What is section 66G?

Section 66G of the Conveyancing Act 1919 (NSW) establishes a formal process for the appointment of trustees for the sale of a property in circumstances where co-owners are in an irreconcilable dispute.

People purchase or inherit residential or commercial property together for a variety of reasons. Disputes arise when one co-owner wishes to sell or divest their interest while the other co-owner does not want to sell or is unwilling or unable to buyout the co-owner.

In such disputes, section 66G can be of great assistance.

The commencement or threat of section 66G proceedings is often pivotal in ending disputes between co-owners of real estate. Co-owners could agree to sell, or one co-owner could agree to acquire the interest of the other.

In section 66G matters where we have consented to act as trustees, in the absence of a commercial resolution, section 66G Orders are made by the Court.

We provide a general overview of the process and the steps a co-owner should take for the appointment of trustees to a property.

When is section 66G typically used?

Disputes over the sale of co-owned assets commonly arise in the following situations:

• A co-owner becomes bankrupt, and their share in the property vests in their trustee in bankruptcy.
• A breakdown occurs in the personal or business relationship between co-owners, resulting in a desire to separate their property interests.
• Co-owners simply cannot agree on a sale process or sale price.

If co-owners cannot resolve their dispute privately, a co-owner can apply to the Supreme Court of New South Wales (or the Federal Court of Australia in cases of a bankrupt co-owner) for an order appointing trustees for sale of the property under section 66G of the Conveyancing Act 1919.

An order under section 66G is discretionary. However, if the application is prepared and presented carefully, and consent from experienced trustees is obtained, it is highly likely to succeed, leading to the sale of the property.

The Court will not appoint trustees for sale or order the sale of a property if:

• The co-owners have made a contrary agreement.
• It would be unconscionable to make the orders.
• The co-owners hold the property on trust, and the trust instrument contains its own procedure for sale.

The Court usually orders that the legal fees for making the Court application, along with the trustees’ expenses and fees, are to be paid out of the sale proceeds upon completion of the sale. It is vital that the application to Court seeks appropriate orders to minimise the risk of disputes and simplify the processes for approval and payment of expenses and fees. This approach can shorten the time taken to complete the job and minimise the costs associated with it.

How Levi Consulting can help

Levi Consulting has extensive expertise and industry connections to support co-owners whose property is in dispute. Before you or your lawyer files your application to the Court, Levi Consulting will prepare an outline of tasks we intend to complete from the day of appointment to the completion of the sale. We will also put forward a proposed fee scale. David Levi is a Registered Liquidator with deep experience in section 66G appointments. Levi personnel will consent to act as Trustees.

Court orders

When a Court orders trustees to be appointed to sell the property, we typically take the following steps to preserve, protect and sell the property:

• Communicate with the Parties
• Familiarise ourselves with the Orders
• Become registered on title
• Obtain vacant possession of the property if necessary
• Obtain insurance (as the appointment may trigger a default on existing insurance)
• Collect rent, if rented, between the time of appointment and completion of the sale, from any tenants, and lease the property if appropriate
• Determine the most suitable real estate agent to market and sell the property
• Devise a sale strategy with the agent to achieve market value through auction
• Obtain an independent valuation from a registered valuer
• Monitor the sale campaign, determine interest, set an auction reserve, and attend auction
• Exchange contracts, attend to settlement, pay out costs of sale, mortgages and caveats on title, expenses and fees of the trusteeship, legal costs of the application (if ordered), and distribute net proceeds to co-owners
• Consider tax issues including capital gains tax, goods and services tax, and lodgement of an income tax return for the trustees
• Attend to any other Orders made by the Court

The legislation refers to trustees rather than trustee.

Recovering your money

As trustees, after the settlement of the sale, we would hold the sale proceeds on trust for the co-owners in proportion to their ownership interests. Subject to the Court Orders, we would then report to the co-owners and the Court, and distribute the net sale proceeds proportionately among the co-owners according to their interests as shown in the title details for the property, including information related to taxes relevant to the sale.

It is important to note that there can be exceptions and adjustments where a co-owner has:

• Contributed disproportionately to the purchase price or mortgage repayments relative to their interest in the property recorded on the title (e.g. where one co-owner has paid the entire purchase price or made all the mortgage repayments)
• Paid rates, strata levies or utilities disproportionately to their interest in the property recorded on the title
• Made improvements to the property that have benefitted all co-owners by increasing the value of the property
• Occupied the property without compensating other co-owners and is liable to pay an occupation fee as a result.

Seek professional help

When it comes to disputes over selling a co-owned property, it is important to seek professional help and expertise.

Don’t hesitate to seek the help of a trustee and also, a lawyer if you are facing a co-ownership dispute. It could save you a lot of time, money, and stress in the long run.

David Levi is a registered liquidator.

Contact David Levi on 0418 602 466 for a free chat or Zoom session.