fbpx

Clubbing Together with a Friend to Buy a Home? See a Lawyer First

14th January 2021 By

It makes sense for friends to club together so that they can buy properties they would be unable to afford by themselves. However, a cautionary High Court ruling showed that such arrangements are only wise if lawyers are consulted so that all concerned know exactly where they stand from the outset.

The case concerned two work colleagues, one of whom had £50,000 to put towards the purchase of a home of her own. Her credit rating was, however, too poor for her to obtain a mortgage. She had discussions with her colleague (the landlord) as to whether the latter might be able to assist her in buying a property.

A suitable property was purchased in the landlord’s name. The purchase was mainly financed by a buy-to-let mortgage, but the tenant contributed her £50,000 and the landlord £60,000. The tenant had lived in the property under an assured shorthold tenancy for eight years since its purchase.

After the landlord sought possession of the property, citing substantial rent arrears, the tenant asserted that it had always been agreed between them that the property was to be her own home. She claimed that the tenancy was a sham that had been entered into as a temporary device to enable the property to be purchased with the assistance of the landlord’s money. She said that it was understood between them that she would take over ownership of the property and the mortgage when she repaid the landlord for the investment she had made.

The landlord, however, gave a very different account of what had been agreed prior to the purchase. Pointing out that she alone had met the mortgage instalments, she said that the lease genuinely reflected their intentions. She asserted that the tenant had agreed that, once her credit score improved, she would purchase the property from her at its full market value, discounted by the £50,000 she had contributed to the purchase price.

Following a trial, a judge preferred the landlord’s account and found that the tenancy agreement was binding. The landlord was granted the possession order sought and the tenant was ordered to pay her more than £67,000 in rent arrears. The judge also ruled that the tenant had no beneficial interest in the property despite her £50,000 contribution. In dismissing the tenant’s appeal against that outcome, the High Court found that the judge’s findings were open to him on the evidence.

Source: Concious

Latest News

Court Sanctions Leg Amputation for Man Lacking Mental Capacity

24th April, 2024 By

The courts are often called upon to sanction treatment for patients whose ability to make decisions for themselves is impaired. In a recent case on point, the Court of Protection had to decide whether it was in the best interests of a man with mental health issues to have his right leg amputated above the knee. The man, aged 60, was taken to hospital by his niece. He was found to have an ulcerated leg. He had a history of paranoid schizophrenia, and believed that the sores on his leg...

High Court Grants Parental Order Despite Previous Adoption

18th April, 2024 By

In law, adopted children are regarded as having been born to their adoptive parents. The Family Division of the High Court recently considered whether that fact precluded a parental order being granted under the Human Fertilisation and Embryology Act 2008 (HFEA) in respect of a child born via surrogacy. A couple who lived in the USA had entered into a surrogacy arrangement with another woman. An adoption order naming the couple as the child's parents had been made by a US court and was automatically recognised under UK law. However,...

Flat Owner Not Liable for Pre-existing Structural Issues

16th April, 2024 By

When building owners carry out works on their property, are they liable for damage to adjoining properties that results from pre-existing structural issues? The Court of Appeal recently provided welcome clarification on that question. The owner of a ground-floor flat wished to extend it by building out into his garden. He served notices on owners of adjoining properties, as required by the Party Wall etc. Act 1996. The works caused the rear wall of two adjoining properties to drop by about 2 mm, which led to internal walls and floor...

Challenge to Will's Validity Rejected by High Court

12th April, 2024 By

The best way to ensure your assets will be distributed as you wish is to have your will professionally drafted by a qualified solicitor. In a recent case, a challenge to the validity of an elderly man's will was dismissed by the High Court. The man had previously made a will in 2011, leaving most of his estate equally to his three children. In 2018, by which time one of his sons had predeceased him, he made a further will, leaving the residue of his estate to his other son...