Co-ownership
Written by Grace MacGillivray.
Co-ownership exists when more than one person holds an interest in the same land. There are two ways of owning property when there are multiple owners; joint tenancy or tenants in common.
A joint tenancy is when ownership is held jointly and equally with the right of survivorship existing. This means that upon the death of one of the owners, the survivor or survivors will automatically take the interest of the deceased.
Tenants in common ownership is when two or more people hold specified shares in the property (equal or unequal). The rule of survivorship does not exist and when one owner dies, their interest in the land is disposed of in accordance with the provisions in their will, or in accordance with the Administration and Probate Act 1958 (Vic) if the person dies intestate (ie without a valid will).
Ownership as tenants in common are commonly created where there are blended families, business partners, friends, siblings or where owners are contributing different amounts to the purchase of the property.
When relationships between co-owners start to break down, there are often disagreements as to how the property should be dealt with.
Under the Property Law Act 1958 (Vic) (PLA), the Victorian Civil and Administrative Tribunal (VCAT) has wide powers to deal with co-ownership disputes. However, there are a number of circumstances in which the VCAT will be unable to hear the dispute. These includes where the dispute relates to a proceeding under Part IV of the Administration and Probate Act 1958 (Vic), which permit a Court to make provision for an eligible person from a deceased estate for the proper maintenance and support of that person. Similarly, the VCAT cannot hear disputes which arise between married or de facto couples or under the Partnership Act 1958 (Vic). In these situations, the Supreme Court and the Country Court have jurisdiction, not VCAT.
A VCAT application for an order for sale or division of co-owned land or goods can request:
- The sale of the land or goods and the division of the proceeds among the co-owners; or
- The physical division of the land or goods among the co-owners; or
- A combination of the two.
The tribunal may make any order (sale, physical division or combination) it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
If VCAT determines to make an order, the order must be for sale, unless it considers an order for sale and physical division or for physical division alone would be a more just and fair outcome.
Under the PLA, the factors that the VCAT must consider if a request is made to physically divide the land, or an order is sought for a combination of the physical division and sale of the land, are:
- The use of the land or goods, including the use for residential purposes;
- Whether the land or goods can be divided and the practicality of dividing the land or goods; and
- Any particular link with or attachment to the land or goods, including whether the land or goods have any special or unique value to one or more co-owners.
Keam v Mason [2010] VCAT 242 (“Keam”) involved a dispute between two groups of co-owners. The relevant property consisted of 11 hectares of land and was surrounded by residential developments. One co-owner lived and grazed sheep on the property, but it had not been significantly farmed since the 1980’s.
The property had several co-owners and was owned as tenants in common in various shares. Those with approximately 75% of the shares wanted the property to be sold while the remaining owners wanted the property to be divided into two lots.
The tribunal considered the 3 factors as previously outlined:
- The use of the land – the use as a residence for a respondent and minor grazing was considered far below the highest and best use of the land, which could be the subject of a residential subdivision;
- Whether the physical division of the land was possible and practicable – whilst a two lot subdivision was possible, as to its practicability, the Tribunal needed to find on the balance of probabilities that the two lot subdivision envisaged would accurately reflect in value the fractional interests of all co-owners. The Tribunal considered that there was insufficient evidence before it on relevant town planning permits and conditions, unquantified contingencies and how they could be dealt with and the costs and the returns from the sale of the two lots;
- Any particular links with or attachment to the land, including whether it is unique or has a special value to any co-owner. “Special value” was held to have the same meaning as in the law of compulsory acquisition, ie the value to the owner over and above its market value. Links and attachment included length of attachment and the intensity of the sentimental attachment. Evidence of this was found to be lacking in this case.
In Keam, the Tribunal decided that based on the above factors, the land should be sold.
In summary, the VCAT will not always have jurisdiction in relation to a co-ownership dispute, however, where it does have jurisdiction, it has wide powers to deal with disputes and is primarily concerned with ensuring a just and fair outcome. Whilst there is a presumption in favour of the sale of co-owned property, parties may seek a physical division of co-owned land if a number of additional factors can be properly addressed.
