What Happens When One Co-Owner Wants to Sell a Jointly Owned Property, but the Other Does Not?

Joint ownership of property can be an efficient way to share both the benefits and responsibilities of owning real estate. However, conflicts can arise when one party wishes to sell the property while the other wants to keep it. This situation can be complex and stressful, particularly when the co-owners cannot come to an agreement. The legal framework provides a structured approach to resolving such disputes, but it can involve several steps and potential legal action.

Types of Joint Ownership

Before delving into the process, it's important to understand the two main types of joint ownership:

1. Joint Tenancy: In this form of ownership, both parties have equal rights to the whole property. If one owner dies, their share automatically passes to the surviving owner(s).

2. Tenancy in Common: Here, each owner has a distinct share of the property, which may not necessarily be equal. If one owner dies, their share does not automatically pass to the other owner(s) but can be left to someone else in their will.

Initial Steps: Communication and Mediation

When one party wishes to sell a jointly owned property and the other does not, the first step should always be to try and reach an amicable agreement. Open communication between the parties is essential. Discussing the reasons for the sale and exploring alternative solutions, such as one party buying out the other’s share, might help to resolve the conflict without further escalation.

If direct communication fails, mediation is often the next step. Mediation involves a neutral third party who can help facilitate a discussion and assist the co-owners in reaching a mutually acceptable agreement. Mediation can be a quicker and more cost-effective solution compared to litigation.

Legal Action: Applying for an Order for Sale

If mediation fails and no agreement can be reached, the party wishing to sell may need to take legal action by applying to the court for an Order for Sale under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).

What Is an Order for Sale?

An Order for Sale is a court order that mandates the sale of a property. When one co-owner applies for this order, the court will consider various factors before making a decision. These factors include:

• The intentions of the parties at the time of purchase: The court will look into what the co-owners intended to do with the property when they originally bought it.

• The purpose for which the property is held: For example, if the property was bought as a family home, the court may be more reluctant to order a sale if one party wishes to continue living there.

• The welfare of any children: If children are involved and living in the property, the court will consider their welfare as a significant factor.

• The financial position of the co-owners: The court may take into account the financial situations of both parties and whether a sale would cause undue hardship to either party.

Court’s Decision

The court has wide discretion in making a decision. If the court grants the Order for Sale, the property will be sold, and the proceeds will be divided according to the ownership shares (or as the court deems appropriate). If the court does not grant the order, the property will remain unsold, and the co-owners must continue to own it jointly unless they can come to another agreement.

In some cases, the court might order a sale and division of proceeds, where the property is sold, and the sale proceeds are split according to each party's share. Alternatively, the court could order a buyout, where one party is ordered to buy the other's share at a fair market value.

Conclusion

Joint ownership of property can become complicated when one party wants to sell, and the other does not. While legal mechanisms like an Order for Sale exist to resolve disputes, it's often best for both parties to seek an amicable resolution through communication, mediation, or alternative solutions before resorting to legal action.