PROPERTY IS EXPENSIVE AND DISPUTES CAN BE COSTLY
Property is often the most expensive purchase people make. When disputes arise, the consequences can be costly. It is recommended that you obtain the right advice to know what your entitlements or obligations are.
Property disputes can come from a range of sources. This article will split these sources into disputes between co-owners, and disputes between other parties.
Property disputes between co-owners
Disputes between co-owners typically arise in the following scenarios:
1. Who should pay for maintenance costs;
2. One co-owner wants to sell their interest in the property;
3. A co-owner has a drastic change in their personal finances and cannot afford to keep their share of the property;
4. A co-owner is withholding information;
5. A co-owner does not account for their share of any rental proceeds;
6. Whether or not a property should be sold;
7. The value of the property;
8. Whether the property is to be sold by auction or private treaty; and/or
9. How the proceeds of sale should be distributed between the owners.
Ideally, co-owners in dispute with one another would be advised to have a co-owners agreement. This is a document which sets out what the parties agree to do in the event that a dispute arises.
A co-owners agreement can cover such matters as:
1. How indemnities and risk are borne by the owners;
2. Who will be responsible for the daily management of the property;
3. Any mechanisms for dispute resolution out of court;
4. How costs such as mortgage repayments, taxes, rates, insurance and repairs are apportioned, and an outline of any further obligations;
5. How the property is intended to be used by the owners or by third parties;
6. How decisions as to rent are made and what the entitlements are by each co-owner;
7. If the property is to be sold, how it is to be valued;
8. If one co-owner seeks to purchase the interests of another, what procedures are to be followed; and/or
9. What is to happen in the case of death or insolvency of one of the co-owners, particularly in relation to questions of transfer of interest and interests arising under a will.
If there is no co-owners agreement, which is not uncommon, there are other avenues available to the co-owners.
In circumstances where co-owners are in disagreement as to significant matters, and there is no success in resolving the dispute through negotiation outside court, it may be that one or more of the parties apply to have the ownership terminated by an application to the court.
This claim may be available to the parties under section 66G of the Conveyancing Act 1919 (NSW). This provision allows parties in certain circumstances to apply to the Supreme Court to partition the property, or to order a sale.
Partitioning the property involves dividing the legal ownership so that each party becomes sole owner of a specific physical proportion of the land. Of course, whether this is possible depends on the type of property. Not all properties can be conveniently partitioned in this way. Accordingly, the Court is likely to want to see evidence of not only the valuation of the property but also evidence that the partition is physically practicable.
If a partition is not possible, the court may consider making an order for the sale of the property. Given that the parties are already in dispute, and are likely to hinder the sale process, the court will typically appoint a statutory trustee who will then control and oversee the sale process (a trustee may also be appointed in the event of a partitioning order).
Once the trustee is appointed, they have power to sell the property, and a duty to do so to the best of their ability and at the best price. The proceeds of sale are then distributed in accordance with the parties’ respective interests, usually as recorded on title, but otherwise as per the court’s orders. This latter form of distribution may be encountered where there may be other matters in dispute requiring an adjustment of sorts between the amounts each party is otherwise entitled to.
Property disputes with other parties
Property disputes may otherwise arise in a number of other areas, including but not limited to:
1. Caveats – Caveat disputes are usually of one of two categories: 1) you are seeking to extend or enforce your rights under a caveat to prevent dealings affecting your land, or land in which you have a caveatable interest; and 2) someone else has lodged a caveat over your property, which you want to remove.
Caveat issues are usually dealt with by filing a Summons in the Supreme Court, together with an affidavit. Questions as to whether a person has a legitimate caveatable interests can be very technical, and it is recommended that legal advice be obtained in this regard.
2. Property development and construction – Claims with respect to property development and construction can be specialised issues according to the type of claim. Typically, such disputes will be heard in the Land & Environment Court. Some of the most common claims have to do with development applications being denied, and issues to do with development appeals.
3. Leases – Disputes in this area commonly arise around the parties’ rights of termination. Most tenancy agreements will have clauses specifying the rights of one or another party to terminate the lease. It may be, however, that even if a landlord, for example, terminates a lease according to a specific provision in the lease agreement, that termination may be set aside if it was found to be fundamentally unfair.
4. Contracts for sale – As with leases, disputes generally arise out of questions as to the parties’ rights of termination. When a contract for sale is terminated, the parties may have suffered financial losses which they seek to recover. These may include the deposit, advertising costs, legal costs and loss of bargain damages. Where such disputes escalate, they can end up in the Supreme Court, with remedies including not only damages, but orders for specific performance.
5. Possession – Issues arise under repossession of property often where there is a breach of a lease agreement by a tenant, or a default by a mortgagor under a mortgage.
6. Equitable claims – Such claims may include the rights of people who have rights as against the proprietor, an unregistered interest in the property, or rights with respect to a claim arising from fraud, breach of fiduciary duty or breach of trust.
7. Boundary disputes – In circumstances where parties are at a deadlock in relation to the location of a boundary between two properties, and two independent registered surveyors cannot agree on that location, parties may apply to the Registrar General to make a determination. Such applications will commonly include a sketch or report prepared by a registered surveyor. The Registrar General may determine the boundary based on all the evidence, together with consideration with what would be considered just and reasonable. Parties have twenty-eight (28) days within which to appeal a decision.
8. Dividing fence and retaining wall disputes – Often owners to adjoining properties are liable to pay one half each of the costs of any fence or retaining wall between the properties. Where there are complications or other matters to be taken into account, and the parties cannot agree, it may be that a party applies to the NSW Civil & Administrative Tribunal or to the Local Court for a fencing order or order with respect to payment of the retaining wall. Such an order covers what work is to be carried out and who is to pay it, and in what proportion.
How a lawyer may assist
Property disputes can become quite complicated and involve a number of different people or entities. In assisting with a property dispute, a lawyer may be expected to provide advice to or liaise with purchasers, vendors, agents, tenants, landlords and body corporate.
In assisting with a property dispute, it is common for lawyers to undertake the following, among other things:
1. Negotiate with other parties to resolve disputes out of court;
2. Prepare court documents;
3. Appear at court;
4. Brief counsel;
5. Advise as to your entitlements under contracts and agreements;
6. Apply for extension or removal of caveats, and advise as to your entitlements; and/or
7. Advise and seek the appropriate damages or remedies.
If you are involved in a property dispute and would like to understand your rights and obligations, please do not hesitate to get in touch with our office.