Selling a Shared Property? How to Apply Section 126 to Resolve Property Co-Ownership Issues

I am unable to agree with my co-owner regarding our property. What can I do?

When purchasing property alongside others, there is an inherent risk of disagreements regarding the management of the property. Additionally, unforeseen circumstances may arise, such as relationship breakdowns or a co-owner failing to contribute their share of the mortgage, or other expenses related to the property costs that render co-ownership unworkable.

What most people do not know is that if they cannot negotiate a satisfactory resolution amongst themselves, an order for the selling or partition of the co-owned property may be made by the Supreme Court (Court) where they find that the relationship is unworkable, or the co-owners cannot agree on the best way to deal with the property.

This article will explore the circumstances in which section 126 of the Property Law Act 1969 (WA) can help a co-owner who is unable to manage the property together with the other owner(s) to protect their share and interest in the property.

What does section 126 of the Property Law Act 1969 (WA) say?

Section 126 of the Property Law Act 1969 (WA) sets out the circumstances in which the Court must direct a sale or partition of the co-owned property.

The Court must issue an order for the sale of the property to a party with a 50% or more share in the property, unless a party with at least a 50% share can convince the Court that there is a good reason to opt for partition instead. For instance, the Court may refrain from ordering a sale if the property can be easily subdivided or partitioned, and another co-owner has expressed a preference for this approach.

The purpose of this section is to provide a remedy for co-owners who, in the event of a dispute with another co-owner, may otherwise not have an appropriate remedy to protect their share or interest in the property.

If you are a co-owner of a property and hold less than 50% of the ownership title, you still have possible courses of action available to you; however, the Court is not obligated to mandate a sale of the property. The Court will consider ordering a sale of the property when it deems those factors such as the nature of the land, the number of interested parties, or other relevant circumstances indicate that a sale of the property would be in the best interest of all parties involved. If the plaintiff is unable to demonstrate to the Court that a sale would provide a benefit to all parties, it is likely that the Court will issue an order for the partitioning of the property instead.

When a sale order is made, co-owners opposing the sale can opt to buy the share of the owner seeking the sale. If they choose not to, the Court can issue directives regarding the sale process. This may include appointing the party in control of the sale, determining necessary valuations, setting a minimum sale price, and selecting real estate agents or auctioneers.

Can section 126 of the Property Law Act 1969 (WA) be contracted out?

In some contracts, clauses may indicate that section 126 will not apply to the property in question and that a party cannot request for the property to be sold or partitioned without exercising other avenues first. While it is possible to contract out of section 126, this restraint is not valid in all circumstances.

How can we help?

At Lewis Kitson Lawyers, we specialise in navigating property disputes, providing clients with the expertise to protect their interests and shares in co-owned properties. If you require legal guidance on resolving disagreements regarding your property, please contact us at (08) 9364 9555 or reception@lewiskitson.com.au.