You say that you bought the house so I am assuming it was in your name only.
There is no agreement to the contrary as to which is the applicable law and hence, as you are both in England and presumably don’t want the grief of any potential legal proceedings in Ireland, you would be happy to both go to English courts.
The only way that she may be entitled to any rental income would be if you had been living in it or if it was ready for rental and for whatever reason, you didn’t rent it or, you rented it to a friend or someone else.
Your friend would be entitled to a proportion of the increase in value of the property in respect of her £10,000 but ignoring the improvements that you have made. She hasn’t contributed to those. You would need a valuation of the property comparing what it was worth when you bought it and what it is worth now ignoring the actual cost of your improvements and giving you some allowance for any labour you put in.
This is simple maths.
The fact that she may want her money back works in your favour. You can offer her the amount that you agree with in full and final settlement and if she won’t accept that, you can hang onto the money which means that she could be waiting for over 12 months for it.
I don’t know what amount she is looking claiming, but if the rental income she think she is entitled to is under £10,000 it is going to be Small Claims Court and she will not recover her legal costs even if she wins. I think that the rental income she is claiming is somewhat of a bizarre claim.
I suggest that you write back to her telling her what you agree to and asking her why she thinks she’s entitled to some rental income for a property which was not rented out. she may be claiming that you were living there rent free while doing the work. however, she would only be entitled to a proportion of the rental income in proportion to the amount she invested compared to the amount you invested.
Tell her to ask her solicitor to write to you. You will then know, if the solicitor does write back to you, whether she means business or not.
Incidentally, you will always find that sending a cheque is more powerful than making an offer. If you are sending a cheque, marked the letter Without Prejudice save as to Costs and then it cannot be produced as any admission. Say in the letter that you are sending the chequein Full and Final settlement of all claims in respect of this property and thatby cashing it, she is confirming acceptance and if it is not accepted she should return it uncashed. Tell her that if she is in any doubt, she should take legal advice.
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