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Making a property agreement enforceable

including wills and probate
Thackley
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Re: Making a property agreement enforceable

#256668

Postby Thackley » October 8th, 2019, 8:39 pm

Clitheroekid wrote:Thanks for the further explanation. However, although you made it clear that you were not seeking advice on what to do about the property the more I read your post the more convinced I became that the only sensible solution is to sell it.

Although, as I said in my previous post, it's technically possible to enter into a contract with M in the terms set out I would foresee considerable problems. For a start, M would need to be separately represented - one solicitor could not possibly act for both B and M due to the conflict of interest. This would mean that she would be advised of the inherent problems in this type of agreement, not least that she is effectively unable to buy any other property while she's tied into this one.

She would also be advised that she would be legally obliged to tell the mortgage lender that she had permanently vacated the property, which could cause problems for B.

If you were planning to rent the property out there would be tax issues for M, as the rent received would, on the face of it, be 50% hers. Although you could get round this she would have to satisfy HMRC that she had no entitlement to it, which is yet more hassle.

There are also potential insurance issues that would need to be addressed if she’s no longer going to be living in the property.

All things considered, the likelihood is that she would be advised not to agree to the proposal.

Even if she insisted that she was happy to proceed, such comprehensive advice won’t be cheap. As the proposed cash sweetener isn't going to be a substantial amount B would probably also have to agree to pay M's legal fees, otherwise they'd probably absorb too large a chunk of the sweetener.

You say that a sale would be "unlikely to yield much, if anything, in the way of gain". However, depending on where the property is and the strong possibility of a post-Brexit decline in value, particularly if it's in London or the south east, it may well be better to get out now on a neutral basis than in a year’s time at a loss. Admittedly, this is purely a matter of opinion as to how the market will move, but it's a factor to be considered.

Taking everything into account it's difficult to see any argument for not selling. Is there a particular reason why B wants to retain ownership?


Thank you for your very clear and well-reasoned answer. I was aware that the type of agreement I had in mind would impact M's ability to buy another property. I even thought that in the interests of fairness I should make M aware of this.

My thinking, possibly naive, was to get a suitable document drafted and then to put it to B and M to sign, leaving it up to M as to whether or not she sought her own legal advice about it. My suspicion is that she would not seek such advice purely on cost grounds.

I hasten to add that my intentions are not about cynically exploiting M's lack of awareness but about trying to develop a solution that is fair to both B and M and gets them to something that is workable for both of them. I would be happy to set out for both B and M the issues you raise about insurance, taxes and mortgage conditions. I accept that a legal adviser acting on M's behalf would probably nuance these issues differently to the way I might present them.

If we go for a sale and forget my ideas about an agreement M will not get any cash until any sale is completed. The amount of cash may well be very little compared to what she is currently looking for. I suspect M is wanting her money as she leaves in a few weeks time. As to B, retaining the property would solve a problem of where to live when she returns to the UK. For both B and M it also solves a problem of what to do about the current contents of a 2 bed property, contents which neither currently have anywhere to home.

Your post has given me cause to stop and think long and hard about what I'm doing and, perhaps more importantly, why I'm doing it. For that you have my sincere thanks.

Chrysalis wrote:It’s a cautionary tale for sure. What would you do differently with the benefit of hindsight? (Genuine question.I think many of us can imagine ending up in a similar situation).


Rather than giving B quite a substantial lump of cash to facilitate the property purchase, I would delay doing that and advise renting together instead. The cracks that showed up in their relationship and ultimately ended it, would then have emerged earlier, no property would have been bought and the present mess would never have arisen. The road to hell...

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Re: Making a property agreement enforceable

#256747

Postby MyNameIsUrl » October 9th, 2019, 11:15 am

Thackley wrote:If we go for a sale and forget my ideas about an agreement M will not get any cash until any sale is completed. The amount of cash may well be very little compared to what she is currently looking for.

