AboutTimmy Chou Expertise I am a experienced Mediator and a partner in a management consulting firm. As a mediator I work as a third-party neutral and specialize in partnership/shareholder disputes, management/labor issues, company culture difficulties, and family-owned business problems. I can help describe why alternative dispute resolution may be a good choice for you. As an experienced management consultant I may be able to offer creative ideas to help resolve your organizational and business problems and disputes. "If you say conflict, I say opportunity".
Question Hi this might not be something you know about but I'm desperate for the opinion of someone that knows law... THANK YOU!
In July 2004, my wife and her brother's wife both qualified to purchase a duplex in the L.A. area. The property was sold to them at $365,000. My wife's father put a down payment of $36,000. My wife and I moved into 1 home, and her parents lived in the other. My wife's brother conveniently added himself to the title of the house, so now there are 3 people on the title: Him and his wife, and my wife. The mortgage payment started out at $1,338 and is now $1,438. My wife and I have paid $1,100 per month while her father paid the rest. Meanwhile, her brother and her sister-in-law have only paid 50% of the taxes on the house. Finally, my wife and I invested about $30,000 for remodeling the house we live in, while her brother invested about $50-60 thousand on the other home. The property is now valued at 550-600 thousand, while the remaining balance on the loan is at $324,000. The reason I am requiring more information is to find out where my wife and I stand in all this because we feel that we deserve 1/2 of the profit (he claims they would keep two-thirds of the profit). What kind of legal recourses do we have to create a 50/50 split on any profit?
Answer Thank you for your question!
Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.
The case you describe here is unfortunately very typical. I am not a lawyer, nor can I mediate your dispute with just you alone but I can respond to your question from my consulting experience. Note that this issue may have legal implications and you should consult an attorney.
The difficulty with your case is that you do not appear to have entered in to a written contract together. In my experience, family business ventures need MORE writtne agreement, not less. Usually however there are none.
Hence, you will have difficulty if you want to take your dispute to court. Courts need a matter of law to rule on. There is no law against people going into business without an agreement, and there is no law that requires a 50/50 split of anything. If a contract exists, then a court can rule on the contract performance of any party.
It is true, however, that over 80% of cases settle prior to trial. Therefore, the question usually is not IF your case will settle, but WHEN. With this in mind I would urge you to find a mediator to assist you to settle this matter before everyone spends a huge amount of money on lawyers (and then settles down the road anyway). This kind of dispute is perfect for a mediation.
I can see several possible ways to approach a settlement. One is using simple accounting.
The parties each add up all the money they have spent on the property on down payments, expenses, loan payments, taxes, upkeep, remodeling, etc. In addition, there are guarantors of the mortgage who a personally on the hook for the money.
The loan amount should be divided equally between the loan guarantors (just because you are on title does NOT mean you are a loan guarantor) and added to that parties total.
Once all the totals are calculated, simply use these totals to calculate the percentage of ownership of the property, and any profits.
I would urge you, if you are able to come to an agreement, to then create a written agreement about how you will deal with each other in the future, and how you resolve any differences that arise.
These are some ideas. Feel free to follow up with additional questions.
For your information, the pros and cons of the types of dispute resolution methods follows.
GOOD LUCK!
Arbitration, Mediation, and Litigation
Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system
Benefits of Arbitration:
Confidential, no public record
Limited exchange of documentation, information
Quick, don't have to wait for a court date
Arbitrators have expertise in the subject matter and are trained in conflict resolution
Cheaper than litigation
Preserves business relationships
Negatives of Arbitration
It's a compromise, no %100 winner
Complex arbitration can be costly
If not satisfied, may litigate the arbitration procedure
Poor results with an unskilled arbitrator
Both parties must agree to cooperate in the process
Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.
Benefits of Mediation:
Neutral mediator can objectively suggest alternatives not considered before
Parties are directly engaged in negotiating the settlement
Can be quicker than litigation
Is confidential, no record
Less costly than litigation
Preserves business and family relationships
85% of American Arbitration Association cases mediated find successful solutions
Negatives of Mediation
may not reach a binding decision
unskilled mediator
Litigation: using the judicial system to resolve disputes
Benefits of litigation:
a clear winner and loser
uses a prescribed set of procedures
more predictable outcomes
is final
Negatives of Litigation:
waiting for court dates can do more harm
usually more expensive than mediation and arbitration
part of the public record
