Deadlock

If one party wants to sell an asset and the other doesn’t, then in the absence of agreement, there’s a deadlock. Nothing happens. That applies to company shares as well as real estate. Either party can block the sale.

Land, however, is different. You can do something with land. You can actually apply to the court and the court can appoint a trustee over the whole of the land. The trustee then sells it, and after costs of sale, the trustee will divide the profit. That requires a costly court application. The cost of the trustee doing his/her job is also costly.

A written agreement before the problem arises, is much simpler and more straightforward than struggling through all the above. Both parties can write an agreement that says, ‘if either of us wants to get out of it, I’ll offer to sell to you’. Should the other party decline, they can negotiate a minimum acceptance price - using the services of a valuer.

Where company shares are involved things are even more difficult in the absence of an agreement as the Courts have very limit scope to intervene.

Note -  that’s what estate planning is about. Estate planning is about putting into place reasonably simple agreements to avoid dispute and misunderstanding down the track.

This is an extract from the book I wrote and was published last year, “Understanding Wills and Estate Planning", the only Australian publication written in plain English for the public and professional advisors who are not specialists. It avoids court decisions, legislation and jargon - a practical manual. 

Copies of this book are available at most good book stores but can be purchased from me direct at the following link: https://www.rodcunichlawyer.com/publications/.