From what you said earlier I've inferred that B is expecting to receive a much bigger amount than M, reflecting a refund of the deposit. But - as I mentioned in a previous reply - won't the solicitor acting for them as vendors expect to split the proceeds to their two respective bank accounts 50:50? (My own solicitor was very wary of sending funds to an account in my name only when a property was in joint names.) Or is this a red herring and the solicitor will send it where you ask? You hint that M is expecting 'more' and I'm imagining potential for problems here.
Thackley wrote:
Chrysalis wrote:It’s a cautionary tale for sure. What would you do differently with the benefit of hindsight? (Genuine question.I think many of us can imagine ending up in a similar situation).


Rather than giving B quite a substantial lump of cash to facilitate the property purchase, I would delay doing that and advise renting together instead. The cracks that showed up in their relationship and ultimately ended it, would then have emerged earlier, no property would have been bought and the present mess would never have arisen. The road to hell...

Rather than 'giving' B the cash, would a loan (with a simple document) have helped? (I too can imagine being in a similar situation.)

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Re: Making a property agreement enforceable

#256758

Postby Clitheroekid » October 9th, 2019, 12:03 pm

MyNameIsUrl wrote:But - as I mentioned in a previous reply - won't the solicitor acting for them as vendors expect to split the proceeds to their two respective bank accounts 50:50? (My own solicitor was very wary of sending funds to an account in my name only when a property was in joint names.)

This is a common situation, and is very easily resolved by the two co-vendors signing an authority to the solicitor to pay them the net proceeds as agreed between them.

Thackley
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Re: Making a property agreement enforceable

#256824

Postby Thackley » October 9th, 2019, 7:05 pm

MyNameIsUrl wrote:
Thackley wrote:
Chrysalis wrote:It’s a cautionary tale for sure. What would you do differently with the benefit of hindsight? (Genuine question.I think many of us can imagine ending up in a similar situation).


Rather than giving B quite a substantial lump of cash to facilitate the property purchase, I would delay doing that and advise renting together instead. The cracks that showed up in their relationship and ultimately ended it, would then have emerged earlier, no property would have been bought and the present mess would never have arisen. The road to hell...

Rather than 'giving' B the cash, would a loan (with a simple document) have helped? (I too can imagine being in a similar situation.)


Not really. B and M had never previously lived together. Had they rented somewhere together as their initial experience of living together, then they would probably have broken up just the same. Jointly purchasing a property together and then breaking up has left much more clearing up to be done than would have resulted from renting and breaking up. B's contribution to the joint purchase was the provision of around 40% of the purchase price in cash, and just over half of this came as a parental gift. M's contribution was the income to facilitate obtaining a mortgage (taken out in joint names) to fund the remaining 60%. Unless I'm missing something, I can't see any advantage to be gained by loaning B cash rather than gifting it. In fact, the solicitor acting on B and M's behalf in the purchase required declarations that the gift to B was unconditional and most definitely not a loan. It also required me and my wife as donors of the gift to jump through the hoops of the solicitor's "prove your identity" nonsense. I suspect the declaration was a requirement imposed by the mortgage lender.

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Re: Making a property agreement enforceable

#256837

Postby MyNameIsUrl » October 9th, 2019, 8:07 pm

Thackley wrote:Unless I'm missing something, I can't see any advantage to be gained by loaning B cash rather than gifting it.

Thackley, I'm not challenging what you say, I'm trying to improve my own weak knowledge as I am in a similar position to where you were 2 or 3 years ago.
Following the sale, the various parties may have conflicting views on their own entitlements. ClitheroeKid explains clearly "[this] is very easily resolved by the two co-vendors signing an authority to the solicitor to pay them the net proceeds as agreed between them" but in practice the agreement might be the problem if the two parties have different perspectives. If in your case B could show that the loan amount (ie the deposit) needs to be repaid from the sale proceeds, it rather restricts M's view about how much of the remainder they are entitled to.
Thackley wrote:In fact, the solicitor acting on B and M's behalf in the purchase required declarations that the gift to B was unconditional and most definitely not a loan.

My guess here is that if it were a loan, the solicitor would have arranged a second charge on the property for you to give a better chance of you getting your money following the sale.

Just to reiterate, I am sorry to hear of your predicament, but I am trying to learn from the many useful posts on this thread as your situation is directly relevant to me. I'm not querying things for the sake of it.

