Name on Commercial Property Title but Never Paid a Cent

[goody078]

My grandmother purchased a commercial property for the sake of my aunty who wanted a major anchor tenant to move out so she could move her boutique clothes business in. My grandmother passed away a week before the property was to settle consequently my grandfather's name was on the title with my aunty on the terms that she was to come up with half the money via finance. My grandfather paid cash. After my grandmother passed away the family decided that it was too risky to let my aunty (unstable business operator) move her small business into the building and risk losing a long term tenant.

Consequently a huge rift between siblings occurred and my aunty no longer speaks to my grandfather. My aunty has not paid a single cent towards the building or contributed in any way. My pop wants to sell the building now and my aunty has sent a solicitors letter stating she wants half the building and half of the rent. Mind you she didn't state that she wants to pay any of the expenses incurred over the past 6 years. I feel terrible for my grandfather and know my grandmother would be turning in her grave.

Any help would be great!!

 

[John R]

Hi @goody078,
You mention that the original property purchase was "on the terms that she (your aunt) was to come up with half the money via finance", etc.
Were these terms documented in a written agreement?

 

[James D. Ford - Solicitor]

How long ago did your Grandmother pass away ?

I assume it was 6 years ago, as you mention that your Aunt has not contributed to the ongoing property expenses.

As co-owner of the property your Aunt must pay your Grandfather for her share of the costs for the past 6 years.

If she obtained finance for the balance of the purchase price, how has she been paying the mortgage ? Just as she must contribute to the expenses, she is in return entitled to her share of the rent from the property.

One possible solution could be for your Grandfather to obtain finance himself (as he has enough equity in the property) in order to buy her out so her loan (if there is one) is repaid and your Grandfather can continue to hold the property, as it has a good tenant (from what I understand).

If your Aunt did not honour her side of the bargain, and did not finance her half of the purchase price... this is another matter.

I await your responses, kind regards, James.

 

[goody078]

Hi @goody078,
You mention that the original property purchase was "on the terms that she (your aunt) was to come up with half the money via finance", etc.
Were these terms documented in a written agreement?

Thank you so much for your reply. The agreement between my grandparents and my aunty should have been finalised in writing however because my grandmother passed away one week before settlement the document did not get signed. The solicitor followed up on this a couple of months after my nan passed away by aunty never signed it. Things turned sour after this especially since other family members advised my grandfather to leave the tenant in there because she had not obtained her finance yet. The solicitor has tried a few times in the past 6 years to get this contract signed however she refuses to sign. She is now stating that she was gifted the share in the property.

 

[James D. Ford - Solicitor]

What does the title deed to the property show ? Is your Aunt named as a co-owner ?

I assume it was your Grandfather who paid the balance of the purchase price at Settlement, and he took out finance in order to do this –– is that correct?

 

[goody078]

My grandmother passed away 6 years ago and my aunty has not contributed a single cent towards the property or spent more than one minute thinking about the management of the building. Luckily my grandfather had other family members such as my mum, my uncles and I who have looked after all the paperwork and management of the building for my grandfather. When the property manager rang my aunty to advise her that a fire was in the neighbour property she advised them to ring my grandfather or my mum - that shows you how responsible she has been.

My aunty never obtained finance for the property because I don't think she was able to in the end or perhaps she knew all along she was taking the free ride so she didn't bother. She even stooped as low as taking all my nan's gold jewellery(left the fake jewellery) that has been sitting on my nan's dresser for 4 years whilst my grandfather was ill in bed.

My aunty never honoured her side of the agreement with my grandparents . My grandfather is now 86 and wants my aunty's name off the building due to all the trouble my aunty has caused. He feels the only way will be to sell the building however he really doesn't want to lose such a great investment with a great rental yield. She is now claiming half the proceeds of the sale and half the rent. Nothing was mentioned about expenses. Her solicitor's letter states that she gets to choose the valuer, the real estate agent and the conveyancer. Can you believe that... how rude!

Thank you soooo much for your advice.

 

[goody078]

The title deed states my grandfather's name and my aunty's name.
My grandfather paid the deposit in cash and also cash on settlement for the full amount. He paid stamp duty, legals, council, lease agreement etc etc.

 

[James D. Ford - Solicitor]

Ok, the matter will only be able to be resolved via a settlement agreement, or via the Courts.

The outcome of the matter will turn on the evidence, and will require statutory declarations from everyone that was aware of the verbal agreement as to what was supposed to happen (that is, is was not a gift and your Aunty was supposed to finance half the purchase price).. which would provide the required evidence to show that if she is allowed to succeed in her claim for $$, she would be "unjustly enriched".

Additionally, your Grandfather needs to be aware that the property can be sold (if that is what needs to happen), without your Aunt's signature following the procedure set out in the legislation.

Kind regards