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Remus2004, Barrister
Category: Property Law
Satisfied Customers: 2457
Experience:  Over 5 years in practice.
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My two brothers and I inherited a house from our mother three

Customer Question

My two brothers and I inherited a house from our mother three years ago which she had turned into a hotel. We agreed to continue the business partly because it was her dream project and we wanted to keep it going in her memory.
The property had a large back yard and I proposed that we build a small block of flats on it and thus increase the business revenues. They both thought it a good idea but declined to invest any of their money into the project. I then made them the following proposal.
• I would source funds plus my own money savings to build the block
• On completion the initial revenue would be used to pay back the investors and myself our principle injection and an agreed fixed profit.
• After these monies were settled then the income from the apartments would revert back to the family and be shared equally between us.
They both agreed to this proposal and a business partner of mine agreed to invest in the venture. In all he invested £550,000 with the understanding that he would recoup this principle and 25% profit that would come from the rentals. I invested £100,000 of my savings and it was agreed that I would recoup this before we shared out the rentals.
Construction began in December 2011 and has now reached the final phase with an estimated completion date of September 2013.

The crucial error on my part is that I made the assumption that since this agreement was struck between us as family, I did not feel the necessity of obtaining a signed agreement between us as brothers.
Following an unrelated disagreement between us, my siblings recently informed me that they have decided not to honor our agreement. They now maintain that they did not consent to the structure and have demanded that I either give them a share of the initial revenues(60%) or they will obtain a court order to have the building demolished.
They say that since our agreement was only verbal, I can’t prove that they ever consented to the project. This is a ridiculous assertion because in the three years that construction has been going on they did not take any action, legal or otherwise to halt the project. A court order at the foundation stage would have stopped any construction and I would not have invested and borrowed the $650,000 spent thus far on constructing the building.
Their argument is that since the flats are on a property jointly owned by all of us, they are entitled to an equal share of the revenue NOW regardless of the fact that they did not invest any money into the construction.
They also maintain that since the loan agreement was between the investor and myself, they are under no legal obligation to honor said agreement. The fact that this would leave me with substantial liabilities and the loss of my own funds is of no concern to them. Their actions are nothing short of extortion.
A number of our relatives were aware of the agreement we made over the construction of the flats. I have contacted a number of them and they are happy to confirm these facts. I am not sure if their testimony can help my case legally.
I then proposed that we demaket the property so the apartment block would be separated from the rest of the property thereby allowing me to complete and rent out my flats independently. They could then rent out the rest of the property. They refused this proposal
I would like to know what my legal position is in this case and if there are any legal options that can enforce a fair compromise despite the fact that they have refuse to come to any agreement that would see me complete the project.
Submitted: 4 years ago.
Category: Property Law
Expert:  Nicola-mod replied 4 years ago.

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Customer: replied 4 years ago.


I am willing to wait

Thank you

Expert:  Nicola-mod replied 4 years ago.

We will continue to look for a Professional to assist you.

Thank you for your patience,
Expert:  James Mather replied 4 years ago.
I have been asked to look at this for you.
They have virtually no chance of gettng an order to demolish for the reasons that you cite.
Would you be happy to sell it all in one (or 2 ) lots?
Customer: replied 4 years ago.

I suggested that I was happy to relinquish my share of the main property in exchange for the rear lot that the apartment block is built and have the two separated with two separate titles.


From my prospective since they did not contribute to the flat's construction they are essentially only losing the empty back yard and gaining a 33% stake in the main building worth far more


As expected they refused this offer,because their target is the apartments anyway. Selling outright means I lose my investment and my partners don't get their investment back whilst my brothers would essentially get a 60% slice of the apartments.


So as I said it is basically a case of extortion and I wanted to know if I could find any legal protection to force them to come to a mutual and fair agreement that does not leave me facing huge liabilities

Expert:  James Mather replied 4 years ago.
If it was sold, why would you lose yr investment?
Do they want to sell it all?
Are they of substantial financial means?
Are you?
I am thinking of ultimate legal costs.