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Re: Making a property agreement enforceable

#256981

Postby Thackley » October 10th, 2019, 5:14 pm

MyNameIsUrl wrote: I'm trying to improve my own weak knowledge as I am in a similar position to where you were 2 or 3 years ago.
Following the sale, the various parties may have conflicting views on their own entitlements. ClitheroeKid explains clearly "[this] is very easily resolved by the two co-vendors signing an authority to the solicitor to pay them the net proceeds as agreed between them" but in practice the agreement might be the problem if the two parties have different perspectives. If in your case B could show that the loan amount (ie the deposit) needs to be repaid from the sale proceeds, it rather restricts M's view about how much of the remainder they are entitled to.
Thackley wrote:In fact, the solicitor acting on B and M's behalf in the purchase required declarations that the gift to B was unconditional and most definitely not a loan.

My guess here is that if it were a loan, the solicitor would have arranged a second charge on the property for you to give a better chance of you getting your money following the sale.

Just to reiterate, I am sorry to hear of your predicament, but I am trying to learn from the many useful posts on this thread as your situation is directly relevant to me. I'm not querying things for the sake of it.


OK, I see where you are coming from. Here's some further stuff which might help.

The idea of a loan never entered my mind as a means of protecting B's interests if it all went south (as it did). Strictly, a loan backed by agreement and second charge would have protected my interests rather than B's. OK, I could have re-lent (or gifted) the money to B again after a sale but loaning rather gifting the money would rather have defeated the object of giving B responsibility for the money at the time of the original gift.

Instead, the intended protection mechanism was to have a Deed of Trust between B and M which would set out the division of sale proceeds when the property was sold. M accepted at the time, and fortunately still accepts, that B is entitled to return of her deposit if/when the property sells.

The Deed of Trust should have been executed at the same time the sale took place. Why "the deed was never done" can, IMHO, be laid in large part at the door of the front street (NE England terminology) solicitor who acted for B and M in the sale. Over a year after the sale completed, I paid my £3 to the LandReg and discovered, to my horror, that the property was still registered in the name of the sellers. The solicitor's explanation was she was waiting for B and M to get back to her with their thoughts on what should go into the Deed of Trust and instructions on how the property should be registered (joint tenants or tenants in common). I think the lack of follow-up by the solicitor to allow this state of affairs to persist was at best unprofessional and at worst negligent. By the time of my discovery, B and M's relationship was over and B did not really want to discuss the matter with M. B unilaterally instructed the solicitor to register the property and that instruction was acted on.

Reflecting on the experience, there is a balance to be drawn between letting individuals (in this case my daughter B) find their own way and make their own mistakes and applying control and influence in order to avoid such mistakes occurring. Couldn't care less vs interfering busybody is my characterisation of the extremes. I'm broadly happy with where I struck the balance.

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Re: Making a property agreement enforceable

#257522

Postby Peanutte » October 13th, 2019, 11:41 am

The amount of cash may well be very little compared to what she is currently looking for.


If M had not been living there and paying the mortgage, she would have been living somewhere else and paying rent. Possibly not a very different amount. So I can't see how she can expect a substantial sweetener if there is unlikely to be surplus funds following a sale. What would be left from the proceeds of sale? Enough to pay the mortgage penalty, the 40% deposit and the costs of selling? If there is anything left over, split it two ways.


(I was in a vaguely similar situation - two of my children and one friend bought together. One daughter put in £10k of savings and I put in £16.5k and they split the mortgage payments three ways. After about three years one daughter wanted to move on. They sold.)

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Re: Making a property agreement enforceable

#347135

Postby Thackley » October 12th, 2020, 4:02 pm

12 months on, the sorry saga involving B (my daughter) and M has moved on.

First, a brief synopsis so you don't have to re-read the whole sad and sorry saga again.

  • In October 2017, B and M bought a flat together and moved in. B provided a deposit amounting to around 45% of the purchase price. B and M took out a joint mortgage for the remaining 55%.
  • In July 2018, B and M's relationship fell apart. B moved out.
  • In October 2019, M decided she was also going to move out. I wrote to this board essentially saying I wanted to try and reach an enforceable agreement with M.
  • The consensus of advice I got from the board was to sell the property.

