What is section 66G?
Section 66G of the Conveyancing Act 1919 (NSW) establishes a formal process of 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. If 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, disputes arise.
If there is a dispute, section 66G can be of great assistance.
The commencement or threat of section 66G proceedings is often pivotal to 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 commercial resolution, section 66G Orders are made by the Court.
We provide a general overview of the process and what steps a co-owner should take for the appointment of trustees to a property.
When is section 66G typically used?
The most common reasons why disputes over the sale of co-owned assets arise are typically due to the following situations:
- a co-owner becomes bankrupt and his or her share in the property vests in their trustee in bankruptcy.
- a breakdown occurs in the personal or business relationship between co-owners resulting in them wanting 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, but if the application is prepared and presented carefully and consent from experienced trustees is obtained, it is highly likely to succeed, and the sale of the property will follow.
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.
- where 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 paid in making the Court application, and the trustees’ expenses and fees are to be paid out of the sale proceeds on or after completion of the sale. It is vital that the application to Court seeks appropriate orders which minimise the risk of disputes, and simplify the processes which will apply to approval and payment of expenses and fees. That way, the time taken to complete the job can be shortened, and the costs of completing the job can be minimised.
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 Court, Levi Consulting will prepare an outline of tasks we intend to complete, from the day of appointment to the completion of the sale and will 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 and sell the property, we would typically take the following steps to preserve, protect and sell the property including:
- communicate with the Parties
- familiarise ourselves with the Orders
- become registered on title
- obtain vacant possession of the property if necessary
- obtain insurance (as appointment of existing insurance may be an event of default)
- collect rent, if rented, between the time of appointment and completion of the sale, from any tenants, and leasing of the property, where appropriate
- determine the most suitable real estate agent to market and sell it
- devise a sale strategy with the agent, with the intention of achieving market value by auction sale
- obtain independent valuation from a registered valuer
- monitor sale campaign, determine interest, determine auction reserve, 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 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
Acting as trustees, after the settlement of 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 co-owners and the Court, distribute the net sale proceeds proportionately among the co-owners in accordance to their interests shown in the title details for the property including information in connection with 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 to the mortgage repayments relative to their interest in the property recorded on the title (e.g. where one of the co-owners 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.
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