Small percentage of house funds required

kensiko

Good day all

Way back in the day I offered 10% (the full deposit paid) on a house purchase on a second property for someone who wanted to be a landlord after they had pension issues. I have been receiving 10% of rental since then and am now in a position where the funds would help my family over the next couple of years rather than waiting x (who knows?) amount of years before the 90% owner wishes to sell or is in a position to buy my percentage.

I have obtained deeds and although I am not in the registered owners section (yes I know that was probably foolish) I do have a restriction on the deeds which reads 'no disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by "MY DETAILS" or his conveyancer'.

I don't think the owner is in a position to buy me out in full but wondered what options, if any, I had in regards to this. I assume I cannot force a sale as I am not an owner as such but wondered what rights the restriction would give me.

I don't hold out much hope in all honesty and am expecting replies advising me to wait till they can sell/pay my share. I am just not 100% certain what the restriction on the deeds is actually worth.

Thanks one and all.

xylophone

the 90% owner wishes to sell or is in a position to buy my percentage.

The 100% owner? You don't appear to own any part of the property?

Do you have any formal written agreement in place?

Is the owner able to mortgage the property so as to be in a position to repay the money you lent him?

kensiko

xylophone wrote: »

The 100% owner? You don't appear to own any part of the property?

Do you have any formal written agreement in place?

Is the owner able to mortgage the property so as to be in a position to repay the money you lent him?

Apologies, yes I do mean 100% owner.

We do have a written agreement yes, that was signed and witnessed at the same time as the restriction was added to the deeds. I will dig that out and see if there is anything about a time frame but I am pretty sure it is just open ended. I will update the thread later if there is any pertinent information in it.

Mortgaging the property would probably be the owners first choice I would have thought, I know they can't pay without getting monies in from somewhere, be it a loan or a mortgage. If I ask and the answer is 'no' or for whatever reason he can't do this, am I in any position to make demands? Or will this depend on what was written in the agreement?

Thanks for your response.

AdrianC

So, basically, you lent 10% of the purchase price - and have a charge on it in return.

What does your "written agreement" state about the amount due on repayment? 10% of value at time of sale? Straight repayment of the fixed sum? Presumably the rental income is in lieu of any interest?
What does it state about when the repayment's due?

If the "written agreement" doesn't give any explicit repayment situation (please at least tell us it specifies it's due on sale), then all you can do is ask.

One other question... You say it says "written agreement of you/your conveyancer" - is there any scope for your successors or heirs? Because, as you've quoted it, he's stuffed if you drop dead tomorrow.

lisyloo

If you made an open-ended loan then I don’t see how you can call in the loan.
If your on good terms then the best thing to do would be to discuss and say you’d like repayment and see what the options are.

kensiko

lisyloo wrote: »

If you made an open-ended loan then I don’t see how you can call in the loan.
If your on good terms then the best thing to do would be to discuss and say you’d like repayment and see what the options are.

Yes, all good terms so no issues there. Just wondered what options I would have if when I make the request it falls on deaf ears. It was the restriction I didn't really understand to its full extent, but it is fairly obvious I am not an owner.

kensiko

AdrianC wrote: »

So, basically, you lent 10% of the purchase price - and have a charge on it in return.

What does your "written agreement" state about the amount due on repayment? 10% of value at time of sale? Straight repayment of the fixed sum? Presumably the rental income is in lieu of any interest?
What does it state about when the repayment's due?

If the "written agreement" doesn't give any explicit repayment situation (please at least tell us it specifies it's due on sale), then all you can do is ask.

One other question... You say it says "written agreement of you/your conveyancer" - is there any scope for your successors or heirs? Because, as you've quoted it, he's stuffed if you drop dead tomorrow.

I will answer all those questions this evening when I can view the agreement, I probably should have thought of that before I started the thread - oops! :rotfl:

It's a good question about the restriction. The property is mentioned in my will at which point I would assume via probate my heirs could get that restriction changed to their details?

Or is this something I should try to get changed? I wouldn't want to leave either my heirs or the property owner with any problems due to my demise! The restriction was worded by a solicitor though so I would hope they know roughly what they were doing.

xylophone

The property is mentioned in my will

How exactly? As a loan?

And is the 10% of rental income that you receive really interest on that loan?

kensiko

xylophone wrote: »

How exactly? As a loan?

And is the 10% of rental income that you receive really interest on that loan?

Actually, ignore that. The will was written before the property deed change was made.
The letter from the solicitor who wrote the wills mentioned the property but at the time I didn't proceed to follow it up. That was done a couple of years later.

The restriction charge may need looking at then? If I do leave this mortal planet, nothing is mentioned in writing but my family do know about it. The owner might struggle to get written confirmation from me should they decide to sell at that point though! I just assumed this was OK as it was written professionally and I thought it could be changed by my heirs. At least this thread has brought up a potential issue for me to resolve if nothing else.

The rental income will be classed as interest, yes. I don't have the final document that was signed but I do have the first draft which was only changed very slightly.

Relevant parts are:
"The Owner purchased the Property as an investment and acknowledges that the payment made by the Beneficiary of the Deposit was neither a gift nor a loan to him."

"The Property is intended to be let as an investment in a succession of Assured Shorthold Tenancies. Any income received is to be divided between the Parties in the following proportions:
(a) OWNER DETAILS 90%
(b) MY DETAILS 10%"

"When the Property is sold the net proceeds of sale after deduction of the incidental costs of sale will be applied as follows:-" The deposit total is then shown or "ten per cent of the net proceeds of sale whichever is the greater"

There is an interesting part which reads:
"In the event that either Party desires to sell the Property the Property will forthwith be placed on the market for sale and the net proceeds of sale applied as set out above"

I am not 100% sure if that was in the final signed copy I have, but if it is I suppose I have answered my own question! Obviously they would try not to sell it but instead find the monies form somewhere.

Will update this when I check the official copy.

Thanks for reading.

AdrianC

kensiko wrote: »

"The Property is intended to be let as an investment in a succession of Assured Shorthold Tenancies. Any income received is to be divided between the Parties in the following proportions:
(a) OWNER DETAILS 90%
(b) MY DETAILS 10%"

And that's been happening, right?

"When the Property is sold the net proceeds of sale after deduction of the incidental costs of sale will be applied as follows:-" The deposit total is then shown or "ten per cent of the net proceeds of sale whichever is the greater"

If the value falls - you get your money back.
If the value rises, you get 10% of the net sale price.
You have zero risk, you get the gain.

There is an interesting part which reads:
"In the event that either Party desires to sell the Property the Property will forthwith be placed on the market for sale and the net proceeds of sale applied as set out above"

And there y'go... That answers your question.

If you want out, it goes on the market.

diggingdude

ask person to work with you to buy you out, sell, or you may investigate selling your 10 percent to someone else