Since, my last posting on this thread, the following has happened.
  • I did not take any action in terms of proposing an agreement with M, much less an enforceable agreement.
  • M moved out of the property in late 2019. The mortgage and other expenses are currently being shared jointly by B and M.
  • B has remained away from the UK. She will not return to the UK until mid-2021 at the earliest.
  • B found the power of attorney she had professionally drawn up in early 2019, appointing her sister as attorney with authority to act on her behalf in the sale of the property. The document is now in the hands of B's attorney.
  • An offer has been made on the property and accepted.
  • Over the past month there has been some increasingly acrimonious correspondence between M and B's attorney about how the proceeds of the sale should distributed between them. This dispute is what has motivated my resurrection of this thread.

I am not for the moment going to get into too many details, but broadly the agreed sale price is less slightly than the original purchase price so there's no "profit" to be shared. M suggested sharing the losses equally and B's attorney has accepted this.

The areas of dispute concern concern M's definitions of her losses and her exclusion of some of B's legitimate losses.

I want to stress that I am not particularly asking lemonfools for advice on this in's and out's of who is right and who is wrong in this dispute. I can see the dispute dragging on. What I am asking for is advice on what services might be available for resolving this particular dispute.

M has clearly been talking to a barrack-room lawyer and is making also sorts of rather stupid threats of legal action. The type of services I have in mind are some sort of mediation or arbitration service. With another hat on I am a landlord and I know about the dispute resolution process that can ultimately be used in the statutory deposit protection schemes when tenant and landlord have a failure to agree about the return of a deposit at the end of a tenancy.

So, what types of schemes are available for this sort of dispute between B and M and what sort of costs might we be talking about?

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Re: Making a property agreement enforceable

#347500

Postby Clitheroekid » October 13th, 2020, 8:23 pm

Thackley wrote:So, what types of schemes are available for this sort of dispute between B and M and what sort of costs might we be talking about?

Unfortunately, the answer is that there are very few formal schemes to resolve this type of dispute.

Probably your best option would be the fixed fee scheme run by CEDR - https://www.cedr.com/commercial/fixedfee/ It costs £600, for which you get the services of a professional mediator for 7 hours. That's usually enough time to reach a resolution, if only because both parties are so exhausted after 7 hours' negotiation that one side will usually concede!

I've used it occasionally, and it's a good scheme. The mediators are very professional, and excellent at banging heads together. I've seen disputes settled that had dragged on at substantial personal and financial cost for a long time.

The only real downside, apart from the cost, is that there's no guarantee of success. The mediator can't make a decision himself as it's not his role to do so; neither can he force either side to accept a recommendation. So if it doesn't work it's £600 down the drain and back to the drawing board.

Another way of accessing mediation would be to issue a claim in the small claims court, where mediation is automatically on offer. It's rather ridiculous that you have to issue a court claim in order to access the service, as the whole object of mediation is to avoid litigation, but what else would one expect from the Ministry of Injustice! By limiting the value of the claim you can keep the court fee to issue the claim to a small sum, as it makes no difference to the availability of the mediator.

Alternatively, there's no reason why they couldn't simply agree to let an independent third party decide the issue for them. If they can find someone they both trust, who's intelligent, reasonable, capable of properly evaluating the issues, and who has no axe to grind either way he may be willing to take on the job for considerably less than £600. They could also agree, if they wanted to, that his decision would be final and binding on both of them, so that even if they weren't particularly happy with the outcome at least it would be an end to it.

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Re: Making a property agreement enforceable

#347602

Postby Thackley » October 14th, 2020, 11:12 am

Clitheroekid wrote:
Thackley wrote:So, what types of schemes are available for this sort of dispute between B and M and what sort of costs might we be talking about?

Unfortunately, the answer is that there are very few formal schemes to resolve this type of dispute.

Probably your best option would be the fixed fee scheme run by CEDR - https://www.cedr.com/commercial/fixedfee/ It costs £600, for which you get the services of a professional mediator for 7 hours. That's usually enough time to reach a resolution, if only because both parties are so exhausted after 7 hours' negotiation that one side will usually concede!

I've used it occasionally, and it's a good scheme. The mediators are very professional, and excellent at banging heads together. I've seen disputes settled that had dragged on at substantial personal and financial cost for a long time.

