Comments on: If Not A Contract, At Least An Understanding

By: Shadox

Shadox — Wed, 10 Sep 2008 06:27:18 +0000

OK, that’s a really stupid move. As a (former) lawyer, I can tell you that I have seen many friendships / relationships wrecked because people didn’t bother to negotiate the terms of their business arrangement and put them in writing in advance. Really bad decision.

By: Double

Double — Wed, 10 Sep 2008 02:22:31 +0000

Get it in writing is a no-brainer. Your friends may be about to ruin their friendship, but I hope it works out for them.

By: Laura

Laura — Wed, 10 Sep 2008 02:16:56 +0000

I think it’s in both interests’ to get it all in writing. Many times people say contracts show a lack of trust, but really it is to protect everyone involved. Circumstances change, memories don’t match, and a simple misunderstanding can result in a lawsuit with now two former friends.

I hope your friends can work this out peacefully.

By: jim

jim — Tue, 09 Sep 2008 20:46:38 +0000

CK drops the hammer!

By: CK

CK — Tue, 09 Sep 2008 18:44:21 +0000

Definitely a bonehead move, get it in writing.

By: Nicole

Nicole — Tue, 09 Sep 2008 18:14:00 +0000

Chris – I think the scenario you describe is the more serious one and the one where a contract would be more relevant. Many people enter into contracts concerning home ownership that do not deal with roommate issues (resolving issues like that is a part of life). But not having a contract that specifies what will happen when one of the owners wants to sell their share is a big problem – there is just a lot more at stake.

The homeowners in the first scenario who are dealing with the roommate issue should take note right now and draft up a contract that specifies what will happen when they do decide to part ways. That will be a much messier problem by far than deciding whether or not to take on another roommate.

Chris – your friends should probably consult a lawyer to determine what their rights are. The big issue is whether the seller has a right to sell his interest to any third party if the other owner refuses to buy it for the price and on the terms that the seller wants? does the other owner have any right to reject a potential buyer as unsuitable, etc.? I would also recommend that they look into a good mediation service – an objective third party who can help them to come to a resolution that they can both live with.

I think the roommate issues is much easier to resolve. If one person does not want a roommate and the other does, the person who does not want the roommate should pay the difference. If the outgoing roommate had his or her own room, then the owner who is covering that cost should get exclusive use of that room.

By: Dan

Dan — Tue, 09 Sep 2008 18:12:33 +0000

Easy solution. Take the rent difference, and have each bid on how much of the rent difference he’d be willing to pay to take ownership of the room and do as he pleases, i.e. find a roommate, leave it unrented, use as an office, etc. Whoever bids higher gets to do as he pleases and pays the lower bidder his bid plus half the difference. If the empty room is on a different floor there can be a adjustment derived from a similar auction.

Same thing for Chris’ friend. Have each bid on the house, and have the higher bidder pay the lower bidder his bid plus half the difference.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Tue, 09 Sep 2008 16:48:47 +0000

From my experience as an attorney, I can assure you that being friends and being reasonable people is no assurance of a smooth business relationship (or termination thereof) if there is money at stake. The problem you have described is even worse if the “friends” are romantically involved and decide that co-habitation is for them.

By: Chris

Chris — Tue, 09 Sep 2008 16:42:07 +0000

Do you, or any of your readers, have advice on how to resolve a situation of this nature?

A friend of mine is in a similar situation. He and a buddy bought a house about 3 years ago, no contract. Now one is engaged and wants to sell his interest to buy another place. They are fighting over the terms, price, obligations, etc.