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Alex J.
Alex J., Solicitor
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Experience:  Solicitors 2 years plus PQE
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Prior to purchasing a hotel 4 people signed an agreement to

Customer Question

Prior to purchasing a hotel 4 people signed an agreement to the effect that if any of the 4 walked out they would forfeit their rights to a % share of the hotel. Subsequently a hotel was purchased. One of the 4 provided the deposit, the remainder of the cost price being provided by a private loan signed for by all 4. The entry in Land Registry was made in all 4 names. After 5 months one person walked out. This person had not contributed financially
in any way to the purchase. The remaining 3 now wish to sell the hotel, but are blocked by the person who walked out unless he is paid a large sum of money.
In the light of the initial agreement and the signed agreement of the provider of the loan together with the remaining 3, can the 4th person be removed from Land Registry?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
How much does this person want to be paid relative to their share?
What did the initial agreement say? What was the forfeiture wording proposed?
Kind regards
AJ
Customer: replied 1 year ago.

I have e-mailed you a copy of the initial document. The relevant clause reads "In the event of any one of the share-holders wishing to pull out of the agreement, their shares to be forfeit and re-distributed equally between the remaining share-holders.

The person that pulled out is Lee Austin, he held a 35% share.

The amount of money he is asking for is £15,000.

It is our contention that he is not entitled to anything.

Regards XXXXXXX

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
You could go to court and obtain an order allowing you to sell the property and to force him to give up his legal and beneficial interest. You would probably have to indemnify him against any liability for the loan as apart of any deak. The problem is this will cost probably close to £10k in the court fees and legal fees and will take time. Is the £15k sum non negotiable? Bare in mind he probably has not realised he will still be on the hook for the loan.
I look forward to hearing from you.
Kind regards
AJ
P.S Just as a side note and with the benefit of hindsight, the original agreement should have contained a power of attorney allowing the remaining members to sign off documents on behalf of any leaver. If you enter into this type of agreement in the future, this type of clause should protect you. Otherwise I would consider forming a limited company or LLP in order to commonly own a business or property.
Customer: replied 1 year ago.

Thank you for your response. Would it be possible to go to arbitration?

Would this be cheaper than court? How do I go about it?

Regards ***** *****

Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Arbitration is expensive as well, and is generally only used these days for complex commercial issues e.g shipping or commodity disputes - these are issues where what is being arbitrated is not a matter of law but a matter of complex commercial interpretation.
The alternative people tend to use is mediation, but this requires all the parties to agree to enter into mediation. Does your agreement have any alternative dispute resolution clauses?
Technically what he could argue is you have a partnership which he has resigned from and is therefore entitled to capital - you want to try and avoid this notion. How much would a quarter share of the property be worth?
Kind regards
AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
Alex J. and other Law Specialists are ready to help you
Customer: replied 1 year ago.

Thank you Alex for your help and advice.

Regards ***** *****

Expert:  Alex J. replied 1 year ago.
Hi,
No problem.
If I can be of any further assistance please do not hesitate to contact me.
I wish you the best of luck.
Kind regards
AJ

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