The only real downside, apart from the cost, is that there's no guarantee of success. The mediator can't make a decision himself as it's not his role to do so; neither can he force either side to accept a recommendation. So if it doesn't work it's £600 down the drain and back to the drawing board.

Another way of accessing mediation would be to issue a claim in the small claims court, where mediation is automatically on offer. It's rather ridiculous that you have to issue a court claim in order to access the service, as the whole object of mediation is to avoid litigation, but what else would one expect from the Ministry of Injustice! By limiting the value of the claim you can keep the court fee to issue the claim to a small sum, as it makes no difference to the availability of the mediator.

Alternatively, there's no reason why they couldn't simply agree to let an independent third party decide the issue for them. If they can find someone they both trust, who's intelligent, reasonable, capable of properly evaluating the issues, and who has no axe to grind either way he may be willing to take on the job for considerably less than £600. They could also agree, if they wanted to, that his decision would be final and binding on both of them, so that even if they weren't particularly happy with the outcome at least it would be an end to it.


Many thanks for this. It may take a while but I will endeavour to report the final outcome when it is eventually reached.

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Re: Making a property agreement enforceable

#359898

Postby Thackley » November 25th, 2020, 11:45 am

Update:

The property eventually sold a couple of weeks ago at a small loss.

In addition to the matters set out in my previous post...

Thackley wrote:
  • In October 2017, B and M bought a flat together and moved in. B provided a deposit amounting to around 45% of the purchase price. B and M took out a joint mortgage for the remaining 55%.
  • In July 2018, B and M's relationship fell apart. B moved out.
  • In October 2019, M decided she was also going to move out. I wrote to this board essentially saying I wanted to try and reach an enforceable agreement with M.
  • The consensus of advice I got from the board was to sell the property.

Since, my last posting on this thread, the following has happened.
  • I did not take any action in terms of proposing an agreement with M, much less an enforceable agreement.
  • M moved out of the property in late 2019. The mortgage and other expenses are currently being shared jointly by B and M.
  • B has remained away from the UK. She will not return to the UK until mid-2021 at the earliest.
  • B found the power of attorney she had professionally drawn up in early 2019, appointing her sister as attorney with authority to act on her behalf in the sale of the property. The document is now in the hands of B's attorney.
  • An offer has been made on the property and accepted.
  • Over the past month there has been some increasingly acrimonious correspondence between M and B's attorney about how the proceeds of the sale should distributed between them. This dispute is what has motivated my resurrection of this thread.

I am not for the moment going to get into too many details, but broadly the agreed sale price is less slightly than the original purchase price so there's no "profit" to be shared. M suggested sharing the losses equally and B's attorney has accepted this.


... M has now withdrawn her suggestion about equal sharing of losses and instead is demanding half the sale proceeds. The basis of M's argument is that the property was registered as tenants in common and as there was no agreement as to how the ownership should be divided this means that it was owned in equal shares and as a result she is entitled to half the sale proceeds. M is now threatening to "lawyer-up" and before B's attorney does the same, I'm hoping that the board might offer some views.

In round terms the numbers (net of selling expenses and redemption of the mortgage and including purchase of furnishings and carpets as part of the purchase costs) are:



B´s position based on an equal sharing of losses (£3,350 each) would be to receive all of the sale proceeds plus £850 from M, so there is a big difference between this and the £24,250 that M is currently proposing.

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Re: Making a property agreement enforceable

#360126

Postby GoSeigen » November 26th, 2020, 6:59 am

Thackley wrote:Update:

The property eventually sold a couple of weeks ago at a small loss.

In addition to the matters set out in my previous post...

Thackley wrote:
  • In October 2017, B and M bought a flat together and moved in. B provided a deposit amounting to around 45% of the purchase price. B and M took out a joint mortgage for the remaining 55%.
  • In July 2018, B and M's relationship fell apart. B moved out.
  • In October 2019, M decided she was also going to move out. I wrote to this board essentially saying I wanted to try and reach an enforceable agreement with M.
  • The consensus of advice I got from the board was to sell the property.

