Trustee for Sale under Section 66G Conveyancing Act 1919 (NSW)
What is the Trustee Appointed Over?
Section 66G of the Conveyancing Act allows the Court to appoint trustees for sale over real estate (property) where the co-owners of the property are in dispute.
How do you make an Application?
The Court will consider the appointment of trustees following an application by one of the co-owners. The application sets out the nature of the dispute with the other co-owner(s), seeks the appointment of trustees to control the sale of the property and orders for the distribution of the surplus. The application must also include the proposed trustee’s consent to act and an affidavit of good character of the proposed trustees.
Who Does the Property Invest In?
The property vests in the trustees and the trustees can effectively take steps to market and sell the property once an order is made.
What Happens to the Sale Proceeds?
Any secured debt and the costs of sale are deducted from the sale proceeds. The remaining funds are held on trust to be distributed by the trustees to the co-owners.
When is the Procedure Used?
The procedure is often used in bankruptcy proceedings, family law disputes and general property disputes.
Court Appointed Receivership
Why Does the Court Appoint a Receiver?
The Court may appoint a receiver where it appears to be just and equitable and where an appointment is required to preserve the assets. Insolvency is not a pre-requisite.
An appointment may be made where:
• there is a dispute between two or more owners of property, including real estate; or
• there is a dispute between two or more owners of a business, such as partners in a partnership; and
• if a receiver was not appointed, the property or the partnership and its business and assets would be at risk of proper management.
What is the Role of a Court Appointed receiver?
The primary role of a Court appointed receiver depends on the specific order made by the Court.
Who is in Control of the Assets?
Generally, but subject to the extent of the Orders, following the appointment of a Court appointed receiver the powers of the business owners are suspended and they will be excluded from the management of the business. Therefore, the receiver is in control of the business, where the orders of the Court afford such powers.
Mortgagee in Possession
What is a Mortgagee in Possession?
A mortgagee in possession (MIP) may be appointed when the secured creditor takes possession of real estate (property) or other assets subject to the security instrument following a default in relation to the loan agreement.
The MIP may appoint an agent to act on its behalf.
What is the Role of an Agent for the MIP?
The role of the agent is to:
• take control of the property
• realise the property
• account to the mortgagee for the net proceeds
When is this Type of Appointment Appropriate?
This type of appointment is appropriate when:
• there are relatively few assets subject to the security instrument
• there is no business to operate
What are the Advantages of this type of Appointment?
There are two key advantages to this type of appointment, outlined below:
• the mortgagee is in control of the realisation of the property or other assets subject to the security instrument
• the cost of the procedure can be relatively inexpensive as the mortgagee in possession is able to control the appointment
How is an Appointment Initiated?
An appointment is initiated when:
• the owner of the property is in default of the terms of the security
• a notice has been issued to the owner to rectify the default and the owner has failed to rectify the default
• notice is given at the end of the default period that the mortgagee will take possession of the property or assets
What is the Priority of Repayment?
The net proceeds from the sale of the property or assets will be applied in reduction of the applicable loan account and/or mortgage facility. Any surplus would be available for the owner of the property or assets.