Introduction
Property law in Australia is the law area that guides and governs different forms of ownership of personal property and real property (land). The laws regulate and prioritize the rights, ownership, and interests of individuals and institutions concerning property- through the right to possess or own property. The following is a structured response to several questions and issues related to the claims of individuals on property and resources thereof. It explores three unique circumstances in which property can be exchanged- through a divorce in the Family Courts, contract law breaches, and defaulting mortgage payments.
Question 1: Bob and Pam
Married couple Bob and Pam own their family house under joint tenancy. However, their relationship deteriorates, which leads to Pam petitioning for a divorce. She also changes her will, leaving all her interests in the family home to her parents. Unfortunately, Pam commits suicide before the divorce proceedings are finalized, which leaves Bob in a peculiar legal situation.
The best course of action, in Bob’s case, can be determined through precepts by the Family Law Act (1975). According to the Act, a divorce is terminated immediately; one spouse passes away before the divorce proceedings are finalized (Family Courts of Australia, 2016a). Death before divorce proceedings have finalized eliminates the legitimacy of the divorce proceedings, including previous negotiations to the divorce terms. This provision makes Bob a widower, not a divorcee after Pam’s death. The effect of this provision on the allocation of property is as simple as it is straightforward- Bob should assume ownership of all marital property. Their family home was under joint ownership by both parties. As such, Both Pam and Bob are legitimate lifetime owners of the property, which gives both parties survivorship rights to ownership of the property. Joint tenancy essentially designates full ownership of the family home to one party once the other passes away (Family Courts of Australia, 2016b). The legal precedence of joint tenancy means once Pam passed away, her rights and interests to the property automatically transferred to Bob. Bob is, therefore, the legitimate owner of the family house.
The Case of Tenants in Common
However, if the couple owned the property as tenants in common, it would designate a certain percentage of the property to Pam and her beneficiaries, according to her will. This would create legal precedence for Pam’s parents to seek their percentage of the house. Her parents would be at liberty to sell or commercialize half the property’s value without Bob’s consent. In such a case, it would be prudent for Bob to enter arbitration or negotiation with Pam’s parents on how the property would be managed. However, if discussions fail, the next best course of action would be seeking a court settlement for the property. The right to the property would likely be granted to Bob since the parents have no direct assets, liabilities, or superannuation interests in the home (Greer, 2017). Also, an assessment of the contribution of Bob and Pam’s parents on the marital property pool and the overall welfare of the couple’s family would lean a ruling in Bob’s favor.
Question 2: Smith, Frigid Limited and Mortgage Defaulting
The second question follows Smith, a property owner (worth $2,000,000) who borrowed $1,000,000 from a bank, secured by a mortgage over the building in question. He contracts Frigid Limited to install an air conditioning plant on the building’s roof. The plant (valued at $300,000) is separate from the building, standing in its weight. The terms of the contract were that Smith would not own the plant’s property unless full installation and payment is made. Smith defaults mortgage payments before total payments are made. The bank contracts Frigid to sell the plant to the bank for $800,000.
Smith breached the terms of his contract with Frigid, which means he has no right to the plant as his property. His interests lie in the separate building. However, because he defaulted his mortgage payments, he granted the bank a right to invoke a power sale of the property. Smith’s right to block the power of the sale right of the bank depends on the terms of their mortgage. If the mortgage agreement does not contain an option to transfer clause, it may give Smith the option to invoke his equitable right of redemption (Stoloff, 2018). Under these provisions, the mortgagor would be entitled to redeem the building (property) when the debt secured by the mortgage is fully discharged, or the mortgagee exercises the surplus (in this case, $1,000,000) after the power of sale. However, this equitable right of redemption would be void if an option of purchase (or transfer) was included in the mortgage transaction.
Also, the $1,000,000 gained by the bank in case of a power of sale may be constructed as a penalty. The amount would be constructed as a penalty for defaulting since it supersedes the genuine estimate of the mortgage breach’s damage (Stoloff, 2018). This is one of the reasons why the option of transfer or purchase may not work in this circumstance. Since the contract between Smith and Frigid Limited was not finalized, it means Frigid maintains full ownership of the plant (there was no property transfer). As such, Frigid is at liberty to sell the property and enter into a contract with the bank.
Question 3: David’s Squatter Rights
David occupied a vacant piece of land for 17 years (between 1990 and 2007). He connected a water pump to bring water from a nearby stream to the land, powered by solar panels (all installed in 1991). Although he does not know who owns the land, he decides to occupy it, erect a fence around the property and grow flowers on the two-hectare property in 2000. He starts earning from the sale of the flowers. However, the government of New South Wales in July 2007, decided to resume ownership of the land to grow opium poppies in its efforts to legalize heroin. The government supports resumed ownership without compensating David.
Under Australian property law, there are several squatters’ rights that should be accorded to David, based on the law of adverse possession. The main precept of adverse possession is that an individual that occupies a vacant property for a predetermined period has the right to claim a legal title to the land. This right is limited to non-objection by the land’s owner. In New South Wales, the predetermined period is 12 years (Thornhill & Hurley, 2019). David continuously occupied the land well passed this threshold (he occupied for 17 years), which means he has the legal right to seek ownership title. His claim for adverse possession is likely to be upheld since there is significant infrastructural evidence of his development of the land- the water pump, solar panels, fence, and the flower plantation. He has adverse possession rights since the owner left the parcel vacant and did not give permission to occupy or develop the land. If the ownership claim is granted, it will force the government to compensate David for taking over the property since he would be recognized as the owner (Thornhill & Hurley, 2019). However, if the government can show proof that it was the legitimate owner of the land, it can counteract the claim (which is most likely to be dismissed due to the overwhelming evidence of continuous occupation of the land).