Advice needed re:property sale

Tipustyger

Ok, bit of a complicated story but would really appreciate any advice.

Around 10yrs ago my dad bought a property. Part of the deposit at the time was loaned to him by another guy who, as a guarantee for loan repayments was put on the deeds as joint owner. Since then, the guy has not contributed to the running of the property at all. My dad now wants to sell but the guy is demanding a great deal of money so they are no longer on amicable terms. It was bought for 50K, would sell for around 150k. Guy only gave a loan of 1.5K and is claiming that he should get half!! Latest offer is that he allow sale if he is given 32K. Is there anything that can be done and if so what? I know it was very stupid to put the guy on the title deed but surely there has to be some way of establishing that he is being more than unreasonable. Parents are happy to give him a percentage share but, as that means he would get less money, he won't budge. Would really like to try and avoid cost of legal case.

Also, if this sale ever goes through, dad wants to put the money in my account for me to distribute it between kids etc. I'm the only one he trusts. Does anyone know if there are potential tax problems?

Would really appreciate any advice/help. Family is in a lot of debt and this sale would set all of us debt free and we'd have some left over to make fresh start.

Mrs_Thrify

Oh dear, what a pickle! I can advise you all need to keep talking, and be polite - you need each other - even if you disagree.
Stating the facts. This guy lent 1.5 K OVER 10 YEARS and now is looking for a return on the investment. The question is what would be fair?
I have not got the answer but I am sure plenty of others on here would have a good idea. Good luck...with the answer.

dolce_vita

Who has lived in the place since it was bought?

Tipustyger

Hi,

since the property has tripled in value I think it would be fair to either give that rate of return or offer him a %share based on his 1.5k out of 50K investment. He has refused both. My dad even offered to allow him to have half of what was left over if he would refund the money that has been invested over the years as running costs etc. He also refused that. Trouble is he also refuses to discuss the situation with anyone and my parents don't have direct contact with him so any communication is slow.

The property has been used by my parents as a non-residential adult education centre since it was bought.

dolce_vita

It seems that your father was struggling to finance the deal at the time and if it wasn't for his mate he probably couldn't have afforded it.

The fact that he allowed him joint ownership for such a paltry sum as 1.5k screams either desperation or stupidity.

Your father should be grateful for his friend's generosity and accept the 60 odd grand on offer.

Tipustyger

I know for certain that at the time this man was supposed to help my father by taking a joint interest AND responsibility. Over the years, given his complete lack of commitment and any financial help, my parents have asked him to transfer ownership. He initially agreed but, for reasons unknown to my family, he has started to demand money and he constantly changes the sum he wants. I think this sort of treatment by anybody in any circumstances indicates a person who simply can't be relied upon or trusted to be fair.

CYBERCIDERSAVER

Surely unless you have some written agreement then he should really be entitled to half as he's a joint owner.

Negotiation is the only way I wouldhave thought.
So was the property used to make a profit??? If so then why wasn't the money paid back as soon as possible???

Tipustyger

The property was not used for profit. Any money made was used to keep the place running as an education centre. As for repayment, my parents have tried before but it was never sorted out and then the guy started asking for money.

flying_solo_2

Around 10yrs ago my dad bought a property. Part of the deposit at the time was loaned to him by another guy who, as a guarantee for loan repayments was put on the deeds as joint owner.

1) 'as a guarantee for loan repayments' would suggest this guy was joint mortgagee...Can your dad prove that he alone made the payments or did this guy contribute (you say he hasn't contributed to the running of the property i'm assuming he didn't financially)

2) was it agreed that this guy was to have no contribution in the running of the property at the outset?

3)has the mortgage and original loan(1.5k) been repaid

4) what was his original 'expectation/ conditions' for his tiny contribution(i realise you've stated he was to have joint interest and responsibility and committed to neither)

The answer to these need to be considered very carefully since basically what they entered into was a 'verbal contract' (as binding as any paper agreement)and your dad would have a good case in arguing that this guy agreed to be on the deeds to protect his 'stake' with no other responsibility other than the those he neglected to undertake!thereby breaking the 'contract'(assuming he wasn't paying towards the mortgage) and therefore should only reasonably expect to recieve an equivalent percentage share as his original contribution approx 3% of the resale value.
The situation could be supported by the fact that your dad actually did this guy the favour by keeping up the repayments of the mortgage since he would've been jointly responsible for any default!! (1.5k against what 47.5k)big risk for such a small stake!
To conclude if this guy has been nothing more than a 'silent contributor' and refuses to discuss this any further a court has the power to enforce an order for sale and can apportion his share as they see fit..(It needn't be as expensive as you think as most of the application process can be done yourself without need of legal representation,your local court will help you with forms, which to use,how to complete them etc but can't advise you).
Personally i'd try to negotiate at 10% of sale price since thats much more than could be earnt on 1.5k in the best high interest account over the last 10yrs.and would be seen as fair and reasonable to a court(dependant on all the assumptions made being close to the mark!)
Put the offer in writing(keeping a copy) requesting a written reply to produce at court if necc.
Apologies for this being so long winded but hope it helps..Good luck.

Tipustyger

Dear Flying Solo, many thanks for your very helpful post.

mightymouse

Tipustyger wrote: »

Ok, bit of a complicated story but would really appreciate any advice.

Part of the deposit at the time was loaned to him by another guy who, as a guarantee for loan repayments was put on the deeds as joint owner.

Hi

It is likely he signed the deed as guarantor only....was he put on the mortgage and if so in what capacity did he sign in the application.

It is possible that the role of 'mortgage guarantor 'and 'lender of deposit' are two speperate issues.

As guarantor he is not entitled to share the equity as for the loan what was the agreement when the money was lent regarding repayment.