Building with family
Building with a Parent/Partner/Sibling? Property NOT formally yours?
Short Story
If you are, here is Janie’s* story:
“In 2004 I started the journey of building a family house/ investment property 🏡 with one of my parents. At the time we were more than close, after all we went through together, I would say inseparable.
From my recollection, this parent told me my name was added to documentation pertaining to the land purchased 📝 through a government agency. I never questioned it, nor did I request proof that it was done. Verification was the furthest thing from my mind, I was really still a child at 19.
Long story short, we built the house, fell out over something that should not have been an issue and I was banished from the house. I was not allowed to stay there in peace😔.
When I think about that 19 year old and her decision to build with that parent. I think of my reason, my reason was we lived in rental accommodation all our lives, all I wanted was a safe place I could call home and somewhere I could always seek refuge.
There were so many times, I just wanted to go home, but couldn’t. This parent had claimed sole ownership of the property and had rented the rooms as an investment property😔.
A few years ago, my younger sibling told me, this parent, asked him to remind them to exclude me from their WILL, hence the house we had built together.😑🤔😯
I was not happy to say the least”
Legal Requirements on building with a partner/parent/siblings
So here is how to go about it, if you are building with someone.
- Consult an attorney. The attorney may recommend the following and will guide you through the process:
a. Ensure your name is on the title.
- This is easier said than done, for your name to be added to a house title, it would require a transfer of title and one of the major costs involved is the 7.5% tax on the value of the property. For e.g if the property’s value is $4 million dollars, then the tax cost would be $300,000.
- If the property does not have a legal title, whatever document the legal owner has signed, which assigns the property to them. Ensure your name is also added to this document. Not as a secondary person, but equal to the primary person. As the secondary person has no rights, and the primary person has the right to remove the secondary person from the document at whatever time they seem fit.
2. Your investment in the property may not be equal, so the attorney will recommend that you both sign a legal contract prepared by an attorney, which clearly indicates each person’s contribution and what to do if one or both parties chooses to opt out. It’s better to do this when you are on good terms and before you part with your money
If things goes wrong years later, and you wish to opt-out of the property you invested in. Your lawyer will request proof of your contribution made to the property or communication between you and your building partner.
Supreme Court
Such matters are handled at the Supreme Court, since the Civil court only handles small cases with value of below $JA 1,000,000.
Because it is the Supreme Court, do not believe you can bring people to court to testify, to voice your contribution to the property, like you would in the Civil court.
The Supreme Court is the court above formalities. You CANNOT represent yourself there and you will need a lawyer for this, who will prepare all documentations on your behalf.
The Supreme Court goes on written proof, and those are: receipts, sworn affidavits, written communications, previous court documents, if you had a case before, relating to this matter, a copy of that document, dated pictures, bank transactions. Basically anything physical and dated that can support your claim.
The Process is:
- You hire a lawyer
- You supply all documentation regarding your case, mentioned above. The lawyer prepares your affidavit and others, that is, if you have a witness to this matter and they wish to support you by telling the truth (hard to find), the lawyer also signs and stamps all documents regarding this matter.
- Several copies of your case files are made. At least 4. One for you, one for your lawyer, one for the court and the other for the defendant.
- Then, the lawyer files this claim at the Supreme Court.
- This document is reviewed at the court, stamped, then the lawyer is given a court date for the matter.
- Once the court date has been made, the next step is to have the document served on the defendant.
- This document consists of a copy of everything that was provided by you to the lawyer and that was also submitted to the Supreme Court – nothing is left out.
- On the court date – you all show up.
Statute of Limitations
Luckily the dispute of land, does not carry the same statute of limitations like most claims such as personal loans/ injury which is 6 years. The law is not clear on this, but you will need to consult with an attorney to explain your case and to be certain if you are within your statute of limitations.
Interest
Now sweet interest, unlike personal loans, the interest pertaining to land is compounded. This means you receive way more.
I will explain.
Let’s say an individual’s initial investment in the property was $1,000,000 and it is calculated at 6% interest rate for the last 5 years compounded. At the end of the 5th year, the money owed would be $1,338,226.
Compound interest means the interest rate is calculated on the initial investment and then on the new value for each year. (I hope this makes sense). Please see the table below to explain this.
| Interest | Money Owed | ||
| 1,000,000 | 1.06 | 1,060,000 | Year 1 |
| 1,060,000 | 1.06 | 1,123,600 | Year 2 |
| 1,123,600 | 1.06 | 1,191,016 | Year 3 |
| 1,191,016 | 1.06 | 1,262,477 | Year 4 |
| 1,262,477 | 1.06 | 1,338,226 | Year 5 |
Building with Family Tips
Here are some other tips regarding building with family/parent/partner.
- Do not hand over cash to your building partner unless they have a receipt to give you immediately… chances are, that is not the case. Make an agreement to always transfer money via your bank. Your bank will forever have these records.
- Keep all your receipts and documents filed – no matter the value. Building materials, payment to construction workers etc.
- Keep communication with your building partner on email. Or ensure whatever medium you use, you can back it up as you may need it to rely on later.
- Ensure all your documentation and notes are dated. You may need to rely on these if and when the relationship breaks down.
- If you yourself are in the construction trade and are contributing to the construction through sweat equity. You must write down all the jobs you have done on the property, the date, the measurement and the value of the job at the time, and store it in a folder.
- Recording all these paperwork could be in vain if the documents are stored around your building partner. I have seen where documents were stolen from someone who was in a sort of similar position. I would recommend, you store the documents at a place independent of your building partner and with someone you whole-heartedly trust. The individual doesn’t necessarily need to know what the paperwork is for, but just know they are documents important to you.
Warning
Trust me, when you think about building with a partner or parent and it might sound amazing because you are on good terms, oftentimes it can turn into your worst nightmare.
When you think attorneys, you may think money, dollar signs and large expense. But I guarantee if things are done properly in the first place, it could save you hundreds of thousands of dollars in comparison to falling out with your building partner.
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