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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 10259
Experience:  I have been practising for 30 years.
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A friend of mine wanted to invest in a house I bought in

Customer Question

A friend of mine wanted to invest in a house I bought in Ireland , paid £55,500 sterling , friend put in £10,000 sterling as investment , we both agreed if house prices went up we would sell and make profit . Have had property for 2 years now , have done a lot of work to property that my friend did not contribute any money to , we also spoke about renting property as a holiday home but have not got round to doing as yet , we both used the house holiday times and her family also stayed free of charge as so did mine , we have now had a massive fall out , she is asking for her £10,000 back and house valued and profit is €20,000 euros which I am more than happy to pay back her £10,000 and her percentage on profit . I am not selling the house I am getting a loan to pay her back but now she is telling me I also owe her 2 years holiday rental that does not exist as house has not been rented out yet . She is saying she has spoken to a solicitor and it does not matter that house was never rented that she is still entitled to this . There was no contracts ever signed or agreement , house is in my name only what should I do . I'm more than happy to pay her her money back that she is asking for but not on money that does not exist
Submitted: 1 year ago.
Category: Law
Expert:  F E Smith replied 1 year ago.

Please confirm that you are both based in the United Kingdom on the mainland.

Customer: replied 1 year ago.
we both live in the uk
Customer: replied 1 year ago.
we are both uk based
Expert:  F E Smith replied 1 year ago.

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.

Can I clarify anything for you?

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I can still clarify things for you.

Best wishes.


Customer: replied 1 year ago.
If she does not accept this can she still stake her claim on house as she is telling me if I don't pay her 2 years rental she will come and go as she pleases . I am willing to give her the investment back and her share of profit as I want this sorted ASAP can she then decide that later on again if she refuses cheque to wait and then later ask for money again , how do I stop that from happening