Since, my last posting on this thread, the following has happened.
  • I did not take any action in terms of proposing an agreement with M, much less an enforceable agreement.
  • M moved out of the property in late 2019. The mortgage and other expenses are currently being shared jointly by B and M.
  • B has remained away from the UK. She will not return to the UK until mid-2021 at the earliest.
  • B found the power of attorney she had professionally drawn up in early 2019, appointing her sister as attorney with authority to act on her behalf in the sale of the property. The document is now in the hands of B's attorney.
  • An offer has been made on the property and accepted.
  • Over the past month there has been some increasingly acrimonious correspondence between M and B's attorney about how the proceeds of the sale should distributed between them. This dispute is what has motivated my resurrection of this thread.

I am not for the moment going to get into too many details, but broadly the agreed sale price is less slightly than the original purchase price so there's no "profit" to be shared. M suggested sharing the losses equally and B's attorney has accepted this.


... M has now withdrawn her suggestion about equal sharing of losses and instead is demanding half the sale proceeds. The basis of M's argument is that the property was registered as tenants in common and as there was no agreement as to how the ownership should be divided this means that it was owned in equal shares and as a result she is entitled to half the sale proceeds. M is now threatening to "lawyer-up" and before B's attorney does the same, I'm hoping that the board might offer some views.

In round terms the numbers (net of selling expenses and redemption of the mortgage and including purchase of furnishings and carpets as part of the purchase costs) are:



B´s position based on an equal sharing of losses (£3,350 each) would be to receive all of the sale proceeds plus £850 from M, so there is a big difference between this and the £24,250 that M is currently proposing.


The first thing that occurs to me is that B provided a 45% deposit so is equitably entitled to that share of the property outright. The remaining 55% of the proceeds might be divided equally. How would the maths look then? Presumably the loss would have to be divided on a similar basis, so B would take a greater share of the loss.

Alternatively (and maybe this works out as exactly equivalent, I haven't thought about it enough to tell), but you could agree with the view that the house was jointly owned but argue that M's share of the deposit was advanced by B and that M therefore owes that amount back to B out of the proceeds of the sale -- this being based on their statement that there was no agreement in advance as to ownership but that one is looking at what actually happened in terms of financing the purchase.

I would argue that the occupation and expenses of the property while they lived there is a different matter: They both lived there and (presumably) shared the expenses 50:50 including the mortgage payments. So it seems to me the benefits and costs of occupation were shared. It is only the capital values of the property that need agreement.

While on that topic, perhaps try to get clear between the parties what is common ground and then just drill down to what may be very small points of difference. If you can financially quantify the difference all the better, since a compromise splitting the difference might be reached.


GS

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Re: Making a property agreement enforceable

#360131

Postby Mike4 » November 26th, 2020, 7:25 am

Thackley wrote:The basis of M's argument is that the property was registered as tenants in common and as there was no agreement as to how the ownership should be divided this means that it was owned in equal shares and as a result she is entitled to half the sale proceeds.


Forgive me as the original question suggests this must be wrong, but my understanding is that the term "tenants in common" means that ownership has been split into two (or more) parts defined as 50/50, 40/60, 90/10 (or whatever) of the whole at the outset, and each person's defined proportion can be independently sold, traded, mortgaged etc.

The normal way of buying jointly is as "joint tenants", which is analogous to a joint bank account where each person fully owns and is jointly responsible for the whole. So to me this info that the property is owned as tenants in common is of huge importance as we now need to know the proportions into which the property was split at the point of purchase for them to own it as joint tenants.

I think it simplifies the issue enormously too, as M and B must each own a defined proportion of the property. The LR will say what it is.

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Re: Making a property agreement enforceable

#360429

Postby NomoneyNohoney » November 26th, 2020, 7:21 pm

Thackley said in October 10th 2019, " B unilaterally instructed the solicitor to register the property and that instruction was acted on."
What did B instruct? Were percentages recorded?

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Re: Making a property agreement enforceable

#364814

Postby Thackley » December 10th, 2020, 3:28 pm

After some acrimony, in which M started to threaten use of solicitors, agreement was eventually reached with M. In short, I bought her off.

Mike4 wrote:
Thackley wrote:The basis of M's argument is that the property was registered as tenants in common and as there was no agreement as to how the ownership should be divided this means that it was owned in equal shares and as a result she is entitled to half the sale proceeds.


