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

Another Sad Tale of a Farmer's Disinherited Children – High Court Ruling

24th November, 2023 By

The tale of a devoted son labouring for years on a family farm only to be cut out of his father's will is so often told as to be almost a cliché. However, as a High Court ruling showed, such stories are often reflected in the sad and recurring reality of agricultural inheritance disputes. When he died, a father was the beneficial owner of a 20 per cent stake in his family farm. He also held a 25 per cent share of a company that ran a market gardening business...

Family Judge Treads the Blurred Boundary Between Life and Death

21st November, 2023 By

The ability of modern medical technology to keep patients' hearts beating and their lungs ventilating has led to a blurring of the boundary between life and death. As a High Court ruling showed, it sometimes falls to family judges to make the desperately hard decision as to when that line has been crossed. The case concerned a young man who fell to the ground after being assaulted in a pub garden, sustaining a catastrophic brain injury. He was admitted to hospital in a deep coma and, following weeks of observation...

False Claim to Be a Cash Buyer Ruled Fraudulent in Ground-Breaking Case

16th November, 2023 By

In coming to the aid of a frail and elderly householder, the High Court has ruled in a landmark case that she was on the receiving end of a fraudulent misrepresentation when a would-be purchaser of her home was falsely described to her as a cash buyer. A copy of a contract before the Court indicated that the woman, aged in her 80s, had signed a contract agreeing to the sale of her home for £840,000. Following a purported exchange of contracts, the purchaser, an investment company, launched proceedings against...

Sometimes Parental Love is Not Enough – Court Sanctions Boy's Adoption

13th November, 2023 By

Parents may be worthy of praise and deeply love their children, but it sadly does not always follow that they are able to provide them with a stable home. The High Court made that point in sanctioning a little boy's placement for adoption. Due to concerns that he was not receiving a good enough standard of parenting, a local authority placed him in temporary foster care and sought care and placement orders. His parents, although separated, staunchly resisted plans for his adoption, arguing that his mother was able to look...