A reader who jointly owns a fixed property with his brother after entering into a partnership agreement is looking for advice from our experts.
His brother bought the property but appeared to require financial assistance as our reader tells us that they are jointly responsible for the mortgage bond. The reader paid for the transfer fees.
Our reader moved into the property but stays in a “back room”, presumably an outbuilding, and pays rent to his brother. It would appear that the brother also resides in a room separate to the main dwelling, which houses tenants.
The reader and his brother recently had an argument and the brother has told him to vacate the property. Understandably, our reader feels done in and would like his brother to repay all rentals as well as the transfer fees.
He would also like to know whether he is entitled to receive a share of the rental income paid by the tenants occupying the main dwelling.
See the reader’s question here.
It would appear that the brothers entered into a partnership whereby they jointly purchased a property and assumed joint responsibility for the mortgage bond.
One alternative is that certain monies were provided on loan by our reader to the brother but, although the rental paid would lend credence to such an arrangement, it does not appear to be the case.
It seems that no verbal arrangements or formal agreements – other than the documentation signed in respect of the purchase, bond documentation and the like – have been concluded.
As a result, the position could be inferred to be one of equal rights and responsibilities where each partner owns an undivided half share of the fixed property.
The rights to income should therefore be shared equally and, similarly, any obligations in terms of maintenance and the like should also be carried equally.
Half of the transfer costs, unless paid as a contribution to the partnership, should be recoverable from the brother.
As his initial contribution, the brother may have expended time, effort and perhaps some money in the seeking and securing of the property.
The rental paid by the reader could have been paid as part of the agreement whereby each of the owners would pay a sum to the partnership to be retained for future expenses.
It could be regarded as irregular that one partner would pay a rental to the other unless that partner in some way received a greater benefit.
This example stresses the need for a written agreement that any parties, even family members, should conclude before embarking on a commercial endeavour.
Partnerships are often entered into in a very casual manner without any consideration for possible issues that may arise.
A negative change in either party’s financial position, for example, will typically impact on the partnership. One party may for instance wish to sell his or her share or insist that the property be sold and the proceeds divided.
The legal consequences of a partnership extend to potential liabilities as a result of dealings with third parties by either partner for which the other may be held liable.
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