Jointly or Co-owned Property Arrangements—How to Start and How to End Them

Property Arrangements

Buying a property with another person is a serious commitment. Even more so if a loan is taken out to buy the property. Co-owners are usually jointly and separately responsible for that loan, which may prevent them from moving on and buying another property. So how do you start and end a co-owned property arrangement?

Get it in writing

Joint or co-owners vary from friends or joint venturers who buy a property to renovate or develop and sell at a profit, to couples buying a property as an investment, and executors or beneficiaries of a deceased estate, to name but a few.

Before the property is purchased, important details need to be captured in a legally binding and enforceable written agreement.  These details include:

  • What the parties intend to do with the property?
  • The timeframe within which they will do it?
  • Who will pay for what?
  • How much will each person contribute towards the purchase of the property and the ongoing costs?
  • How will the parties deal with disputes or terminate the arrangement?

If things don’t go as planned, and one of the owners stops paying the loan or other costs or is getting a greater benefit from the property, or the owner’s original objective is not achieved, or the relationship breaks down, invariably the questions arise: how can I end this legal relationship? how can my responsibility for loan repayments and other costs be terminated?

Get an order to sell

Section 126(1) of the Property Law Act 1969 (WA) is an important provision. It allows the separation of the interests of parties who jointly own property. This provision anticipates an order for sale or an order for partition of the property.  There is no other alternative available. There also appears to be no case in Western Australia in which an order for partition has been made, so that means a sale will almost invariably be ordered. De facto couples cannot usually rely on s126(1) because other areas of the law related to those types of relationships.

The section does not specify what interest a party must hold to make an application for the property to be sold. It refers to ‘parties interested…to the extent of a half share or upwards in the land’, but that share may be owned in law or in equity. [1]

Section 126(1) says nothing about the proceeds of a sale. Although the parties own the property jointly, one may have contributed more than the other and be entitled to a greater share of the proceeds. If there is some reason why, in equity, one of the co-owners is due more of the proceeds than the other, then equity will protect the interests of that party by a constructive trust. [2]

As with all court proceedings relating to land, a case under section 126(1) must be commenced in the Supreme Court of Western Australia.

Another benefit of this provision is that a summary judgment procedure under the Rules of the Supreme Court 1971 (WA) is proper and appropriate. A quicker or summary procedure generally costs less and can be achieved in a shorter timeframe than ordinary court proceedings.

Cases: Sale in lieu of partition

In Trainor v Trainor [2021] WASC 40, the parties were registered proprietors of 6 farming lots, which they owned as tenants in common in equal shares. As Master Sanderson stated in that case, “Really, that is the end of the matter. …. there is no answer to the plaintiff’s claim and he is entitled to summary judgment.’ The plaintiff had applied for and obtained an for the property to be sold.

In Corlett (as Executor) v Field [2018] WASC 243, the executor of the deceased estates of a husband and wife applied for and obtained an order for the sale of a 4.4187-hectare property. At the time of their death, the deceased married couple owned a half interest in the property, and the defendants together owned the other half of the property. The deceased couple had sold part of the property to the defendants on the understanding that the land would be subdivided. No subdivision occurred during the lives of the deceased couple because the defendants refused to share the cost of the subdivision. The defendants failed to establish that they were entitled to more than a one-half share of the property and that they should be compensated for improvements to the property. The court declined to order the partition or subdivision of the property.

KLD Legal provides advice and representation on:

  • Buying jointly or co-owned property
  • Co-ownership agreements
  • Resolving disputes over jointly or co-owned property

Contact Kerry Davis and the KLD team for assistance if you are involved in a WA property dispute or are considering being a part of a co-owned property arrangement and want to know your legal rights when it comes to real estate law.