I have two residential properties (Tenants in Common) with…

Hi
Based on the situation you have advised, you have a number of options to consider:
1. is to exchange your share in the investment property your sister is living in, for your sister's share in the property you are wanting to sell;
2. if #1 is not possible or agreeable with your sister.... then to attempt to enter into a co-ownership agreement with your sister (I am assuming these agreements are not currently in place, and they would provide a resolution to your current situation) with regard to the property she is currently living in, so that everything is clear regarding what the arrangements will be into the future with regard to this property. Who will pay for what? Should an adjustment be made for the fact that she is most likely going to live in the property rent free? what happens if she defaults of the mortgage payments (that is assuming there is a mortgage)... etc.;
3. if # ***** is not possible, consider forcing the sale of the property she is living in (via the process I will outline below in option#4). She can either decide to sign the co-ownership agreement, or co-operate with the sale, or refuse to co-operate.. in which case the property will still be sold (via order from VCAT);
4. Lastly, with regard to the sale of the second property, which is what you query relates to... if she continues to refuse to co-operate... then the sale of the property can be forced... albeit with the assistance of VCAT.
Sale by application for orders to sell the property/properties from VCAT
PROPERTY LAW ACT 1958 - SECT 225
Application for order for sale or division of co‑owned land or goods
(1) A co-owner of land or goods may apply to VCAT for an order or orders under this Division to be made in respect of that land or those goods.
(2) An application under this section may request—
(a) the sale of the land or goods and the division of the proceeds among the co-owners; or
(b) the physical division of the land or goods among the co-owners; or
(c) a combination of the matters specified in paragraphs (a) and (b).
(3) A person who makes an application under subsection (1) must give notice of the application to the holder of a security interest over the land or goods to which the application relates.
Please let me know if you would like me to prepare a quote for legal assistance (in the first instance) to write a legal letter to your sister outlining her choices, and stating that if she does not reply within a certain timeframe (and agree to co-operate), that you will be applying to VACT to force the sale of both properties.
Kind regards,
James