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Richard
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 45682
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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My husband and I purchased a vacation cottage with another

Customer Question

My husband and I purchased a vacation cottage with another couple. The mortgage is solely in our name as is the insurance. We put down all of the down payment. They have paid us
1/2 of:
Home inspection
Insurance for the year
Monthly mortgage since purchase 11/16/2012

They also have paid us a
$5000.00 lump sum toward the down payment price but still owe over 8k
They were not able to finance in their name


If things are not working out between us, what are our legal obligations to them.
Can we keep the house and pay them back what they have invested into the place?
Do we have to pay them any equity they may have accrued?

Thank you
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.


Good afternoon. Is this other couple on the title? When you say "things are not working out between us," do you mean they are in default under their agreement with you regarding paying you what they owe you? Thanks.
Customer: replied 1 year ago.
The other couple is not on the paper work at all. Out names are XXXXX XXXXX names on any legal document

Domestic things are causing disagreements. How the house is being managed and the responsibilities involved. The main offensive thing is they see it more as a party house and have volumes of people of to the house each weekend. They host large cookouts and bonfires and parties. We purchased it with more of a family atmosphere intent. We both have children, they have twin 4 year olds and we have a 10 and 12 year old. Our children keep asking why so many people keep coming to our house. The house is on an island in the middle of a lake. We like to have a good time too but resent all the parties.
Expert:  Richard replied 1 year ago.
Thanks so much for your reply. Title to real estate is based on the deed. So, if you are the only one on the deed, you own the property. And, unless you have a written signed agreement regarding them gaining ownership, they have no legal right to an interest because the statute of frauds requires agreements regarding real estate to be in writing. So, you can terminate this relationship which would basically legally be looked as a landlord tenant arrangement. You can terminate this arrangement by giving them 30 days written notice and paying them back the money they've paid toward a down payment. You could make an argument that you would be entitled to keep any portion of the mortgage payments they've made attributable to interest plus the insurance as basically rent for the use of the property. But, if you want to pay them back everything they've paid to prevent further argument, they would be much less likely to file suit. You would not owe them any increase in the value of the property because they have no ownership.

One other thing, if you give them the 30 day notice and they don't leave voluntarily, unfortunately, you do want to go through the legal process to avoid being accused of an illegal eviction. With no lease, they would be deemed to be a month to month tenant. If they don't not leave voluntarily on or before the 30 days, under Michigan law, you will then need to give a 7-Day Notice to Quit...meaning they must vacate the premises within that period or face formal eviction. Then, if they still have not left, you will have to file a petition for an eviction order. Once that is granted...you can have the sheriff evict. Unfortunately, you are not allowed to move their stuff out, change the locks, or take any other means of "self-help" eviction prior to obtaining the eviction order. In the interim, if they pose any threat to your person or property, you can get a restraining order to get them out of the house immediately while the eviction process runs its course.




Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 1 year ago.
How does the verbal agreement factor into any of this. The verbal understanding that we were joint owners and they were in process of paying half the expenses and working toward paying off 50 % of the down payment. They paid 5k of the original 13 k. 26k was the down payment that we provided
Expert:  Richard replied 1 year ago.
Thanks for following up. The following two Michigan statutes relating to the statute of frauds require transactions to be in writing:

Section 566.106 reads: "No estate or interest in lands, other than leases for a term not exceeding 1 year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the party creating, granting, assigning, surrendering or declaring the same, or by some person thereunto by him lawfully authorized by writing."


Section 566.108: "Every contract for the leasing for a longer period than 1 year, or for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized in writing: Provided, that whenever any lands or interest in lands shall be sold at public auction and the auctioneer or the clerk of the auction at the time of the sale enters in a sale book a memorandum specifying the description and price of the land sold and the name of the purchaser, such memorandum, together with the auction bills, catalog or written or printed notice of sale containing the name of the person on whose account the sale is made and the terms of sale, shall be deemed a memorandum of the contract of sale within the meaning of this section."


It is possible that the other couple could try to enforce the verbal contract if they can allege that circumstances between the parties justify enforcement of an oral contract. This would be equitable relief awarded by in the court's judgment. If the couple were to attempt this, you would contest this on the basis that the couple is defaulting under your verbal agreement based on their actions and on their failure to timely pay (if they are late).
Customer: replied 1 year ago.
We really never went into a great amount of detail regarding the agreement other than 50/50. We never laid out any ground rules for sharing the place or a back up plan should things not work. They were unable to purchase this place on their own. We financially made everything happen.Does that change anything?Are they entitled to any ownership based on the verbal agreement? Even if we refunded their share of the investment thus far?How do you recommend we proceed?Feeling very stressed and confused.
Expert:  Richard replied 1 year ago.
Thanks for following up further on this; I apologize for the short delay....quick breakfast. If you didn't go into very much detail, then it's going to be very difficult for them to get a court to rule in their favor on a verbal agreement. In order for their to be a contract, there must be evidence that the parties have full accord and satisfaction...which means that there is agreement upon all the terms and conditions of the agreement. That's why the law requires a complicated transaction as a real estate transaction to be in writing; without it, the couple is going to be swimming upstream trying to establish that you agreed upon all terms and conditions.
Customer: replied 1 year ago.
You have been so helpful and I appreciate your time and information. I think I am signed up for a month. If I have more questions will I be consulting you or do I have to start over with someone new?
Hope you had a nice breakfast. :)
Expert:  Richard replied 1 year ago.
You're welcome...it's been my pleasure; and thanks...I did have a nice breakfast!

I'll be happy to help you with any more questions you may have. For easy access, my bookmark is: http://www.justanswer.com/law/expert-legalbeacon/
Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 45682
Experience: 32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
Richard and 6 other Real Estate Law Specialists are ready to help you
Expert:  Richard replied 1 year ago.
Thank you so much for the positive rating! I appreciate having had the opportunity to serve you!

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