force a sale of the property. Under Section 38 of the Property Law Act, one or more co-owners can apply to the Supreme Court of Queensland to appoint a trustee to manage the sale of the property. This ensures that the property can be sold, even if one or more co-owners refuse to participate.

Who Can Apply Under Section 38?

Co-owners

Any co-owner of the property can apply under section 38, whether they are a joint tenant or tenant in common. It does not matter what proportion of the property they own. The court has discretion to consider the circumstances of the co-ownership and decide whether appointing a trustee to sell the property is the appropriate course of action.

Business Partners

Section 38 can also be used in partnership disputes where property is jointly owned by business partners. If the partners cannot agree on a sale, a statutory trustee can be appointed to manage the sale and dissolve the partnership. For example, if the co-owners are in a legal partnership that owns commercial or residential property and there is a dispute, a statutory trustee can be appointed to sell the property.

This often happens when partners cannot agree on how to wind up the partnership, or when they cannot agree on how to sell the property. The trustee may also be appointed as a “special referee” to dissolve the partnership, ensuring all financial accounts are settled before the sale proceeds are distributed.

Bankruptcy Trustees

In cases of bankruptcy, a trustee can apply for a statutory sale under section 38 to liquidate the bankrupt co-owner’s share, even if other co-owners oppose the sale. This allows creditors to recover debts through the sale of jointly owned property.

A Co-Ownership Dispute Example: The Uncooperative Co-Owner

Imagine you inherited a property with your siblings. You would like to sell the property and divide the proceeds, but one sibling insists on keeping the property and refuses to cooperate. In this situation, you can apply to the court to appoint a trustee to sell the property, even if your sibling disagrees.

The court-appointed trustee will handle the sale, ensuring that all parties receive their fair share of the proceeds after expenses like mortgage repayments, unpaid rates, and legal costs are deducted.

Section 38: A Tool for Amicable Settlements

Section 38 is not just about forcing a sale. It can also serve as a powerful negotiation tool. In many cases, the mere possibility of a trustee sale encourages co-owners to negotiate an amicable settlement.

For example, instead of going through the whole court process, one co-owner might agree to buy out the other’s share, or all co-owners might come to an agreement to split the sale proceeds without involving a trustee. This option can also be used to encourage co-owners to contribute to unpaid rates or other property expenses.

In many cases, once a co-owner understands that the court can order the sale of the property, they may become more willing to negotiate a resolution that avoids court involvement.

What Can the Court Order Under Section 38?

When a court orders a trustee sale under section 38, it has the discretion to order the recovery of past expenses, such as unpaid council rates or maintenance costs. If one co-owner has paid more than their share of these expenses, the court can adjust the final distribution of the sale proceeds to ensure that this is reimbursed.

For example, in some cases, courts have made orders ensuring that the co-owner who has been covering costs is compensated from the proceeds of the sale.

How Argon Law Can Support You in a Shared Property Dispute

If you are facing a co-ownership dispute and considering forcing a sale, or if you are being pressured into a sale and want to protect your rights, we can help.

At Argon Law, we provide experienced legal advice and representation to guide you through the process. From drafting the necessary court documents to negotiating settlements and representing you in court, we ensure your interests are protected every step of the way.