Exercising the Trustee’s Powers of Sale – Property Issues in Bankruptcy
Exercising the Trustee’s power of sale may give rise to certain issues before you can put the property on the market and getting it sold. There are some practical scenarios which Trustees may face when exercising their power of sale in two specific circumstances:
- Firstly, in relation to co-ownership disputes, the power of sale can only be exercised upon an application for orders for the sale of the property and division of the proceeds; and
- Secondly, where a Trustee is entitled to register a section 139ZR charge on the title to the property (based on the failure to comply with a section 139ZQ notice) and obtaining orders for sale pursuant to the charge.
If an agreement cannot be reached with a co-owner for the sale of a property, an application is made to VCAT under Part IV of the Property Law Act 1958 (Vic) or the Federal Circuit and Family Court under section 30 of the Bankruptcy Act 1966 (Cth) for the power to make orders for possession and sale.
In order for the Trustee to effect his or her power of sale of the co-owned property, the Trustee is entitled to obtain orders for the co-owner to provide vacant possession of the co-owned property.
There may also be uncollected goods which are left at the co-owned property upon vacant possession being given to the Trustee and the steps which are required to be adopted by the Trustee in relation to those goods. Specific requirements also apply for abandoned animals which may have been left at the co-owned property.
Consideration should be given as to whether any other additional orders are required such as equitable accounting or unjust enrichment or whether any costs are required to be deducted from the co-owner’s share of the net sale proceeds as a result of the costs associated with the procedures undertaken by the Trustee.