What Are the Legal Options When Co-buying Property Goes Wrong?

Question from Andy, What Are the Legal Options When Co-buying Property Goes Wrong?

Answer from AI:

When two family members decide to purchase a property together in Australia, it’s crucial to understand the legal implications of how the property title is held. If one party pays half but the title is only in the other person’s name, and later disputes arise, there are several legal considerations to take into account.

Understanding Property Ownership

In Australia, property ownership can be held in several ways, including ‘joint tenants’ or ‘tenants in common’. When a property is purchased jointly but the title is in one person’s name, it may be presumed that the person on the title is the sole owner. However, the other party may have a claim based on their contribution to the purchase price, known as a beneficial interest.

Legal Steps to Consider

1. Seek Legal Advice: It’s important to consult with a legal professional who specializes in property law to explore your options. They can provide personalized advice based on the specifics of your case.
2. Gather Evidence: Collect any evidence of the agreement and contributions made towards the purchase of the property, such as bank statements, receipts, or written agreements.
3. Mediation: Before taking legal action, consider mediation to resolve the dispute. This can be a cost-effective way to reach an agreement without going to court.
4. Legal Action: If mediation fails, the party not on the title may need to initiate legal proceedings to claim their share of the property or to recover their financial contribution.

Constructive Trusts and Resulting Trusts

In cases where there is a dispute over property ownership, Australian courts may recognize the existence of a constructive trust or a resulting trust. These are legal concepts that can be used to enforce the rights of someone who has contributed to the purchase of property but is not on the title.

• A constructive trust is imposed by the court to prevent the registered owner from unjustly benefiting from the situation.
• A resulting trust arises when it’s presumed that the person who provided the purchase money did not intend to gift it to the person on the title.

Legal Remedies

If the court finds that a trust exists, several remedies may be available:

• Ordering the sale of the property and division of proceeds.
• Compensating the party who contributed financially.
• Transferring the property title to reflect the true ownership.

Preventative Measures

To prevent such disputes, it’s advisable to have a clear written agreement when purchasing property jointly, even among family members. This agreement should outline the ownership structure, contributions, and what happens if the relationship breaks down.

Conclusion

Disputes over property ownership can be complex and emotionally charged. While general guidelines can be provided, each situation is unique and requires professional legal advice. If you find yourself in such a dispute, it’s important to consult with a property lawyer to understand your rights and the best course of action.

For more information on property law in Australia, you can visit the Law Council of Australia or the Legal Aid NSW for resources and guidance.