When a property is owned by more than one person, it is important to know who needs to sign the listing agreement and the sale and purchase agreement. Also, when you are having an agreement signed by a purchaser which is a trust or company, you need to know who should sign for the purchaser.
This may involve a husband and wife or de facto couple, the trustees of a trust, or a company.
Two or more individuals
A husband and wife or de facto partner do not have authority to sign an agreement for the other, unless one person has appointed the other person as that person’s agent. It is possible for one person to have given another person “implied authority”. This is where that person, by words or conduct, has lead a third party to believe that the other person had authority to act on that person’s behalf. However, it is best not to try to argue that point. Therefore, unless you have received a written notice from one of the owners confirming that the other owner is authorised to act as his or her agent or to sign on his or her behalf, or unless you see a copy of a power of attorney where one person appoints the other as his or her attorney, the safest thing is to have both spouses or partners sign the agreement.
Trusts
A trust can only act through its trustees.
The general rule is that trustee’s decisions must be unanimous and all the trustees must take part in decisions (although this rule can be changed in the trust deed, which forms the trust).
All of the trustees must therefore sign the agreement, unless the trustees who do not sign confirm to you in writing that the trustees who do sign have been authorised to sign on their behalf.
Unfortunately, it is common, especially where two of the trustees are a couple and the third is a professional trustee, for the couple to sign a contract for the sale of a property owned by the trust without referring it to the professional trustee. This is a breach of the rule requiring all trustees to make decisions unanimously. In the recent case of Burt v. Henry and Taylor, the High Court ordered that a purchaser’s caveat be removed from the certificate of title of the property owned by the trustees because one of the trustees did not sign the sale contract. In other words, the court said the agreement was not binding on the vendor as all three trustees did not sign.
Companies
There is a rule that says that someone having the “expressed or implied authority” of the company may bind the company. Therefore, even if there are two directors of a company, only one of the directors needs to sign a sale and purchase agreement for it to be binding.
