Investment properties: conflict of interest, solicitor was one of the purchasers?

I would really appreciate any advice on this.

In 2006 two family members, who were solicitors, asked us to invest with them on two properties as they needed us to secure the loan as we have assets and a secure job. We were extremely reluctant but wanted to help them. We did on the understanding that it was short term and we would have no role with tenants.

We wanted to sell immmediately but was told to hold off and we trusted their professional judgement.

Since then relations between the pair have completely broken down both on a personal level and financially and we have had to completely take all responsibilty as landlords. One is paying towards the loan but everything re tenants, PTRB etc falls on us.

We feel there was a conflict of interest in them being our solicitors originally. They didnt look after their clients best interest here. Should they even be the solicitors if they are also the purchasers? Has the bank and its lending be in any way doubtful too? Major stress involved and inaction to now due to being a close family.

thank you.

Gallen said:

We were extremely reluctant but wanted to help them. We did on the understanding

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Verbal or written?

we trusted their professional judgement.

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On legal issues or on investment issues?

we have had to completely take all responsibilty as landlords. One is paying towards the loan but everything re tenants, PTRB etc falls on us.

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What exactly is your role here - joint buyers? named on property deeds? or just on mortgage deeds? something else?

We feel there was a conflict of interest in them being our solicitors originally.

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Seems odd that you proceed then but what's done is done...

They didnt look after their clients best interest here.

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You mean on legal or investment issues?

Should they even be the solicitors if they are also the purchasers?

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You mean should they have been doing the conveyancing? I don't know of any impediment to them doing this but I'm no expert...

Has the bank and its lending be in any way doubtful too?

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I don't understand - in what way?

Indication from your post is that you were enjoined as either borrowers or guarantors for the bank debt on these properties. If that is the case the fact that your co-investors were solicitors is in any way relevant to your liability on the borrowings. Your best bet is to obtain independent legal advice on where you now stand in respect of your liability. It is unlikely that you will be in a position to extracate yourselves from liability on the borrowings, so you need to look at alternative options, which should include addressing the problem with the 2 family members either together or separately.

Gallen said:

We feel there was a conflict of interest in them being our solicitors originally. They didnt look after their clients best interest here.

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But you are not their client, you are their partner! And that makes all the difference.

Are they not both assuming that the solicitor partners did the conveyancing?

I think the real problem here is that the deal has gone, or is going, south and the business relationship has broken down.

Op admits :

"asked us to invest with them on two properties as they needed us to secure the loan as we have assets and a secure job."

It would have been prudent for OP to seek independent legal advice. It might have been advisable for the solicitor to advise the OP to seek such advice but there really is no way around the parties seeking to end their relationship or reach agreement on a way forward - by legal proceedings if necessary.

I think the "conflict of interest" angle is not the issue.

mf

ClubMan said:

Are they not both assuming that the solicitor partners did the conveyancing?

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It is not relevant, they could have been high court judges for all the difference it makes. They are all partners and therefore there is no client relationship and hence this no special obligations attached to business agreement.

Gallen said:

Major stress involved and inaction to now due to being a close family.

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Then focus should be not on who is to blame, and it looks like everybody is to blame as all were adults and willing participants, but now need to focus on how to get out of the mess in a calm, cost effective manner with the least financal and emotional damage.

The alternative is to continue fighting, spend more money and have many years of stress and inaction.

Clear heads and flexibility and willingness to take the financial hits.

Thank you for all your views and for taking the time to give us your opinion. We respect that the decision we made back in 2006 wasnt the best to put it mildly and that there isnt anyway around the liability for any of us.

Gallen said:

Thank you for all your views and for taking the time to give us your opinion. We respect that the decision we made back in 2006 wasnt the best to put it mildly and that there isnt anyway around the liability for any of us.

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Well that's already progress, best of luck in sorting it out amicably.