Resolving Property Disputes Without Going to Court: A Practical Guide to Buyouts and Settlements

Disputes over shared property can arise for many reasons. These include separation, changing life circumstances, or disagreements between co-owners. Whether you jointly purchased a home with a partner, family member, or friend, a change in the relationship or arrangement can quickly raise difficult questions about what should happen to the property.

One common solution is a buyout, where one party purchases the other’s share of the property. While it may sound straightforward, a buyout can involve complex legal, financial and emotional considerations. However, it is often possible to resolve these matters through negotiation and settlement, rather than resorting to court proceedings.

With the right legal support and a focus on reaching agreement, many people are able to navigate this process calmly and cost-effectively. This article explains how property buyouts work, and how settlement can help resolve disputes in a practical and constructive way.

What is a Property Buyout?

A property buyout occurs when one person who co-owns a property purchases the other person’s share. This results in the buying party becoming the sole owner of the property. Buyouts are common in a range of situations, including relationship breakdowns, business dissolutions and changes in investment partnerships.

A typical buyout involves:

• Agreeing on the property’s current market value, usually by way of an independent valuation

• Determining each party’s legal and equitable interest in the property

• Arranging finance or refinancing so the buyer can purchase the other party’s share

• Preparing and executing the legal transfer of ownership

In many cases, parties will also need to resolve related matters such as mortgage liabilities, contributions to rates and maintenance, or compensation for improvements to the property.

Reaching Agreement Outside of Court

While the law provides formal processes for resolving disputes through court applications, many people prefer to settle privately if possible. Court proceedings can be time-consuming, expensive, and adversarial. By contrast, a negotiated settlement allows parties to remain in control, avoid unnecessary stress, and often reach a more flexible and workable outcome.

In a buyout scenario, settlement negotiations may involve:

• Clarifying each party’s position and expectations

• Reviewing relevant legal documents, such as loan agreements or trust deeds

• Obtaining expert valuation and accounting advice

• Making proposals for how the buyout would be structured, including timelines and financial terms

• Working through any disagreements about contributions, debts, or repairs

• Recording the agreement in a written settlement agreement

Negotiations may take place directly between the parties, or through their lawyers. In more complex cases, it may be helpful to involve a mediator or engage in a formal settlement conference.

Legal and Financial Considerations

There are several important legal and financial matters to consider when negotiating a property buyout.

First, the value of the property should be established through an independent registered valuation. This helps ensure that both parties are working from a fair and reliable starting point.

Secondly, the parties need to agree on how to divide the equity in the property. This is not always a simple 50/50 split. Contributions to the purchase price, mortgage repayments, renovations, and other financial or non-financial inputs may need to be considered. In some cases, legal ownership may not reflect the actual contributions or agreements between the parties, so legal advice is essential.

Thirdly, the buying party will typically need to arrange finance to complete the buyout. This may involve refinancing the existing mortgage or taking out a new loan. It is important to consider whether the buyer can service the loan on their own and whether lender approval will be required for the transfer.

Finally, the settlement agreement should clearly record all agreed terms, including payment amounts, timeframes, who will pay for legal and valuation costs, and how any remaining disputes will be resolved. This agreement can then be used to facilitate the legal transfer of title and, if applicable, discharge of any shared mortgage.

The Role of Your Lawyer

Having an experienced property lawyer involved is crucial to ensuring the process is legally sound and that your interests are protected. Your lawyer can:

• Advise you on your rights and obligations as a co-owner

• Assist with reviewing and negotiating the terms of settlement

• Arrange for the property to be valued and any relevant searches or reports

• Draft or review the settlement agreement

• Oversee the transfer of title, mortgage changes, and registration requirements

• Ensure all documentation is correctly completed and lodged

In some cases, your lawyer may also recommend involving other professionals such as accountants, mortgage brokers, or relationship property specialists.

When Agreement Cannot Be Reached

Although most property disputes can be resolved by agreement, there are situations where negotiation fails. In these cases, an application to the court may be necessary to determine ownership interests, order a sale, or resolve other disputes. However, court proceedings should generally be seen as a last resort, given the cost, time, and uncertainty involved.

Summary

Property disputes between co-owners can be challenging, especially when emotions are running high or financial stakes are significant. However, with the right advice and a focus on practical settlement, many disputes can be resolved through a buyout agreement without going to court.

Taking a cooperative approach, supported by independent legal advice, can help you avoid lengthy disputes and reach a fair outcome that allows everyone to move forward.

If you are involved in a property dispute or considering a buyout, our team at Macalister Mazengarb can help. We provide clear, pragmatic advice and can guide you through the negotiation and settlement process from start to finish. Contact us today to discuss your situation and explore your options.