Joint Ownership on Commercial Property Question

Hi guys,

I have a friend in a sticky situation. He along with 3 other parties purchased a commercial property a few years ago. His fiance and he committed to 50% of the purchase. The other couple committed to the other 50% of the purchase. Each couple committed to 50% of the finance. His fiance took the loan out in her name only, but all 4 names are on the title of the property.

The property was cash flow positive from day one. All rent goes into a joint account in all 4 names, with 50% of the rent being set up on a direct debit to service his fiance's loan, the remaining 50% on a direct debit to service the other couples loan.

They split up approx. 3 years ago but held the property as it was experiencing healthy capital gains and was self servicing. The break up was amicable. It is now the market now for sale. He recently contacted his ex-fiance about obtaining a payout figure on his committment to the loan as he wanted to refinance his 25% share to invest in some residential property. This would mean that he would need his 25% of the rent to pay for his own loan so he wanted to pay out his share of the existing loan. His request was met with a "you need to go through my solicitor". To cut to the chase, he as today has been advised by his solicitor that contact has been made with his ex-fiance's solicitor and that she is claiming that she is entitled to a 50% share in the property as he has not made any contributions towards the loan.

The loan is self servicing. The rental return is actually more than the repayment. No one makes additional payments towards the loans. His name is not on the loan, but on the title. There were documents which stated the 25% ownership between the 4 parties (drawn up by solicitors), despite the loan not being in his name. The deposit was joint, the Contract for Sale of Land – 1996 Edition lists the purchasers as tennants in common.

Does he have anything to worry about? Thanks in advance for any comments.

Micky.