Forgive me as the original question suggests this must be wrong, but my understanding is that the term "tenants in common" means that ownership has been split into two (or more) parts defined as 50/50, 40/60, 90/10 (or whatever) of the whole at the outset, and each person's defined proportion can be independently sold, traded, mortgaged etc.

The normal way of buying jointly is as "joint tenants", which is analogous to a joint bank account where each person fully owns and is jointly responsible for the whole. So to me this info that the property is owned as tenants in common is of huge importance as we now need to know the proportions into which the property was split at the point of purchase for them to own it as joint tenants.

I think it simplifies the issue enormously too, as M and B must each own a defined proportion of the property. The LR will say what it is.


NomoneyNohoney wrote:Thackley said in October 10th 2019, " B unilaterally instructed the solicitor to register the property and that instruction was acted on."
What did B instruct? Were percentages recorded?


Here, I have to admit to a major screw up on my part.

The solicitor's reason for not having registered the property for over 12 months after the purchase completed was that they were waiting for B and M to have a deed of trust drawn up which would detail, amongst other things, how proceeds would be divided in the event of a sale. I was incensed by this, given that they had already charged for drafting this deed (it was shown on the purchase completion statement) but in over 12 months had taken no action to actually get towards words on paper.

So, the instruction to the solicitor, which I drafted, made clear there would be no deed of trust. What it omitted to say was there would be no deed of trust drawn up by such a useless firm of solicitors. Shortly after this B did get a deed of trust drafted by a different firm and sent it to M, who for whatever reasons never signed it. The unsigned version was intended, in the event of a sale, to give B her deposit of £51k back with any surplus beyond this split 50:50.

The instruction also made clear that the property should be registered as tenants-in-common in <big_screw_up>equal shares</big_screw_up>.

When I eventually dug out the letter, it was clear what M was basing her case on.

So I wrote to M, fessing up to my big screw up but basically telling her that if she wanted to fight it out in court, she would be relying on a gross error on my part and that B would cite the subsequent unsigned deed as evidence of her true intentions at the time. I also mentioned that no-one can be certain of the outcome of court action, it would take a long time and could be expensive.

So, knowing that M is not brilliant at managing money, I offered M some to settle the matter. In earlier correspondence she had mentioned a figure of £7k. I offered less than this and, in retrospect wish I had pitched it even lower, as she came back with a fairly swift acceptance.

I paid B, she instructed the solicitors acting for the sale to pay the balance of the proceeds to B, B's attorney confirmed the instruction and the money arrived in B's account a few days ago.

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Re: Making a property agreement enforceable

#364829

Postby NomoneyNohoney » December 10th, 2020, 3:57 pm

I'm so glad you updated this - I had got way too interested in the shennanigans. So it cost less than £7k to resolve a problem that could reach £49k of disagreement: expensive but better than the alternative.

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Re: Making a property agreement enforceable

#364905

Postby Clitheroekid » December 10th, 2020, 8:01 pm

Thackley wrote:The solicitor's reason for not having registered the property for over 12 months after the purchase completed was that they were waiting for B and M to have a deed of trust drawn up which would detail, amongst other things, how proceeds would be divided in the event of a sale.

I appreciate that it's now water under the bridge, but that's not a remotely valid excuse. The deed of trust would not have been registered anyway, so there was no justification for delaying registration. If a DoT was later entered into all that would have been required is registration of a Form A restriction at the princely cost of £20.

Assuming the LR searches weren't renewed the title was at risk for several months. For example, if the previous owner owed money the creditor might have obtained a charging order against the property which would have taken priority over B and M's ownership.

Also, the solicitor owed a duty to the mortgage lender to register their mortgage, so they were put at risk as well. Again, whether or not a DoT was entered into was entirely irrelevant as far as the lender was concerned.

The instruction also made clear that the property should be registered as tenants-in-common in <big_screw_up>equal shares</big_screw_up>.

When I eventually dug out the letter, it was clear what M was basing her case on.

This instruction would not have been binding on B,as it was quite clearly an error by you as a third party, and it's not remotely possible that M would have been allowed to take advantage of it.

My own view is that M should have been paying B a share of the shortfall, or at the very least counting herself lucky to be walking away without having to pay anything, rather than receiving payment, but I suppose everything has its price.


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